Last week, I wrote about the new “racetrack memory” described in a recent Science paper. The commercial application of such high-capacity devices naturally falls toward high-demand media like music and movies. An interesting tangent of this is that while the devices may or may not be expensive to purchase, they will become increasingly valuable when filled. For instance, an iPod with 16GB now can hold 40,000 songs. At $0.99 each, that’s $39,600 worth of music. You own a $30,000 iPod!
It makes you wonder why Apple has to charge at all for iPods. A recent article in Wired exposes this question very nicely. Why do movie theaters charge admission when they snag $40 from you at the concession stand? What if movie theaters were free? More people would go, I’ll bet. Wouldn’t the owners make more money that way?
And what if Apple offered iPods for free? Wouldn’t they make $20,000-$40,000 off each one through music sales offered exclusively through the iTunes store? There is a rational argument here about “freeconomics,” as the Wired article terms it.
When racetrack memory makes your iPod have unlimited capacity for video, audio, and data, what will it be worth to Apple for you to own one? $500K? Shouldn’t Apple just give you one? As a Mr. Gillette once discovered, giving away the razors and selling the blades is a good model.
Scholarly publishers don’t have options like this — or do we? How would a scholarly publisher structure a business model like this?