Showing posts with label economics. Show all posts

Following on from my previous post summerising some concepts of free content distribution that are being talked about on the Internet: TechDirt point to a post by Kevin Kelly that describes eight ways in which scarcity can be added to digital content to make it valuable enough to pay for.

I think the first two that Kevin points out are particularly compelling:

• Immediacy: imagine having tomorrow's content, today. What is interesting about this idea is that it is the opposite of the BBC opening up its Archive, which is centred around making old content available to viewers. Which would you pay more for: the next episode of Lost now instead of next week or an episode of Lost from a month ago? The answer to this question may vary depending on the type of programme that is substituted for Lost. In the same way that Jackson 5 songs have reemerged in charts of songs sold through iTunes, there may be some programmes that people will want to watch over and over again.
• Personalisation: in a world where there are millions of websites and hundreds of TV channels, determining what and where to consume your media from can be challenge. Amazon.com has for years used technology to guide users to the things they are interested in. Imagine you could have all news you are interested in - what is happening in your local area, the latest news to feed your addiction to Le Mans racing - all of this for the same price as an in print daily newspaper. Would you buy it?
  

In a world where content is given away for free, how do you make money? Newspapers are struggling in world where news is available for free online. The music industry, Hollywood and a number of other makers of content are feeling the pain of having their content freely distributed by 'fans'.

Mike Masnick has finished a his series of posts on the economics of Free. The central thesis is simple: In the past there was a cost associated with producing music tapes, videos or newspapers. The consumer paid for this cost. Digital distribution mean there is zero cost in producing new copies of the content. This means the 'thing' that people are willing to pay for has shifted. People will now pay £350 for an iPod and free music, whereas in the past it would be ridiculous to think you'd pay more than £40 for a Walkman. The key is in recognising which elements of the experience have scarcity, i.e. there is a limited supply of. Physical goods, such as iPods and CDs are scarce. Digital content is easily copied, so is not scarce.

The theory is compelling. Media companies across the world will need to face these challenges; I suspect the those that are most capable of creating scarcity in the way they distribute content will win big.

Author of the Long Tail, Chris Anderson is proposing that everything that is free will become paid products, while everything that is paid for will become free.

While I don't quite agree with what he suggests, I can see his point: movies, music, newspapers - these are all becoming free content in the digital age.

However, I can't imagine that people will now start paying for free-to-air video and audio. Why would people move away from free to paid-for unless there is some compelling reason to start actually paying for these things?