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A captive market is a happy market, no?

Not for consumers, obviously?

This is not a captive market. If someone were to invent a free codec that performed similarly and had both software and hardware reference implementations, the market would adopt it very quickly.

This is a market that is voluntarily paying for perceived value.

Please show me where I can pick between similar consumer devices where there supported codecs are easy to find, or, better yet, I can pay extra for non free codecs.

The few HNers who actually care about these things do not make a market that vendors think is worth serving, most likely because it would be unprofitable. There’s not going to be a market if sellers don’t find it profitable.

That's exactly my point: those options don't exist so there is no hard data on what people prefer. It's silly to say the market decided when it's only speculated on the most profitable path, but that doesn't make it the only profitable one.

There have been many attempts to make a market for free hardware, particularly in the mobile phone market. All have failed thus far.

Libre hardware is not the same as a device supporting only royalty free or otherwise libre codecs.

You’re splitting hairs. Customers, by and large, just do not care.

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