The dotcom bubble; the telecoms crash; the music industry bust; the advertising downturn; the e-publishing revenue stagnation; the PC slowdown; the wireless saturation; the semiconductor slump; the newspaper recession; the R&D retrenchment: And the question is, why do these problems sweep over the information sector so regularly？
The prevalence of these problems points to fundamental issues beyond a specific industry or short-term period. Instead, we need to recognize that the entire information sector--from music to newspapers to telecoms to internet to semiconductors and anything in-between--has become subject to a gigantic market failure in slow motion. A market failure exists when market prices cannot reach a self-sustaining equilibrium. The market failure of the entire information sector is one of the fundamental trends of our time, with far-reaching long-term effects, and it is happening right in front of our eyes.
The basic structural reason for this problem is that information products are characterized by high fixed costs and low marginal costs. They are expensive to produce but cheap to reproduce and distribute, and there-fore exhibit strong economies of scale with incentives to an over-supply. Second, more information products are continuously being offered to users. And information products and services are becoming more "commoditized", open, and competitive. The main result of these factors is that prices for content, network distribution and equipment are collapsing across a broad front. It seems to have become difficult to charge anything for information products and services. The music industry is unable to maintain prices. Online publishers cannot charge their readers, except for a few premium providers such as the FT. International phone call prices have dropped, and with internet telephony will move to near-zero. Web advertising prices have collapsed. Much of world and national news is provided for free. A lot of software is distributed or acquired gratis. Academic articles are being distributed online for free. TV and radio have always been free unless taxed. Even cable TV, at 20,000 program hours a week, is available to viewers at a cost of a 1/10 of 1 cent per hour. Newspaper prices barely cover the physical cost of paper and delivery; the content is thrown in for free.
All these are symptoms of a chronic price deflation that shows no sign of abating. It is a good deal for consumers, including those of developing countries, but it spells disaster for providers. The price for their information or distribution is dropping towards marginal cost, which is close to zero and typically does not cover full cost. No company can afford to do this for long. And the more efficient the information market becomes due to technology, the faster this process advances. And there is more trouble ahead.
The problems mentioned in the passage ______.
A．last only in a short span of time
B．are widespread and long ranged
C．are caused by improper management
D．exist in the minority of the information industries
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