Threadless & Distributed Economies of Scale
Threadless is phenomenally cool. I highly, highly recommend you check it out.
It's also a perfect example of why open-source is going to create massive
disruption - far beyond what most suspect.
The economics behind this are what I call distributed economies of scale: it's cheaper to massively distribute
production of a good than it is to massively specialize
it. This happens when the opportunity cost for a large number of individual producers is far lower than for an equivalent firm (whose opportunity costs generally rises with production).
Add to that frictionless coordination costs courtesy of the Net, and what you've got are entire industries (or at least industry segments) waiting to be absolutely vaporized
. Where will we see distributed economies of scale? Where the economics add up: low coordination costs, high opportunity costs for firms, and low aggregate opportunity costs for massively distributed producers (and, of course, cheap factors of production - which are what create lower distributed versus specialized opportunity costs). Xingtone (ringtones) is a great example.
But I like the Threadless example especially because it shows that distributed economies are not
going to be confined to digital goods - the factors of T-shirt production are cheap, so the economics hold here as well.