"Econ 102" with Noah Smith and Erik Torenberg cover image

Tech Maturity and What Lies Ahead

"Econ 102" with Noah Smith and Erik Torenberg

NOTE

Value Beyond the Cost: Software's True Price

Understanding the true cost of software extends beyond just variable costs to include amortized fixed costs. The perception that software is inherently free is shifting as two major factors influence this change. Firstly, the volume of information humans need to exchange is relatively small, making the resource demands of current artificial intelligence technologies considerably higher than mere information transfer. This disparity highlights that machine cognition is more resource-intensive than human communication. Secondly, the diminishing costs of computation driven by Moore's Law are changing the landscape, as this trend is not guaranteed to continue. Both factors indicate a necessary reevaluation of how software is priced and valued in the future.

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