The Value Of Legitimacy

Most economics are based on scarcity and desire. We want clean drinking water pretty badly, but there's so much of it that we've made it effectively free in many, many places. We want diamonds some, sure - oh, and they're rare; and as a result, expensive.

And that's pretty good, as far as it goes. But we can make artificial diamonds pretty easily now, and make them indistinguishable from the real thing. Wouldn't that destroy the rarity entirely? Turns out, not so much - we require that artificial diamonds be labelled, see. And that's a distinction of legitimacy, which is something we're going to need to get a lot better at managing in the future. This is a strong relative, in some way, of the strange quest for the authentic that moves in many circles (some of which are purely marketing-created, but some of which are... authentic).

So, some equating:

Our desire for digital merchandise, for information products like music, programs, and so on, has not decreased. If anything, it continues to grow.

The scarcity of information products has dropped to zero, or so closer to zero as to make no nevermind. We are in a post-scarcity age for information. Living in denial of this fact, scrambling to create a scarcity in order to sell one, is one of the new games in town. I'd argue that it's a game for dumbasses, but Microsoft is playing it anyway; they must know something I don't. Or they're relying on people to be clueless. Or both.

What digital companies are selling, in truth, is authenticity and legitimacy. You give them money in order to possess their permission. And this is not a negligible asset. As a general example, iTunes is not significantly more reliable, nor significantly faster, than torrenting sites. PDF stores online aren't easier to use than rapid upload sites.

The question of an online sale is not how much you think your product is worth. The question is how much a customer group would value having a legitimate product, because the "legitimate" part is the part they're being sold. And the answer isn't as simple as one might expect - customers intending to use something one-time and then discard it? They don't need legitimacy. Customers for whom the item is a social product; something they will talk with their friends about? They have plenty of value for legitimacy unless their circle has already given up on legitimacy for that product as overpriced, stupid, a dolt's game.

The value of legitimacy in an electronic product is an output of the use of that product, and of the dialog that surrounds it.

That's the new market, as I see it. It's not quite the one most major companies seem to see, but there you have it.