SMU economics professor, Michael Cox, and "Would You Give Up the Internet for 1 Million Dollars"

SMU economics professor Michael Cox discusses tangible vs. intangible worth and brings to light the importance of the rich investing early on in a product's life span. 

How do you make your product so ingrained in consumers' lives that they can't imagine life without it? Or so important that they would pay anything to keep it? How do you make the intangible worth of a product greater than that of the tangible?

Since the advent of the internet, it has become a consumer necessity. Most cannot imagine a life without it, and many would pay thousands, or millions, relatively, to keep it.

How did that happen? And how do we do it again?

According to Cox, the internet (or any other technology) would be no where without initial investors. It is most likely that these initial investors are in at least the top 10% of the county's annual income rate.

"During those first few years products are very expensive as those development costs are paid. If everybody waited, then the product would die on the vine, it would never make it to the market. So somebody is paying that cost of the first product to keep it from dying, and that's the rich."-Michael Cox

Never before did I realize how important is the role of the rich in propelling a product past its introduction stage and into a place where it becomes more accessible to the main stream.

Think about it...

...If there weren't rich people around to buy the first iPod, would it be as accessible and as commonplace a product today?
...If the upper middle class wasn't around to buy the first versions of cable TV, would be what it is today?
...How about flat-screen TV's? Or MacBook's? Or just computers in general?

Without rich people buying these products when they are still expensive (and admittedly slightly faulty), they wouldn't live to see the mainstream. Product developers need the money received from initial buys to improve the product, and eventually, make it cheap enough to be purchased by the masses, and good enough to be wanted by them.


PS- I'm sort of getting into economics lately. Part of why I love advertising is the psychology behind creating the "want." Economists are interested in that as well, and conduct research to determine what might spur consumer interest or lack there of. There's also a bit of storytelling in economics... extrapolations, if you will. Personifications. Ways to make the numbers, graphs, and charts come to life. And that is essentially what advertising is: making a product's benefits come to life in a way that excites emotion from the consumer and creates a connection that causes desire and an ultimate purchase.

Hm... maybe I have more in common with all those economics majors than I thought!