Artificial scarcity

Oh Joy! Disco Ball!I don’t know how many of you have Facebook, but I do. Here in the US it turned out to be a big thing and at the end of the day it is a nice procrastination tool.

Some time ago Facebook added a gift feature allowing people giving their friends little icons as presents. If you give someone a present, it would show in their profile and they will know whom it came from. So far so good. Now, after a promotion period they started charging $1 per icon and the question is “why?” Why would anyone pay $1 for a 1K image of a toilet paper roll? Apparently people pay for the keep on selling.

But the story doesn’t end here. Now they have a promotion similar to the one you see in the illustration. Indeed, there are limited editions of the icons now! Only 1 million of disco ball gif files are out there! Oops… 1 million and one if you count the one i posted here. And i still keep asking myself “why”… Why would i give someone an artificial disco ball? Why would anyone like to get one? Why would anyone would actually pay for it? And what does the “limited edition” feature add to the value of the icon?

The last one is absolutely beyond my comprehension. What’s the idea of selling an illusion of a limited edition of gif files? I think there is something fundamental i am missing here.

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4 Responses to “Artificial scarcity”

  1. Nadya Says:

    I fail to fully understand this facebook gift thing too. But naive as I am, I first thought that maybe they actually mail you something. :) Like a hard copy of the limited edition icon!

    Actually, maybe the whole thing is about the only free gift you get to give when you first sign up? Because it’s such a stupid thing to pay money for, this free gift becomes really the ONLY one you can give on facebook, so it becomes something special! And you take your time thinking carefully of how to ‘invest’ it. I still haven’t given away mine – I like seeing it there and having the illusion of choice.

  2. Michelle Says:

    It caught my attention when I saw the Disco Ball too. =)

    I tend to agree with Dima that there are people paying it for keep on selling.

    Given you can answer the first 3 ‘why’s, the last ‘why’ you have is the easiest. Facebook can’t say it will be expired, because this virtual thing is supposed to be there FOREVER. She needs a reason to renew the “gift” and those people who bought, pay again. Nothing economics or value adding behind it.

  3. lisa Says:

    Just like any other “limited edition” marketing. Making them seem exclusive apparently adds to their value! I fail to personally understand many aspects of consumerism but regardless of my unwillingness to participate there is no shortage of people who do! So there can only ever be a million shiny disco ball gifts “authentically gifted” in Facebook. Just like there could only ever be, say, a hundred limited edition [brandname] [brandmodel] handbags, cheap knockoffs aside. Just because it’s so easy to make a cheap knockoff of the GIF image doesn’t make the economics that different I guess. I do hope you won’t be offended that I imply your GIF image is a cheap knockoff — you did a good job and it’s indistinguishable from the genuine thing ;)

  4. Dima Says:

    Well, i can see how limited edition can be valuable with collectible and/or handmade stuff, but i agree that when you talk about manufacturing it is loosing the much of its sense. I think i was amused by limited additions of files because in this case, unlike regular manufacturing, the reproduction costs are literally zero. I think this what makes this case particularly absurd.

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