From: Eliezer S. Yudkowsky (sentience@pobox.com)
Date: Thu Oct 25 2001 - 00:25:37 MDT
hal@finney.org wrote:
>
> Eliezer writes:
> > Each additional download creates wealth, because information is an
> > infinitely duplicable good. If we all paid exactly the same amount to
> > artists and middlemen, but got ten times as much content at one-tenth the
> > price per unit, the net effect on industry revenues would be zero, and yet
> > an enormous amount of wealth would have been created.
>
> For example, the Dixie Chicks sold 9 million copies of their Fly album in
> the two years after it was released [1]. It probably sold for about $15.
> If they had reduced the cost to 1/10 as much or $1.50, would they have
> sold 10 times as many copies? 90 million copies? That's almost as many
> as there are households in America (116 million [2]).
By hypothesis, that situation (selling 10 times as many copies) was the
one described above. If we all pay the same amount, but get ten times as
much content for it, it follows that on average price must have gone down
by a factor of ten, and sales must have gone up by a factor of ten.
> I don't think the market is that big for the Dixie Chicks' music.
> Even at $1.50 a copy, they would not sell an album to every household
> in the country. They would make less money at 1/10 the price per unit.
>
> The Dixie Chicks do better to sell their album for a larger amount and
> sell to fewer people. The exact point of optimality will depend on how
> quickly the market falls off as the price rises.
The point of *global* optimality is that as much information gets
downloaded as possible. This is in conflict with the point of optimality
for the Dixie Chicks if you assume that everyone pays the same price for
their download. Except, of course, that the idea that everyone pays the
same price for an album is another one of those assumptions that may not
survive the age of downloading. One way to reconcile the global optimum
and the Dixie Chicks optimum is to assume that everyone downloads the
album, and everyone pays the maximum price they would be willing to pay
for that album, whether it's a cent or (in Bill Gates's case) a million
dollars. This maximizes the Dixie Chicks's revenue - to the theoretical
upmost maximum, in fact - while obeying the fundamental constraint that
information *must* be downloaded. The problem would be how to implement
such a system short of a telepath to watch over it...
-- -- -- -- --
Eliezer S. Yudkowsky http://singinst.org/
Research Fellow, Singularity Institute for Artificial Intelligence
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