Manufactured Scarcity

Information goods are, by definition, abundant.  That is one of the principle reasons why software companies can be so extremely profitable.  Oracle’s profit margin is over 30% while your typical firm’s profit margin is 8%.  It’s easier to do that when the cost of the next unit you produce approaches zero.

Meanwhile one of the scarcity is one of the top ways to motivate action.  The economists built entire branch of sociology on that insight.  So vendors of information goods often strive to create the impression of scarcity where, in fact, there isn’t much.  When I was a kid you couldn’t subscribe to National Geographic without an invitation from a current subscriber.

I was amused this morning to get an email from a vendor.  He wanted me to know that I should act now because my limited pool of invitations to his service will turn into pumpkins soon.  Why might they turn into pumpkins, because he’s about to introduce a new improved invitation system.  I love it. Of course I would never hand out these old and dusty invitations, it would be embarrassing later when they ask why they didn’t get the new improved shinny invites.

There is a place where you get scarcity in information goods; when they are new.  New information holds the potential for new opportunities.  It creates a option space and sometimes the first settlers in a new space win big prizes.  Sometimes the starve to death.  So maybe I should hand out these invitations before the new risky ones are released.

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