> > "The natural cost of information is the marginal cost of copying."
> Wow, no, this is a fundamental misunderstanding right at the core of the issue.
It is, because it is also a misstatement. The actual rule is "unit price will trend toward the marginal cost of an additional copy", but that elides a couple of caveats; first, this only holds true under conditions of a "perfectly competitive market"[0]; second, over a sufficiently long term ALL costs eventually become marginal costs[1].
[0] Suffice it to say that most businesses try to leverage or introduce imperfections in the market (aka "sustainable competitive advantage").
[1] Instead of thinking about the "sunk cost" of building a factory, consider the (eventual) marginal cost of building the next one.
I agree with all of that, but the very crude issue here is one of sunk/capital outlays vs. unit costs.
Good software requires incredibly investment, even if the 'unit cost' is nothing.
Books aren't sold for $25 because of the cost of paper.
I think we are wired to think in such material terms, which is why maybe why we have an instinct towards the notion of 'free' software as being somehow special, when really it's not that much different than many other things.
> Good software requires incredibly investment, even if the 'unit cost' is nothing.
True. But with open source that investment is of labor (sometimes it is volunteer labor, in part), and is usually incremental, there is often little in the way of large up front capital outlays.
Most of the exceptions would be a commercial company making a "Big Bang" initial release.
This is just to say that the concept of "marginal cost of producing another copy" needs some contextual adjustments.
For F/OSS, it might be better to think instead of "the marginal cost of making a new release", since at the point of making the release the marginal cost of all subsequent copies becomes zero.
> Wow, no, this is a fundamental misunderstanding right at the core of the issue.
It is, because it is also a misstatement. The actual rule is "unit price will trend toward the marginal cost of an additional copy", but that elides a couple of caveats; first, this only holds true under conditions of a "perfectly competitive market"[0]; second, over a sufficiently long term ALL costs eventually become marginal costs[1].
[0] Suffice it to say that most businesses try to leverage or introduce imperfections in the market (aka "sustainable competitive advantage").
[1] Instead of thinking about the "sunk cost" of building a factory, consider the (eventual) marginal cost of building the next one.