Any non-excludable goods, which includes public goods (which are also non-rivalrous) are very difficult to profit from. These include lighthouses, laws, national defense, clean air and water, a sustainable population of fish and game, and so forth.
I say "very difficult" because search engines, for example, are non-rivalrous and non-excludable in practice. They are "public goods". The trick is, access to the attentions of and data generated by search engine users is excludable, and this is the good that Google actually sells. But any sort of non-excludable good from which your consumers cannot generate an excludable good you can sell for others would be unprofitable.
Programming languages (mentioned by another post) are another good example of a public good: they are non-rivalrous, and while they may be excludable as long as you sell the only compiler/interpreter/runtime and sue everyone else who writes a different compiler/interpreter/runtime, in practice no one will pay for a programming language anymore so you have to make it non-excludable for it to even exist in the outside world. Likewise, Google is probably excludable in the sense that they can set up a paywall before you use it, but in practice Google has chosen to make the search engine non-excludable and it's hard to see how a paywalled search engine would work (though I won't rule it out as a possibility).
But when a non-paywalled alternative comes about (see Google Law), it threatens to eat its lunch.
I think people view for-pay information brokerage as unfair, unless it comes with service. If it's something they know costs the other party 0 marginal cost to provide, people start resenting them, which causes the paywalled service to hurt doubly hard when a free alternative comes about - even if they follow to free, people might stay away out of spite.
I think people view for-pay information brokerage as unfair, unless it comes with service. If it's something they know costs the other party 0 marginal cost to provide, people start resenting them
I think you are projecting your own personal views, or possibly views which are non-negligible in your social circle of tech-rich cash-poor twenty something males, onto the population at large. Empirically, people will pay for LOTS of things that have zero marginal cost. A short list: airplane tickets, gym memberships, list of bankruptcy sales in Chicago (my dad is a real estate agent and has had stacks of this weekly publication for as long as I can remember -- that info is expensive and worth every penny), and WoW.
I may be, but I don't think most people think of those things you list as having 0 marginal cost, as they're tangible goods or services (although the listings one is a bit sketchy, I think a lot of people view being charged a lot for access to that sort of info as highway robbery, despite its very real value). The cost of information has been anchored at $0 repeatedly over the past decade, and we now use that reference point when deciding the monetary value of new info.
I think I was probably off the mark in my post. It's likely not the marginal cost they're considering, it's likely just that $0 is the new reference cost for info in many people's minds.
Is Matlab an exception to your statement on programming languages? They are following your hypothetical of owning the only implementation, and people are certainly willing to pay for that proprietary language + implementation rather than use another. Arguably being a somewhat niche language makes its market and competition smaller, but it's a very large niche, spanning several industries and many academic institutions.
Alternatively, Matlab may succeed because it straddles a couple of different categories. It could be argued to be a language, an implementation of that language, a development environment... since it's very goal-oriented, it could even be seen as a more traditional piece of software with an unusually hard-core scripting language.
Matlab is predominantly used by engineers and scientists rather than programmers. I suspect it is an exception to most general rules that govern programming languages and environments for this reason.
All good are partially non-excludable and partially excludable (e.g. you can exclusively sell the name of a lighthouse; restaurants which exclusively sell food give away for free, to the whole city, the option to buy food. This free option has concrete value, e.g. houses near many good restaurants, or one amazing one, are worth more.). It's just a matter of degree. And solved with a little creativity.
And you can do the google trick with programming languages: Microsoft's C#, which supports its platform. Another example is postscript - a highly specific language tied to a system.
You can also make money by implementing a language that someone else created: java vendors e.g. BEA Systems; C++ vendors e.g. Borland; and SQL vendors.
Comments
Any non-excludable goods, which includes public goods (which are also non-rivalrous) are very difficult to profit from. These include lighthouses, laws, national defense, clean air and water, a sustainable population of fish and game, and so forth.
I say "very difficult" because search engines, for example, are non-rivalrous and non-excludable in practice. They are "public goods". The trick is, access to the attentions of and data generated by search engine users is excludable, and this is the good that Google actually sells. But any sort of non-excludable good from which your consumers cannot generate an excludable good you can sell for others would be unprofitable.
Programming languages (mentioned by another post) are another good example of a public good: they are non-rivalrous, and while they may be excludable as long as you sell the only compiler/interpreter/runtime and sue everyone else who writes a different compiler/interpreter/runtime, in practice no one will pay for a programming language anymore so you have to make it non-excludable for it to even exist in the outside world. Likewise, Google is probably excludable in the sense that they can set up a paywall before you use it, but in practice Google has chosen to make the search engine non-excludable and it's hard to see how a paywalled search engine would work (though I won't rule it out as a possibility).
Paywalled search can definitely work, given that you are searching an exclusive data set. Look to Lexis Nexis.
But when a non-paywalled alternative comes about (see Google Law), it threatens to eat its lunch.
I think people view for-pay information brokerage as unfair, unless it comes with service. If it's something they know costs the other party 0 marginal cost to provide, people start resenting them, which causes the paywalled service to hurt doubly hard when a free alternative comes about - even if they follow to free, people might stay away out of spite.
I think people view for-pay information brokerage as unfair, unless it comes with service. If it's something they know costs the other party 0 marginal cost to provide, people start resenting them
I think you are projecting your own personal views, or possibly views which are non-negligible in your social circle of tech-rich cash-poor twenty something males, onto the population at large. Empirically, people will pay for LOTS of things that have zero marginal cost. A short list: airplane tickets, gym memberships, list of bankruptcy sales in Chicago (my dad is a real estate agent and has had stacks of this weekly publication for as long as I can remember -- that info is expensive and worth every penny), and WoW.
I may be, but I don't think most people think of those things you list as having 0 marginal cost, as they're tangible goods or services (although the listings one is a bit sketchy, I think a lot of people view being charged a lot for access to that sort of info as highway robbery, despite its very real value). The cost of information has been anchored at $0 repeatedly over the past decade, and we now use that reference point when deciding the monetary value of new info.
I think I was probably off the mark in my post. It's likely not the marginal cost they're considering, it's likely just that $0 is the new reference cost for info in many people's minds.
Is Matlab an exception to your statement on programming languages? They are following your hypothetical of owning the only implementation, and people are certainly willing to pay for that proprietary language + implementation rather than use another. Arguably being a somewhat niche language makes its market and competition smaller, but it's a very large niche, spanning several industries and many academic institutions.
Alternatively, Matlab may succeed because it straddles a couple of different categories. It could be argued to be a language, an implementation of that language, a development environment... since it's very goal-oriented, it could even be seen as a more traditional piece of software with an unusually hard-core scripting language.
Matlab is predominantly used by engineers and scientists rather than programmers. I suspect it is an exception to most general rules that govern programming languages and environments for this reason.
All good are partially non-excludable and partially excludable (e.g. you can exclusively sell the name of a lighthouse; restaurants which exclusively sell food give away for free, to the whole city, the option to buy food. This free option has concrete value, e.g. houses near many good restaurants, or one amazing one, are worth more.). It's just a matter of degree. And solved with a little creativity.
And you can do the google trick with programming languages: Microsoft's C#, which supports its platform. Another example is postscript - a highly specific language tied to a system.
You can also make money by implementing a language that someone else created: java vendors e.g. BEA Systems; C++ vendors e.g. Borland; and SQL vendors.