[wtallis]

Amazon and Apple aren't in the business of distributing digital goods with low marginal cost. They are in the business of distributing digital goods with the highest marginal price possible, so they have little incentive to reduce their marginal costs as much as possible. (Even so, their profit margins are very high.)

When you stop trying to impose artificial scarcity and simply try to distribute with the lowest possible marginal cost (things like Project Gutenberg or Bittorrent), you find that even if the marginal cost is not exactly zero, it is close enough that the marginal cost does not affect the pricing across any real-world range of quantities. Thus, the traditional supply/demand model no longer applies.

[anamax]

> They are in the business of distributing digital goods with the highest marginal price possible, so they have little incentive to reduce their marginal costs as much as possible.

Oh really? You think that Apple and Amazon don't care about their bandwidth charges? That will be news to the folks from whom they buy bandwidth. You also think that they don't care about the cost of the servers to send that content out?

> you find that even if the marginal cost is not exactly zero, it is close enough that the marginal cost does not affect the pricing across any real-world range of quantities.

There's your problem - you think that when the cost is minimal, supply/demand doesn't apply.

Your "economics" is several decades out of date. Lots of things aren't priced by cost, but by value. Supply/demand works just fine for them.

> When you stop trying to impose artificial scarcity and simply try to distribute with the lowest possible marginal cost (things like Project Gutenberg or Bittorrent)

Ah, you think that bittorrent is cost-efficient. It isn't. It's a way to spread infrastructure costs across a lot of people.

In other words, you're confusing cost and price again.

[wtallis]

"You think that Apple and Amazon don't care about their bandwidth charges?"

I really didn't say that, and you know it.

Apple and Amazon don't want to have a very high marginal cost, but they really don't mind small costs like credit card transaction fees. They don't need to eliminate those costs in order to be profitable. Minimizing their marginal costs is not their top priority.

[anamax]

>>You think that Apple and Amazon don't care about their bandwidth charges?

> I really didn't say that, and you know it.

The person who wrote "They are in the business of distributing digital goods with the highest marginal price possible, so they have little incentive to reduce their marginal costs as much as possible." either thinks that bandwidth costs aren't marginal costs for content distribution or did write that A&A don't care about bandwidth charges.

> They don't need to eliminate those costs in order to be profitable.

So? Lots of companies are profitable without eliminating certain costs, but that doesn't imply that they don't care about those costs.

You seem to think that a company that has "enough" margin doesn't, or shouldn't, care about costs. Some evidence would be nice.

> Minimizing their marginal costs is not their top priority.

Move those goal posts.