But, but, . . . Solveig, they're talking about the cost of copying not transaction costs or information costs (you mean the cost of producing information, right?). And they're making a normative argument that information should not be locked up with DRM. In their role as consumers, they seek to advance their view of what the market should look like. I don't see any abuse of economics here.

"DRM is an unacceptable approach to this problem. We understand that online music presents a challenge for corporations steeped in old business models. . . . [T]here are alternatives to the current system for artists. A new slew of record labels and distributors are appearing, experimenting with new business models. Lets give them the time to mature."

Granting the existence of the problem with information costs, they argue that DRM is not a good solution. Alternatives exist, such as tying information to services and tangible goods.

Also, did you get my e-mail? I think I sent it to your comcast address.

The email you mean, is it the one about the seal? I got that. Did you get my answer?

Re the cost thing. Groan. Not you too. Okay, step by step:

Here's the way the model works: Under certain assumptions (about information costs, transaction costs, perfect competition, under certain definitions of efficiency, what have you, doesn't really matter which set of artificial assumptions one picks) one observes prices falling to marginal cost. What this tells us about the real world: A little bit about why, under certain circumstances, prices may rise or fall or have a tendency to rise or fall. How this often gets translated by folks who are not careful: prices ought to follow from costs. What this is NOT: A normative statement about what *prices* ought to look like in the real world, whatever costs are.

How the DbyD commentator was using it: The cost of distributing more copies is zero. Therefore, he implies very roughly, it is wrong to elect a business model that supports the current price structure (of significantly more than zero) for content. No, he wasn't commenting about transaction costs or information costs--I doubt very much he is aware of the role the assumptions about those types of concepts play in the model he is very informally adopting. He is making a comment about prices needing to follow from distribution cost. Static rather than dynamic efficiency.

Note that my comment *doesn't* purport to be a comment on the general thrust of the argument he is making. I have no objection to people not buying DRM-stuff if they don't want to. I do find the general sense of the article that DRM is being forced on people who do buy it to be wrong-headed, but I didn't address that here. I was going to do it tomorrow but as I am in town I may not have the opportunity.

Jim, I read the passage Solveig critiques as referring to transaction costs, which covers copying and information costs (with the contours decided by contexts, especially the technology or product in question). Also, on DRM, I read Solveig to view that anti-DRM arguments shouldn't be based mereley on the potential of low-marginal transaction costs, as that would ignore development-production costs.

"Yes, yes, when information or transaction costs are low enough, prices drop to marginal costs..."

Solveig, stop while you're ahead please,

"While this model is an interesting academic exercise that tells us something about the tendency of prices in the real world, it was simply never, ever intended to serve as an example of how the real world ought to work."

Ok now your out there twisting.

.../

"Granting the existence of the problem with information costs, they argue that DRM is not a good solution. Alternatives exist, such as tying information to services and tangible goods."

Now, this is actually where it gets interesting. They see DRM as problematic and their response is multi faceted:
1. Don't Buy DRM
2. Get a brand image (the use of the hazmat suits)
3. Create drama, focus attention
4. Organize create a NFP.

I think they will play a role in the defeat of DRM. Apparently, in forums like this, everyone only seems to see the Property Rights issue.

No one here _ever_ acknowledges the First Amendment issues.

Well, there exists those who really see First Amendment issues here, and they will grab the moral high ground and oppose DRM freedom limiting measures.

They will win, because:
1. There exist no strategy for defeating this kind of an opponent in the long run. Your victories however, are by their nature, temporary. In other words, once DRM is gone, it aint coming back. Those who would promote DRM, in the absence of the high profits it provides, will progressively lose traction.

2. They are simply right: there is no credible argument why property rights should take precedence over First Amendment rights.

The idea now should be to adapt. It is not the stronger, or smarter that nature favors, Darwin noted, but the most adaptable.

By consistently trying to adapt the environment to their wants, those pushing DRM are just showing they don't want to or can't adapt.

Well guess what, someone will adapt, then they'll clean up.