Supply and demand.  It's one of the most important principles in economics.

Consequently, it's also of massive importance to marketing.

## Scarcity Drives Margins

In 2013, the average price for a football ticket was $81.54.[ref]National Football League average ticket price from 2006 to 2013 (in U.S. dollars)[/ref] For less than a hundred dollars you could attend a professional football game at just about any stadium in the country. The average price for the 2014 Super Bowl:$3,480.  That's more than a 4000% increase over the season average.

The Super Bowl is not just "the" game of the year, it's also a hugely limited commodity.  Throughout the year, you can watch games on TV and lose count of the empty $80 seats in the stands. The highly limited nature of the one Super Bowl of the year, however, means two things: 1. The game is absolutely certain to sell out 2. Tickets will go for insane amounts in both primary and secondary markets - the most expensive Super Bowl ticket available carried a price of almost$450k![ref]Super Bowl 2014: Ticket prices not dropping on eve of game[/ref]

This phenomenon isn't strictly applied to high-end entertainment.  In college, I worked at a summer camp that had a small camp store.  We sold program materials, souvenirs, and snacks.

The year Vanilla Coke came out, I had the luck to have 2 cases hidden in my tent.  My brother, the supervisor of the camp store, wanted to see if he could sell them - the store otherwise sold only Pepsi products and its nearest competitor was 17 miles down the hill.  A can of Pepsi cost $0.35; my brother priced the Vanilla Coke at$5.

He sold out in an hour.[ref]After a fit of guilt, my brother refunded the kids who'd bought the far-too-expensive soda and issued an apology.  But the fact that someone was willing to pay 1400% more for a can of soda just because it was rare shocked everyone.[/ref]

## Digital Goods Are Cheap

I own a few digital albums that claim to contain "rare" recordings of older songs performed by my favorite bands.  That these albums are, first, digital and, second, classified as "rare" amuses me.

I purchased the album once, and have the same song on my PC, my Mac, my iPod, my Droid, and my Kindle.  The music is so rare that it takes me a whopping 5 seconds to make as many copies as I want.

Digital goods, by their very nature, cannot be made scarce.

In other words, the supply of a digital product is effectively infinite.  As a result, the incremental cost of producing such a product is effectively nil.

## Race to the Bottom

As more and more vendors enter the digital space, they try to make the same competitive moves they made with physical goods.

Namely: cutting margins.

Once a digital product is compiled, bundled, processed, or uploaded, though, the incremental cost of producing duplicates drops to 0 - meaning the lowest margin is giving the product away for free.

That's not sustainable for anyone.

## Can Digital Goods be Sold Out?

I ordered a table the other day.  Actually, I ordered it over a month ago - but I won't get it for another month because it's currently sold out.  Even though it's already paid for, the fact that I can't have it right now just makes me want it more.

But can this sentiment be applied to digital goods?  Can there be a hard limit on the number of digital records sold?  On the number of eBooks available?  On the number of software downloads released?

Would this limitation raise the price?

Is there a way, short of evil DRM restrictions, to effectively limit the supply of a digital good and thus raise its value?