> This isn't the case, however, for digital goods. If there are suddenly 100 million new people who want to buy a Netflix subscription, it isn't like we are going to see the price of a Netflix subscription go up because there isn't enough Netflix to go around.
Good point but you have to think that if there’s lot of demand for Netflix which means Netflix has lot of hit shows. Say their hit percentage is 10% (which is very high). Which means they have to make more and more shows to provide that number of hits to sustain so much demand. Which means more expenses, which puts pressure on them to increase the price of subscription. Which also means actors, story writers etc can charge more (as they are only a finite number of good actors etc)
> Which means they have to make more and more shows to provide that number of hits to sustain so much demand
That's a fixed overhead, because the hit shows costs the same if there is 10 million subscribers, or 100 million subscribers. Netflix doesn't not need to have 10x the number of hit shows to serve 10x the number of subscribers!
Good point but you have to think that if there’s lot of demand for Netflix which means Netflix has lot of hit shows. Say their hit percentage is 10% (which is very high). Which means they have to make more and more shows to provide that number of hits to sustain so much demand. Which means more expenses, which puts pressure on them to increase the price of subscription. Which also means actors, story writers etc can charge more (as they are only a finite number of good actors etc)