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Re: FSF : lackeys of their corporate masters

From: Bernd Jendrissek
Subject: Re: FSF : lackeys of their corporate masters
Date: Fri, 7 May 2004 10:07:45 +0000 (UTC)
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In article <> Stefaan A
Eeckels <> wrote:
>On Thu, 6 May 2004 16:20:31 +0000 (UTC)
>"Bernd Jendrissek" <> wrote:
>> In article <> Stefaan A
>> Eeckels <> wrote:
>> >Either the investment can be recouped by the sale of the
>> >original item, or it needs to be spread over the sale of
>> >a number of copies.
>> You can't really "spread" the investment over the sale of a number of
>> copies - the investment is a sunk cost that you can't "trade in" for
>> something else.  Once it's made, it's made.
>Granted, but the original investment will have to be
>factored into the price of each copy.

You *can't*.  Or rather, you can, but by doing that you're no longer
maximising profit.  I think there was a thread here some while back
about MS's antitrust fine being "factored into" the price of their

Maybe this works:

That post actually finally made me understand what, exactly, a sunk cost

>The larger the number of copies, the lower the price of each can be.

You don't know how many copies you will sell.  What if you sell none?
What if you sell infinitely many (over infinite time, of course! :)?

>If not enough copies are sold, money will be lost, reducing the ability
>of the producer to invest in a new project.

No, you should be setting your price to maximise profit.  Then pay the
sunk costs out of that profit (via loans, bounties, whatever it takes to
achieve financial time-travel).

Why would you ever want to make less profit by selling at a higher
price, just so you can say you "factored the investment into the unit

>> You have to fund it out of your *economic profits*.
>Which are the revenues from the sale of a number of copies 
>minus the original investment, the cost of producing the
>copies, and a provision for the warranty and/or after sales

Minus shareholder dividends.  You've just defined *accounting* profit.

>> >In the latter case, if not enough revenue can be derived from the sale
>> >of copies (because someone else makes and sells them), then it might
>> >not be economically possible to produce the original.
>> You might find (or just predict, rather) that the equilibrium price
>> would be below what you need to be able to make a profit out of which,
>> *once pooled*, your mortgage on the investment must be paid.
>I'm not sure I understand what you say here. 

Basically, I'm half agreeing with you.  :)

>In any case, if the cost of producing a perfect copy is sufficiently
>low, and doesn't require access to the original (a CD with just a
>program would qualify), the creator is at a serious disadvantage if he
>needs to cover the costs of producing the original out of the sale of

Yes, and this hasn't been explained away to my satisfaction by the "to
be reproduced, it first has to be produced" crowd.

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