Economics Of My Old CD Collection

Posted under Business On By Alan Berkson

Is a fair price what you think is fair, or what someone else is willing to pay?

Permit me a mild rant…

What Is A Fair Price?

I recently started going through some of my old CD‘s to rip onto my computer. There was a lot of good stuff and plenty of “what was I thinking” stuff. It struck me that I had purchased many of these CD’s — in that pre-iTunes world — for only one song. Sound familiar?

As I went through the CD’s I counted (off-hand) 20 CD’s I had purchased for just one song. At an average cost of $15 that comes to $300 for what today would cost me $20 (to only get the songs I wanted).

On the face of it, I paid a 1400% premium for the “value” of the one song I really wanted to purchase. Did I think it was fair? No. But I was willing to pay it because I had no alternative.

20 x $15 = $300 vs. 20 x $1 = $20

Broken Economics

Looking back, how can I look at the music industry in any way other than the tremendous profits they reaped because of our willingness to overpay? The fundamental nature of the product itself — a song — hasn’t changed, but there has been a disruption in the delivery model that’s changed the economics of the music industry. Innovation in the industry narrowed the gap between what I thought was fair and what I was willing to pay.

What other  industries are ripe for disruption because of “broken economics?”

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