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Comment by philwelch | Hacker News Reader

There's two sides of this. There's the side where the seller's price is above the demand curve, so the buyer pirates the movie. But there's also the side where the seller's price is below the demand curve, but the buyer pirates it anyway to capture more consumer surplus.

What's really happening is that, the easier piracy becomes, the closer the supply curve comes to turning into a very flat line at price 0. Now, the actual cost to the consumer in time, energy, bandwidth, and guilt is higher than 0, and it's possible to reduce those costs by trading off some actual money cost to get the permission of copyright holders the way Apple or Rdio are doing, but it's not clear that this will last forever.

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The idea of selling copies of information is very basically broken. Half the time stuff is made but undersells copies because the producer did not find out no-one wanted it, and the other half, people are prevented from realising value that could actually be freely available.

Such a structure consumes a scarce resource -- creative effort -- wastefully, and restricts an abundant resource -- communicability of information -- unnecessarily. That seems very much the opposite of economically efficient.

Information goods should be more like better kinds of software production. But the current copyright-based system makes it all more like a 'waterfall economy'

http://www.hxa.name/notes/note-hxa7241-20120103T1008Z.html

What makes you think iTunes won't last?

What if someone makes a better-designed iTunes that happens to work using piracy instead of legitimate sales? Or comes close enough that $0.99 isn't worth it?

I think that was called Napster...

They've tried. For legitimate competitors, Apple has them outgunned in terms of selection due to all their deals with the labels and such. For illegitimate competitors, Apple has a comparatively huge budget for design/UX.

The "isn't worth it" actually goes the other way at this point: it's isn't worth pirating anything you can get from iTunes. Most of their customers are perfectly capable of pirating stuff, but it isn't worth their time compared to grabbing it from iTunes.

I'm not saying nobody will ever compete with them or that people don't still pirate anyhow, just that they're more than capable of competing with free. They've been successfully doing that the entire time, in fact.

I agree that's the status quo, but Apple's a rather unique organization in terms of their mix of negotiation ability, closeness to Hollywood, and design ability. And there's already cracks showing when it comes to their software quality. Those advantages can't last forever.

> Apple's a rather unique organization in terms of their mix of negotiation ability, closeness to Hollywood, and design ability.

That's exactly the part that makes me believe they have staying power.

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