public goods

DeLong:

Felix Salmon: Sky News is using YouTube to host their entire “News Corp will block Google” interview with Murdoch...

I keep on thinking that there is something powerful and important to be written about Google's success and the elective affinity between non-rival commodities and advertising. In order to charge people who buy things money, you have to make the commodity excludable. As long as the commodity is rival--as long as only one person can use it at a time--setting up technological or legal barriers that also make it excludable adds significantly to its value. You can be secure in your enjoyment in a way that you could not possibly be if the commodity were rival and yet non-excludable.

A bicycle with a lock is thus much more valuable than a bicycle without.

But once commodities become non-rival, making them excludable by legal or technological processes reduces their use value--as I am reminded every time something goes wrong with the FT's automatic authentication system and it claims that I do not have a subscription.

Thus advertising is bound to be a second-best way of obtaining a revenue stream for rival commodities, and similarly likely to be a first-best way of obtaining a revenue stream for non-rival commodities.

The coming of a decent micropayments infrastructure may change this--iTunes, for example. But my father reminds me that dividing the number of songs purchased on iTunes by the number of iPods produces a number like 30