>> The same is true of anything where all the value is in the bytes -- news, film, music, the written word.
Good point. I consider those "media or content" to be "played", "read", "watched" whereas software is more a thing to be used - or a set of capabilities added to a physical thing. Video games OTOH are software meant to be played so that occupies both of my mental categories. Stop it! You're making me think! ;-)
Not so for movies, the marketing budget and press junket tours end up costing as much as the film production itself. Music is also pay-for-play, but buying off radio stations and promotional spots on Spotify is not nearly as expensive as movies.
In fact most industry have marginal cost which is zero or otherwise negligible, as was remarked by French economist Maurice Allais in his discussion about the train to the city of Calais.
Think about a restaurant: the food has been bought and will rot if not sold, the cook and the waiter are being paid and so is the rent, so the only truly marginal cost in such a scenario is the cost of the energy needed for the stove or the oven (and only for dishes that get cooked at the last minute and not upfront), which is negligible compared to all of the upfront costs.
> Think about a restaurant: the food has been bought and will rot if not sold
This is a good point to raise, though I think we can refine the meaning of "marginal" to preserve a meaningful distinction between, say, restaurant meals and software:
Although the ingredients for making the meals have already been purchased, so there is no direct causative link between an additional customer arriving and additional ingredient cost, there remains a statistical link: Ingredient purchases are done based on a statistical model of what number of customers, with what preferences, are likely to arrive in the near future. I would very roughly characterise this as: There is some duration x such that if n more customers than expected show up during the next x days, n additional portions of ingredients will be purchased sometime later (in anticipation that this increased demand is now "the new normal").
The above could do with improving, but what's important is that software (and media) do not have any such statistical link: If 100 people buy your program this month, 200 the next month, 300 the next month, there is no additional cost outlay for you to make in order to meet the requirements of selling an (estimated) 400 copies the following month.
That's entirely true. I just like to point out that the marginal cost is an impractical concept in most cases.
The only thing that matters IRL is the average cost, and as you point out, it is always monotonically decreasing for software and other IP-based businesses, which isn't the case doe for other kinds of industries.
The same is true of anything where all the value is in the bytes -- news, film, music, the written word.