Uneconomics and Texting

September 15, 2009

George Ou’s good post yesterday on “Being Rational on Text Pricing” rightly takes to task the complaint that text messaging should be priced at marginal costs and ignore total costs, upgrade costs, or competition. It also prompts me to join in to address the issue.

Lets get to the quick here.

The folks arguing for text pricing to be based on marginal costs are trying to politically redefine traditional economics in the datatopian Chris Anderson vision of the “economics of abundance” — that because the marginal cost of computer processing, storage, and bandwidth are getting increasingly small — the price should be free!

  • I call this political thinking that “information wants to be free” and the “economics of abundance” school of thought — simply — uneconomics.
  • It ignores the real world, real economics, the reality of private property, market forces of incentives and disincentives, etc.

Does anyone think that the infrastructure that enables the instantaneous reliable delivery of roughly a billion text messages every day wherever one happens to be — costs basically nothing to pull off and thus should be free?

 

 

 

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