The price of cotton, the cost of jeans, the value of digital media

Please strike the one word which does not fit here:

  • cotton
  • jeans
  • digital media

Right. Jeans is the wrong one. Because cotton and digital media are commodities, but the jeans a value added product.

Exhibit 1

As Joe Weisenthal insightful question in Business Insider: Guess What Surging Cotton Prices Do To The Cost Of Blue Jeans. In the last year, cotton prices almost doubled. As jeans are (or: should be) mostly cotton, what would be the effect on the retail prices of let’s say a Levi’s Ex-Girlfriend Jean (no kiddin’).

The effect is actually: zilch.
Levi’s bill of material rose from $1.41 to $2.53 – the final product cost $65.

Exhibit 2

Remember this infographic?

It tell’s you one thing: musician’s are cultural cotton pickers. Under current conditions, the (monetary) value is created elsewhere. And there’s not even a commodity bubble for music in sight.

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