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Why does digital media cost so much?
app103:
There is also the complex art/science/whatever of pricing and valuing things. There is much evidence to suggest that lowering prices only works to incentivize purchasing and improve perceived value of your product *to a point*, after which it actually starts to make your product look bad and reduce its perceived value. People wonder "Why is it so cheap when it's always been expensive?" and maybe think "It must be poor quality.", etc. In some cases *increasing* the price will actually increase sales. "Rational actors" my ass...
- Oshyan
-JavaJones (July 07, 2010, 11:59 AM)
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I have done consumer product testing and related stuff for almost ten years now, and I actually participated in a study within the last year that was something like that (don't know the results), where I was shown a large assortment of brand name prepackaged, ready to eat, instant, and microwaveable convenience foods (stuff like ramen, canned chili, frozen dinners, etc.) and asked to give two prices, the first being the point at which I would consider the items too expensive to consider purchasing, and the other being the point at which I would question whether or not it was safe to eat.
I don't know who paid for this study (seemed to be a lot of unrelated brands involved), but I am sure it was worth a lot to them to know the results, and that it will somehow be used to determine what price to set for their products.
Paul Keith:
A better question is how can you create a business proposition that does transfer the extra risk to you, but does lower the WORK and WORRY on the writer while lowering costs for all involved? That is what would be needed to be adopted, as once the content is there, the people will come. As the saying goes, "Content is King". Now, extrapolate that from books to all content - music, programs, whatever.
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As the saying goes:
Content is king but... <insert marketing/copywriting/networking/etc.> is Queen.
I disagree that over the internet it works like that.
Actually it works like that everywhere but the realm changes further when it comes to self-publishing.
A central repository IMO should increase the Work and Worry of the writer.
At first, this seems counter to the desires of everyone but if the writer feels said repository is where everyone hangs out and the success of his book there is crucial to increasing the sales of their books long term, then they have more incentive to send their better books there than one that merely makes it easy. (and maybe even at a limited cheaper price like a Bits du Jour incentive style website)
In fact, the art of pricing and value still comes into play in such sites before it hits the sell button. A rotten apple can spoil a fresh one.
If a customer discovers that a book he payed for is well...not worth the price. His impression of the site changes even if he sticks around to buying something else.
Although I'm not saying the interface or business model should make it difficult for the writer to submit his work, if you make it too easy then the initial quality and majority of the content that's going to be in that site are most likely going to be low value. (relative to quality, not just price)
It's just the nature of the system. Even published books are more decentralized than a central repository of e-books. Even sites like Amazon has the benefit that when they started their site, online transactions were the ones in need of credibility - not the books themselves.
steeladept:
Fair enough, but that assumes the repository already is existing and has been proven to be a place where buyers are. You won't get the content in the first place unless you reduce the worries/work/both of the writer(s). And without that, you will never get the traffic that will allow you to ensure quality in the method you suggest.
My thoughts for this are that once you get a significant quantity of content that brings in enough people, the quality will rise (probably some sort of user ranking would be required). As quality rises, the number of people will grow. It becomes a spiral. Once you hit critical mass, it no longer becomes an issue of driving traffic, it then becomes a quality issue. Until then, it is a traffic issue (which admittedly does require quality in the first place, but traffic is a much more significant issue at first).
Paul Keith:
Edit: Sorry, it's kind of hard not going off-topic with this post because we're kind of going in the realms of what we think is needed for cheap digital media to succeed.
No, I was actually thinking of the reverse based on what I've seen many of those "submit your articles and get payed if more people click on your page" services like Hubpages end up as.
Some of these services generate high content relative to blogs but it also generates high amounts of low quality submissions that people generally don't profit as much compared to having a PPC ad on a blog when an author strikes upon a mega-article that has loads of people reading the link.
The model is slightly different but I think the model is a case where cheap and free are going to have similar trends of community failure.
