Ahhh the age old system which conveniently explains how the business of selling goods and at what price works. The less there is of something, the more valuable it is; that’s your supply. The more people want something, the more valuable it is; that’s your demand. But how does it work when the supply is infinite?
With digitally distributed products there is an infinite supply of the good in question, supply effectively becomes insignificant in the equation. It is now all down to how “elastic” the demand is; the more elastic the demand for a product is, the more it changes with a change in price. The iOS game for example is extremely elastic, it could start at £2.99 and sell ok, but sell ridiculously well in the inevitable £.69 sale, demand significantly increases . Things like bread, water, milk, petrol, cigarettes – be it by a basic need or by a necessity to addiction/circumstance – are in elastic; the price will change but demand will change very little.
But it would seem that Demand is mo alone, there are still two factors in play, Supply and Demand has evolved into Greed and Demand.
Now I don’t necessarily agree with this description, I’d say that greed and demand, or rather greed and pricing, have and always will be intrinsically linked. People will always charge the maximum they can get away with, but the price increase of Whitney Houston albums on iTunes following her death ruffled a fair few feathers; such as those of fellow Hombre Andy.
I’d not be one to say that it wasn’t incredibly poor taste to profit from someone’s death, but business is business and business is greed. On a basic level, when a singer dies, sales of their albums go up. This isn’t related in any way to the price point of the albums, it’s a public response to grief, demand is in theory inelastic.
If the price won’t affect the demand, why not put the price up? It would be stupid not to, right? I’m not defending it, it’s incredibly poor taste, as previously stated, but it’s just business. If you can’t charge a few pence more for a singer’s songs who has just died from customers who are only buying the singer’s songs because they have just died, when can you?
When something is popular, for whatever reason, it becomes more valuable, unpleasant though this can sometimes be.
Here’s a question, who was keeping an eagle eye on the price point, no doubt anticipating the rise after Whitney Houston’s death, ready to pounce on the issue? No one can have any kind of moral high ground in this, we’re all debating, discussing, profiting, high ground climbing off the back of a tragic loss of life.
Hopefully the profits Sony and Apple are making off the price increase will be donated to a relevant charity to Whitney Houston. In the mean time, so long Supply and Demand, hello Greed and Demand. But have you been here all along?
This post is from the new blog I’m contributing to, Five Hombres