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Originally Posted by Fugee
I'm pretty sure it's the reason for the phrase "economies of scale."**
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I can't tell if this non-sequitor is intentional so I will just say this: not all industries are characterized by signficant economies of scale. With the possible exception of the royalties you mention, selling music over the internet doesn't at first glance look like one where the economies of scale are particularly large.
As to whether itunes is able to negotiate better licensing terms, that is a potential economy of scale, but I do not know whether it has (there are cases alleging that record companies have colluded on online music royalties, although I don't know the details) or if it has, what the magnitude of the advantage is.
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ETA:**Or maybe what Burger said.
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Except what Burger said was "it isn't that there are economies of scale." What Burger said is "the required fixed costs could be a barrier to entry."
