One interesting post and one interesting news article, seemingly unrelated, but actually quite related: both contain evidence of the dynamic wonders of free, or somewhat free, markets.

1. Making markets work even better:

LucyPhone, a smart-phone app and an online tool, was born out of the all-too-common experience of waiting for hours on end to speak with a customer service agent. Instead of staying on hold, the caller can use LucyPhone to keep their place in the queue. When a live person comes on the line, LucyPhone rings the caller and connects them.

“We were frustrated consumers that were facing a problem that we wanted to try to solve,” said Tom Oristian, who founded LucyPhone last year with his brother and fellow Stanford graduate, Michael. “Why should a human being wait and listen to elevator music, wasting their cell phone minutes, when they could be off doing whatever they please?”

LucyPhone fields about 10,000 calls a week and reached a high of more than 30,000 a week during tax season. This summer, it plans to introduce new features that will help with another common frustration – navigating phone trees to reach the right person.

HT to Jeff Hummel.

2. David Friedman’s Optimistic Insights on Book Publishing:

A Kindle at $2.95 pays about $2/copy in royalties–one consequence of the fact that the cost of making and delivering one more copy is close to zero. My Salamander seems to be selling about two copies a day at this point, and it looks as though the rate is drifting up despite no serious further promotion by me, possibly as positive word of mouth spreads. Suppose I assume, optimistically, that it makes it to ten copies a day, hardly a best seller. It could maintain such a rate for a very long time without significantly reducing the pool of potential fantasy readers who had not yet read it.The result would be an income stream of about seven thousand dollars a year–not wealth, but a sizable trickle for someone willing to live at a starving artist level. For an author who could add one more book each year to the inventory, the trickle would be growing.
Perhaps what is happening, perhaps what ought to happen, is price discrimination over time. Put your Kindle up at a nominal price–$2.95, $.99, perhaps for free. Leave it up at that price until it accumulates a significant number of sales and positive reviews. Then raise the price to something more like what people expect to pay for an ordinary paperback book. Ten copies a day at $10 a copy comes to royalties in the neighborhood of $25,000/year. Get a few more books up on those terms, move to somewhere with good weather and low living costs, and retire to a life of comfort.