Time to drink your gin-and-tonic-ah

[Mmmm, Burger (C.J.)]

Originally Posted by Adder

Apparently you have the concept. I'm not sure the facts are right though -- I'm not sure marginal costs decline with size. Then again, I would think the biggest marginal cost is bandwidth, which I have never shopped for in that kind of scale.

The rest of actually delivering content online should be very, very low marginal cost at any reasonable scale.

I don't think it's that marginal costs in themselves are significantly lower with size. Rather, Apple's size allows it to recover the sizable fixed costs over a larger set of sales, such that it can get a reasonable return on its investment, whereas a smaller company with lower sales would either be unprofitable selling slightly above marginal cost (because it cannot recoup its sunk costs) or would have to charge higher prices in order to recover its investment.

[Fugee]

Originally Posted by Adder

I'm not sure marginal costs decline with size.

I'm pretty sure it's the reason for the phrase "economies of scale."**

And with much (nearly all?) of the material requiring licenses, being such a huuuuuuuuge distributor couldn't possibly give them an edge in negotiating pricing.

ETA:**Or maybe what Burger said.

[dtb]

Originally Posted by ThurgreedMarshall

Nice.

TM

I don't get it.

[Hank Chinaski]

Originally Posted by Flinty_McFlint

Uh, hi? Why should I care about what some nutbag has decided to focus his anger, outrage and unhappiness this minute, and why do you think I'm interested? Oh, right, I friended you. I knew that would set a bad precedent.

so you can get friends without being friendly?

[Adder]

Originally Posted by Fugee

I'm pretty sure it's the reason for the phrase "economies of scale."**

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.

ETA:**Or maybe what Burger said.

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."

[Hank Chinaski]

Originally Posted by PresentTense Pirate Penske

Hank and I have been reading the DU for years, but we don't cite it for reliability.

2. not under my primary at least. Ty@50 (voted best sock ever) has.

[Cletus Miller]

Originally Posted by taxwonk

Why? You can get those subscriptions on Kindle right now, with no monthly data plan.

Linkage and pix and advertising.

By "general interest", I meant celebrity-trash and other photo-intensive mags and the newspapers will offer a cheaper subscription price if they can gety ad revenue, too, which is unlikely on Kindle.

[ThurgreedMarshall]

Yes, it is exceedingly disturbing.

TM

[Fugee]

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.

But other than that, Mrs. Lincoln, did you enjoy the play?

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.

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.

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."

I consider the ability to spread required fixed costs over a large number of units part of "economies of scale." Why don't you?

[Sidd Finch]

Originally Posted by Icky Thump

Even better than hearing lawyers whine at a deposition about my not permitting a lunch break: hearing them whine 2 tables over at dinner (w/o seeing me) about my not permitting a lunch break at today's deposition.

Gosh, you are one tough litigator.

Why didn't they just walk out with the witness and go to lunch?

[Adder]

Originally Posted by Fugee

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.

This response is beyond stupid, even for you.

EATA: Also, record companies have strong incentives not to let online music be too cheap.

I consider the ability to spread required fixed costs over a large number of units part of "economies of scale." Why don't you?

ETA: Okay, my initial response was unfair. It really depends minimum efficient scale. I'm assuming that a new online retailer doesn't need all the fixed costs that itunes does (i.e., it doesn't need as many servers).

[Sidd Finch]

Originally Posted by Adder

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.

Right. Because I could set up a system to sell music online today, sell one song for 99 cents, and make as much profit on that song as Apple makes on each song it sells on iTunes. Tomorrow, I'd upgrade the software and sell another song, with the same result.

The only question here is whether your ignorance or your snottiness is more annoying. It's like you're channeling Spanky.

[Cletus Miller]

Originally Posted by Adder

Perhaps because I am not economically illiterate.

Okay, Mr. Well-read, can you point to the definition of "economies of scale" that excludes allocation of fixed costs over a greater number of units/customers/whatever? Because every definition I've ever seen/heard (hardly exhaustive) relates to reduction in total costs per unit, which includes allocation of fixed costs.

[taxwonk]

Originally Posted by ThurgreedMarshall

Good point.

TM

Good edit.

TW

[Fugee]

Originally Posted by Adder

This response is beyond stupid, even for you.

Maybe because I don't read the PB, I somehow missed what an ass you are.