Dropbox or Netflix or Spotify all will maximize profit by lowering prices to reach more people. Of course, many digital services need to be priced with more traditional demand curves. When we understand that, we can understand that edition-of-one NFTs serve as luxury goods for the next generation of the haute bourgeoisie-influencers, cryptobros, and Twitch stars. NFTs are reminders that a Serra or a Salle perched in the entryway just off the elevator is really just a certificate for the more valuable item you purchased, which is the ability to say that you own a Serra or a Salle. We pay for context, including the context of what the market says we should pay. But even that was hardly new in Duchamp’s time.

Duchamp’s revolutionary view of a urinal as salon piece has become the standard model for late capitalist emperor-clothes valuation: conceptual art not only opens our eyes to see random, mass-manufactured banalities as artwork, but to see that they’re worth astronomical sums as artwork. Any successful auction will result in two buyers jockeying for the highest possible price of a good, but why do art and NFTs go so high? Like just about any major work of art, NFTs are largely valuable both because of their artificially limited quantity and because of the context around the work (who made it, who owned it, how it’s been used publicly). What’s more interesting is what NFTs’ parabolic demand curve says about the art world-and about digital goods. We arrive at a kind of Goldilocks theorem: try not to charge too much or too little, but charge what is just right. However, if you charge a moderate $30, there would be 3000 potential consumers (total revenue of $90,000)-and if you charge a paltry $10, there would 5000 prospective eaters ($50,000 total revenue). So, using the textbook chart above, if you want to charge an expensive $50 for a meal, there would in theory be 1,000 people willing to pay for it (total revenue of $50,000), assuming there were no competitor offering a similar option for cheaper. If the company keeps lowering prices past that point, it will draw more consumers, but it will start losing revenue since all of its previous consumers will be paying a lower price as well. We can determine that point of revenue-optimization quite simply by drawing a square under the graph, making sure the top right corner intersects the demand line. Even if the supply curve didn’t exist, there would still be an ideal price to charge. This is the classic formulation: as a price goes down y dollars, x more people will want to pay for it.

Marginal revenue graph builder