“The best way to make a profit is to trade something that’s scarce” as Seth Godin puts it. The concept of creating and holding on to something that is scarce has been a pinnacle concept for most of the economy — if there was a shortage of Salt in the world, and you have a stockpile you can sell, you can sell it at a premium. Simple.
You can create scarcity either by creating something which is truly scarce, such as…
… Compression algorithms by PixSense, Adobe, others
… Comprehensive technology platforms such as Microsoft, IBM, Information Builders and others
… Some unique taste, e.g. Coca Cola
OR You can create scarcity by creating the impression of scarcity, such as…
… NBC’s New Co. (now Hulu) would rather build their own video delivery network for their “premium” content rather than simply hand it over to YouTube.
… Mobilink and others invest a large amounts of money in their post-paid brands.
… Nestle’s biggest advertising budget may (probably, venturing a guess..) be allocated to their bottled-water products.
All of this is good — on the one side you’re making something proprietary, on the other you’re building a brand. Both are highly valued.
Next, I’ll write about when scarcity doesn’t make sense.