Conventional Economics Doesnt Apply Here

Economics was developed to deal with atoms, not bits (paraphrased from NicholasNegroponte). Some very fundamental assumptions present in what people think of as "economic laws" simply don't apply here:

• Limited Resources: NetworkExternalities work the opposite way. Example: The more people use the internet, the more it is worth to any of them.

• Variable cost for another copy (or 10, or 100000) of a piece of software: practically zero.

• Cost of Transportation: With bits, there virtually isn't any.

• Moore's Law: The price/performance improvement regarding chips is so strong and predictable that it causes economic effects of its own.

--FalkBruegmann

The inapplicability of "conventional economics" to these issues is often overstated. People who are really interested in this kind of thing might look at: http://www.stern.nyu.edu/networks/site.html (warning--although this site has lots of useful information, it also has really annoying animated icons and sound effects, so be prepared!) --MatthewWilbert

I dunno, when people say, "This time it is different," I think automatically, "Hold on to your wallets." -- Anon