The "law" is just an equation, y = 1/x. It doesn't just apply in some cases or to some people, it applies in all cases. Though subjectivity & opinion can bend your world any way you want, this doesn't change reality. "Diminishing returns" (1/x) applies in a wide variety of applications and natural systems.
In the plot of -1*(1/x) below (-1 is just to flip the plot horizontally as people, in this case, are trying to maximize y), the x axis would be cash, the y axis would be "perfect sound quality".