These sites taper off from reaching critical mass because people started getting very little income from those site and the site themselves can't generate enough views that it either can't pay the rent and drops out or the site becomes a walled garden for generally free articles with lots of links on the articles themselves and the interest overall wanes down. (This while factoring the sites initially having a more comfortable interface than separate blogging services and the pay incentive increases commenting on articles)
This is what I meant about too many lightning needing to strike though.
There's a catch-22 between the service needing to already be a reputable service and the reverse, the service is better off not being a reputable service, gaining small amounts of loyal readers so that by the time it hits that payload of views, you already have tons of free marketers (in loyal readers) backing you up as a reputable service that it becomes a self-fulfilling prophecy of credibility.
This especially holds true if each central repository design needs to be battle tested like the case with DRM. It's the small ones that got big that most people trust to already have gone through this battle and know more about the pros and flaws of the system itself. (which then reduces the worries of people submitting to the site)
Finally the central repository can only reach mass critical point if people are actually submitting "quality reviews" into those sites rather than posting them into social networks like GoodReads.
Reviews are more crucial than books in my opinion. Especially if the reviews themselves generate comments which helps in capturing suggested books and creating a sort of crowdsourced online best seller effect for non-book readers which in themselves become an alternative view from that of say published paid reviewers.
That is where I feel the content model for e-books often fails.
Repositories are trying to build...well e-commerce repositories rather than networks.
Yet it's the network themselves that are stealing the thunder of the central repositories because they are collecting reviews and thus collecting credibility excepting sites like Lulu.com which are pioneers and early bird implementors.
If you don't believe me, here are what social networks are building up to:
Fair enough, but that assumes the repository already is existing and has been proven to be a place where buyers are. You won't get the content in the first place unless you reduce the worries/work/both of the writer(s). And without that, you will never get the traffic that will allow you to ensure quality in the method you suggest.
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My thoughts for this are that once you get a significant quantity of content that brings in enough people, the quality will rise (probably some sort of user ranking would be required). As quality rises, the number of people will grow. It becomes a spiral. Once you hit critical mass, it no longer becomes an issue of driving traffic, it then becomes a quality issue. Until then, it is a traffic issue (which admittedly does require quality in the first place, but traffic is a much more significant issue at first).
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That said, I disagree that once you hit critical mass, it no longer becomes an issue of driving traffic.
Just ask Digg/Yahoo/MySpace that question.
This doesn't mean social networks are the next gen repositories but just as in martial arts "position before submission" - it's the ones who position themselves for the explosion of e-books while establishing their userbase that have the most leverage and the ones who only provide the "ease" to set up the "content"...well I'm a bit skeptical because self-publishing is not going to be similar to how Amazon succeeded in my opinion.
(Although I do believe there's a way to circumvent this, I think most cheap e-book lovers and e-book repositories and even on the fence users don't respect a type of system until it matures or gets implemented well enough that I think it's going to be a service not built on ease but built on networking and viral marketing that will conquer the e-book market and end up convincing both sides to sell and buy cheaper e-books.)
app103:
So I asked this question on Quora, just to see what kind of answers I would get and so far, we have one answer:
Pricing constructs are based on demand, not on cost. Therefore, publishers price their products at the maximum that the market will bear, not on a "cost of materials plus markup" basis.
From that standpoint, digital media is a much cheaper option. CDs routinely cost $18-$20 until iTunes came along with a much cheaper model.
Similarly, most eBooks are much less expensive than their paper counterparts.
Users place value on the content, not on the delivery vehicle. Therefore, the value of the product is not determined by the cost to produce or distribute it, but instead by the value of the information.
Incidentally, this works the other way with physical media. Books will be sold on remainder to get rid of excess inventory, even if it means taking a loss on the book. Readers determined that the ideas in the book were worth less than the actual paper it cost to print them on. This reinforces the notion that price is not determined by inputs, but rather by value created.
This has also given rise to a much larger self-publishing universe, where individual authors and artists can control pricing and distribution in the ways that make the most sense for them. See eMusic, Cafepress, and Lulu for some examples.
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http://www.quora.com/Why-does-digital-media-cost-so-much
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