Digital music players and the free market


A great explanation of why free markets benefit consumers and why
Just passing through for the moment. I have to go be sociable for a couple of hours if I want help painting on Tuesday and Wednesday. I think I'll be home in a bit, but I am not sure, and I am going with some friends to see 300 later tonight.

Anyway, I wanted to point out this Daniel Eran piece at Roughly Drafted. It has this great explanation of the free market and how it benefits consumers.

And yes, Roughly Drafted is an Apple centric web site, but that doesn't mean he isn't telling the truth. Emphasis in original.

It's not billionaire executives nor genius engineers who decide whether the world's resources will be used to design and build iPods or Zunes. It's the millions of consumers who choose to buy them. Companies in Redmond and Cupertino simply build their products, advertise them, and then wait to see what the market decides.
 
The Campaign for Dollars
Markets provide an efficient and fair way to determine how the world's resources will be used. If a company delivers a poor product, or simply fails to campaign for it in the market with effective advertising, consumers will vote with their dollars for alternatives instead.
 
Earning the votes of consumers in the market is a powerful incentive to develop better products. The market rewards companies that deliver the best work, whether best happens to mean cheapest, highest quality, most reliable, or whatever balance of features appeals most to consumers.
 
Maladies of a Monoculture Market
Markets generally work well to sort out who should be rewarded with profits, but things can go wrong if choice in the market is restricted:
 
•When companies only care about being cheap and efficient, buyers end up with a dreary monoculture and are cheated with poor quality, while artisans and workers are exploited. Example: Wal-Mart.

•When companies interfere with a market by fixing prices or negotiating cartel pacts, consumers are overcharged and get a poor selection, while artisans and workers are exploited. Example: the RIAA Labels.

•When companies monopolize a market and prevent any natural competition from occurring, prices stay high, innovation lags, and the threat of government regulation looms. Example: Microsoft.

•When governments interfere with markets and try to set prices artificially, it commonly results in just the opposite of what was intended: production stagnates and prices inch up anyway. Example: The 70s.
 
All of these problems can be corrected by new sources of competition and choice. More competitive choice in the market means more incentive to develop better products, more pressure to lower prices, and less need for the complications of government regulation.

The rest of the article is pretty good too if you are interested in the Zune vs. the iPod, but it is that bit about the free market and choice I really want to stress.

— NeoWayland

Posted: Sun - March 18, 2007 at 01:08 PM  Tag


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