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Originally Posted by Adder
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.
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But other than that, Mrs. Lincoln, did you enjoy the play?
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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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It's simple marketplace reality. I had a client that was a large, but not ginormous retailer. Target and Walmart could sell electronics for less than the wholesale price my client paid. Of course Apple can negotiate significantly lower costs than smaller online retailers.
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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."
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I consider the ability to spread required fixed costs over a large number of units part of "economies of scale." Why don't you?
