Just because a single instance of the good has a near zero price, it doesn't mean the creation of the initial product cost nothing. Even though everyone in the universe could potentially consume a copy, the item still needs to be able to at least recoup its cost with the consumers that are actually going to consume it.

The ideal scenario would be a pricing structure where the early adopters and initial consumers would pay a higher price until the development costs were recouped (plus a profit margin), and after the development costs were accounted for, the price would shift to whatever the profit margin was calculated to be per product.

The cost-based pricing is inherently flawed as supply/demand typically governs prices, however digital media tends to stick to whatever tradition dictates, e.g. $60 for a game or $0.99 per song. It is hard to gauge sunk costs for performance art past what it costs to run the studio for X amount of time + whatever salary artists get paid.

>> The cost-based pricing is inherently flawed as supply/demand typically governs prices, however digital media tends to stick to whatever tradition dictates, e.g. $60 for a game or $0.99 per song. It is hard to gauge sunk costs for performance art past what it costs to run the studio for X amount of time + whatever salary artists get paid.

That's true. I find myself coming down on the side of "the creator should set the price" rather than the consumer. Digital media is weird in that it's very easy to duplicate the creators work, but as the "supply" is potentially infinite, I'd like the system to be a price/demand ratio, where the cost of the item determines whether the product is consumed, instead of the consumer circumventing the creator to consume the product without remuneration.

That's how it works for most people. If the cost of an item is too high, most people don't buy it. With digital media the effects of "theft" are largely overstated because pirates wouldn't buy the game if they had to pay for it. With traditional goods theft results in a cost to the creator due to physical materials costing money to produce, however digital goods have no such cost and thus the creator loses very little to pirates in practice.

That is how it works for games on Steam, for instance. Almost all games go down in price over time, some more than others.