Making Money in Digital Money

[zem]

Anonymous writes:
> Let me explain it so simply you can't miss it.  This system does not
> work, because by the time the content is in the hands of just a few
> people, they will be bidding against each other to sell it on the net.
> Such a state of competition will quickly drive the prices down to the
> cost of reproduction, which is effectively zero.  Therefore you can't
> sell more than a dozen-odd copies of the software at a non-zero price.
> 
> If most of the people buying this software are doing so with the
> expectation of recouping their costs by re-selling, then no one will
> buy after the first few, since they will not be able to make any money
> selling at zero.  But this means that even those first few buyers won't
> be able to sell at non-zero, since these second-wave potential buyers
> were their customers.

You're assuming that resellers add zero value to the content.  They can
make a profit by providing some service over and above the content itself.

Take file sharing networks as an example.  Current networks are flooded
with bogus, incomplete or poor quality files.  A nym could build a
reputation as a validating service - a critic, if you like.  Perhaps
something like this:

Alice the music critic buys copies of new content at relatively high
prices from the creator, or close sources.  When Bob requests a copy of
a particular file, Alice encrypts it to Bob's public key and signs the
encrypted copy, selling him this 'reviewed' copy for reproduction cost +
profit.  Bob can verify he's received a good copy, but he can't
redistribute Alice's reviewed version without revealing his secret key.

(Yeah, Mallory can create a one-shot key pair with the intention of
revealing it and redistributing Alice's reviewed file.  Alice can reduce
her losses by refusing to deal with unknown buyers, or by demanding
pre-payment for 100 copies up front, or something like that.)


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