Thursday, June 10, 2010

Cost vs. Value

I’ve been sick for the last few days. (Why, yes, I’m feeling much better today, thanks for asking.) During a particularly lucid period, I decided to catch up on a lot of the RSS feeds I haven’t been paying enough attention to lately.
Anyway, one of the items that really got me thinking yesterday was this one from TechDirt: "Scott Adams: The Economic Value Of Content Is Going To Zero, But Maybe It's Okay".
Mike Masnick is a smart guy, and he does a lot of thinking about this kind of thing. And since I’ve got this little e-publishing venture launching its first issue in about four weeks, it’s got me thinking about things like cost, price, and value.
The specific bit that sunk its hooks into my brain was this:

“The economic value of that content doesn't go to zero. The price of that content may approach zero, but as we've pointed out over and over again price and value are not the same thing. In fact, there may be tremendous economic value in that content -- it's just that the economic value is realized elsewhere, by making something else gain a higher price.”
Now, as someone that’s starting a business that aims to survive (at least in the short term) by asking you to pay a price for content, that hit me right between the eyes. As I started thinking about it, I realized that I’d seen it in my own life.
That the reason I ever bought an iPod in the first place was because I was listening to podcasts in general, and Scott Sigler’s novels in specific. They were free to me, so the cost was zero. The creators of those podcasts were producing their stuff without requiring me to pay for the content up front. But the fact that I was getting this great content led to my buying a $300.00 plus electronic doohickey so I could listen to their stuff more easily. And yeah, I COULD listen to music or whatever, but the fact of the matter is that only very recently have I been using my iPod (having moved on to the iPod touch, and then the iPhone 3GS -  and the value I get from that - from the apps and everything... well, that's a separate post) to listen to much of anything BUT podcasts. Now, SINCE I bought the iPod, I’ve done things like donated voluntarily to some of my favorite podcasters, and buying Sigler’s books whenever possible, but that value wasn’t realized until much later for the podcasters, and I don’t know if it’s proportional to the value I received.
So, the question I now have to ask myself is – what kind of business, no… that’s not it… what is the value that Flying Island Press will be bringing to the marketplace? Can we justify a price of $1.99 per issue for text or audio only, and $2.99 if you want both? I know there’s VALUE here. There’s value to authors, as we’re paying (yes, it’s a token amount, but we’re hoping to grow that) for their stories. We're certainly putting in effort to make it as valuable as possible. I think there’s value to readers, because we’re bringing you short fiction. I know there’s value for people who make e-readers and audio players because we’re providing the kind of thing that makes their products more useful.
The question I keep coming back around to is… are we looking in the right place to recoup that value? Is charging for content feasible? Is the price right? Or are we missing the opportunity?

1 comment:

  1. As a publisher, Flying Island Press stands as a conduit between the writer and the reader. I think there is a responsibility to add value in several directions. Value added to the reader is in collection, distribution, and quality control of the content. The readers can trust that they will be exposed to more quality stories this way than on their own, especially for the effort. For the writers, there is the feedback, and if published, the payment, exposure, and "bragging rights." Device manufacturers and software developers get more reason for users to purchase their product, like you said about your iPod. Advertisers get more eyes on their ads if sold in the magazine, website or software.
    I suppose the best scenario would be each of these paying proportionally to the value they each receive and their means to pay. It may not be directly or even monetarily. Apple will not be sending a cut of iPhone sales, for example, but the fact that there are lots of iPhones means lots of apps, and some free, that you have installed, so you still benefit. That doesn't literally pay the bills, but does lower your personal expenses.
    But back to revenue, I don't know who should pay what, but I hope that there enough to benefit everyone.