The problem that this sets is the fact that the stock market and all markets for that matter are driven by scarcity. That is there is a limited amount of a certain product and that people must offer to buy it at different prices to obtain it. In the digital forum - scarcity is not an issue. The copyright holders can offer an unlimited amount of songs at their acceptable price, the supply is perfectly elastic. The problem here is that someone else buying the song online doesnt stop me or anyone else from buying the exact same song - the supply is unlimited. The answer is that I have no incentive to offer a higher price for the song because scarcity is not an issue and the music companies would be smart to limit the amount of download of particular songs in order to drive up prices of particular songs in a market setting. For instance if I am a big fan of the Killers and I know that world wide the killers are only going to sell 100,000 songs I would pay a higher price for the songs that if they were unlimited. I just dont see how this market system for music would work. The most inreagueing part of this whole thing is that if licenses for songs wre tradable, it would be interesting to see how that would play out. I think it would leave the music industry with a huge problem, say for instance the price of each song incresed when its popularity increased, if I baught the song early on at a low(er) price than what it is currently at, I could sell my license at a lower price than the record companies but higher than what I paid, thus profiting. This would lead to secondary music dealers cornering the market - buying up large amounts of music when it first comes out and reselling it later at a higher price, cutting the music industry out of the sales. Just my thoughts.
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The problem that this sets is the fact that the stock market and all markets for that matter are driven by scarcity. That is there is a limited amount of a certain product and that people must offer to buy it at different prices to obtain it. In the digital forum - scarcity is not an issue. The copyright holders can offer an unlimited amount of songs at their acceptable price, the supply is perfectly elastic. The problem here is that someone else buying the song online doesnt stop me or anyone else from buying the exact same song - the supply is unlimited. The answer is that I have no incentive to offer a higher price for the song because scarcity is not an issue and the music companies would be smart to limit the amount of download of particular songs in order to drive up prices of particular songs in a market setting. For instance if I am a big fan of the Killers and I know that world wide the killers are only going to sell 100,000 songs I would pay a higher price for the songs that if they were unlimited. I just dont see how this market system for music would work. The most inreagueing part of this whole thing is that if licenses for songs wre tradable, it would be interesting to see how that would play out. I think it would leave the music industry with a huge problem, say for instance the price of each song incresed when its popularity increased, if I baught the song early on at a low(er) price than what it is currently at, I could sell my license at a lower price than the record companies but higher than what I paid, thus profiting. This would lead to secondary music dealers cornering the market - buying up large amounts of music when it first comes out and reselling it later at a higher price, cutting the music industry out of the sales. Just my thoughts.