Information might be free to reproduce, but it's not free to produce.

And people in general probably seriously underestimate the cost of production vs. reproduction. I'm pretty sure the average person thinks the costs associated with a physical book are a lot higher than an ebook and they really aren't--at least for a book involving editors, etc.

Do you have a good source on that? I have been looking around for these kinds of costs and found nothing I could trust.

I've seen various figures of the years, e.g. https://www.davidderrico.com/cost-breakdowns-e-books-vs-prin...

But all the figures I've seen suggest that printing/distribution/remainders/etc. are in the low single digits so that even if you ignore any of the costs that are unique to ebooks, there is no reason for ebooks (or for that matter paperbacks) to be significantly cheaper than hardcovers other than price discrimination.

Even before ebooks, it used to be standard for hardcovers to sell at list price for a year or so at which point they came out as paperbacks selling for maybe half the price.

Hmm. What about storage, delivery, returns, etc.? Quote from your source: "Now, I think they’ve underestimated the costs of shipping and warehousing books, and the tremendous cost of accepting returns (for full credit) of unsold books by bookstores — sometimes paying for return shipping, sometimes having the books simply destroyed, and other times selling them in bargain bins for a fraction of the cover price."

Information has a non-zero cost for the first unit, and zero cost for each unit thereafter. In other words, marginal cost is zero. These types of goods are hard to find a market equilibrium for.

I'm not sure that's true. You're describing just about every SaaS out there. (Yes, there's some per customer cost of resources and sales/support but in general relatively little compared to initial and ongoing development.) What is true however is that you need to be able to prevent people from acquiring your product/service for that very low or zero marginal cost.

That's it - ongoing development. You should constantly invest in the development of your SaaS product, unlike the example with the books

Paul Samuelson[0] makes the argument here[1] when discussing how lighthouse economics works that anything with zero marginal costs that has a price other than free is by definition an economic loss. Therefore you should find other ways to fund lighthouses, and by extension, all media and software.

[0]: https://en.wikipedia.org/wiki/Paul_Samuelson

[1]: https://courses.cit.cornell.edu/econ335/out/lighthouse.pdf - page 359, first paragraph