(2009-04-24) Wenger Limited Edition Digital Music

Albert Wenger: Limited Edition Digital Music. This is another post in thinking out loud about the economics of abundant and digital goods. In particular, I am interested in mechanisms that allow producers to recapture some of the consumer surplus even when the price for (a version of) the good is zero.

In photography, there is a well established difference between limited edition prints (sometimes a single one) made by the artist and reproductions of the photograph in catalogs or online. I believe it is possible to create a similar mechanism for digital music.

What identifies the limited edition print of a photograph is usually a combination of serial number and signature by the artist.

This will be critical for limited edition digital songs. The easiest way to do this would be for the distribution service itself to keep track of information about who has actually paid for a limited edition copy.

It is important to note that this is completely different from DRM. The buyer could freely transfer the file between devices, etc. They could put it up on their own web site and stream it. None of this would reduce the value to the purchaser because it does not increase the number of authorized copies that have been sold and any claims of having an authorized copy can be compared against the sales records.

An artist could choose to keep the edition really small and auction off only a few or make it larger and set a fixed price. All the while the artist can continue to distribute unsigned copies of the file for free!