I recently heard that iTunes was planning to raise the price of some popular songs from $0.99 to $1.29, and at the same time, some less popular songs would be reduced to $0.69. Makes sense to me. But from techdirt, “Oddly, the LA Times article claims that the new pricing scheme is “true to supply-and-demand economics,” but, as Gizmodo notes, that’s not true at all. The supply is infinite. So if it were true to supply-and-demand economics, the price would be free. The actual price is based on an artificially limited supply and a made up demand.” Huh? Let’s look at a supply demand graph;
Supply only goes up if the price is maintained, at a price of zero, the supply drops to zero as well (in theory). The Gizmodo quote confuses the medium (the bit going across the internet) with the product itself (the song). The supply of good music is certainly not infinite, you’d not listen to any and every bank or piece of music that came along. Just as their are bands whose concert tickets are scalped for many hundreds of dollars, their are also bands who don’t sell out their concerts. There is nothing that’s infinite, even clean water is not plentiful everywhere on earth.
I’ve heard of soda machines which contain temperature sensors. These machines are programmed to bump the price based on the temperature, rate of sales, and level the machine is full. iTunes seems to be the perfect venue for little known bands to offer their songs for a lesser amount, even free for a time, and for superbands to get a bit more money. But lets not kid ourselves, supply/demand is far from dead.