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The Height of a Payment as an Indicator of the Value of the Service

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Please choose what this post is worth to you and donate! 😉

A former colleague of mine recently read a Dutch article about Martijn Aslander and the new economy. Whenever Aslander does a presentation or talk, he lets the members of the audience decide what the value of the talk was and pay him accordingly. My ex-colleague was fascinated with the concept and is now wondering whether he should do something similar. He especially likes the idea of having a more direct way of getting feedback about what he does. He has asked me what I think of it as a business model. I will try and outline my thoughts in this post.

Aslander is inspired by Radiohead’s In Rainbows album and probably by authors like Cory Doctorow who gives away electronic versions of his book under a Creative Commons license. The reason why this can work as a business model for music and literature is twofold:

  1. The costs for the production and delivery of digital goods is so marginal that it can be considered as being zero. Once the CD is finished there are no real costs to Radiohead for delivering an extra copy to someone.
  2. The problem of content creators is not that everybody pirates their content, it is that nobody knows about their content. Giving away your content can help build an audience, who then might be willing to pay for others things that you do or have (e.g. go to your speech or concert). Currently this is an usual model, which by itself also generates interest (this is why it can work for Aslander). Usually the money isn’t made with the content that is given away on a voluntary donation basis, it is made with the other opportunities that become available when you have a larger audience.

I personally have reached a stage where I expect digital information to be free. If there is no marginal costs to something, then I don’t really see why I would have to pay for it. This is why I like free software so much: it enables me to use software freely and legally. It is my belief that this is the future of music too, as more and more people find it absurd to pay about a dollar for something that costs absolutely nothing to deliver.

This begs the question of how content creators can make a living for themselves. Kevin Kelly (who has been thinking about the new economy for over a decade now) has written an fascinating manifesto about the things that people will always be willing to pay for, even in a digital economy with abundant and free copies: Better Than Free. One of those things is embodiment. People will pay to see you in person.

Back to my former colleague. Should he try a business model in which he asks the participants of a workshop to pay him what they think it was worth? I don’t think he should, unless he wants to use it as a marketing gimmick. What he does has a very real value. When he does a workshop he needs to be physically present to make it a success. His time is worth something. Also, there is an optimum amount of participants for a workshop. If you get any more participants, you negatively impact the quality of the workshop: an extra space has a real and tangible cost. You cannot say the same for a song download…

This leaves open the question about how to get more direct feedback. I will have to address that in another post.

  1. Hi Hans,

    Nice blogpost that made me think (10 points for that!). Interesting idea that you expect digital content to be free. I don’t feel that way because the cost of distribution/delivery is not the only aspect that creates the value and the costs. E.g. if you are an author it would be nice if people are paying you for your e-books. It is not his/her job to earn money by giving presentations about the book. And as a consumer I’m not interested to hear or see the author (mostly), I just want to read his/her book. So I’m very willing to pay for good e-content and also software.

    IMHO such a model cannot be a marketing gimmick because it is driven by something else than marketing ideas. So if that’s the only way, it is a bad way.

    Hans, thanks for writing this post and after the next one (about the direct feedback) I will evaluate the value of the post 😉

    Marcel

    • Hello Marcel,

      Well, I guess in some ways we disagree. Did you get a chance to read Kevin Kelly’s short piece yet? It is very interesting. He summarises:

      When copies are super abundant, they become worthless.
      When copies are super abundant, stuff which can’t be copied becomes scarce and valuable. When copies are free, you need to sell things which can not be copied.
      Well, what can’t be copied?

      There are many digital products that I do pay for (e.g. making this hosted WordPress blog appear on my own URL and ad-free, a voluntary donation to Leo Laporte’s podcasting network, an interesting research article form the Harvard Business Review or software as a service in the form of DabbleDB). In all cases they seem to fit one of the eight generatives that Kelly describes.

      I guess I am putting two things together that don’t necessarily fit: the business models based on “free” and the idea of using monetary feedback as a measurement of value. Maybe I did that because Aslander does it in his interview. Well, I’ll start thinking about direct feedback for a next post!

      Thanks,

      Hans

  2. As we are culturally colleague / friends I felt I had something to share. We have a television programme that applies a similar concept. Celebrities and their friends/family and sometimes co-workers work along side Celebrity chef Gordon Ramsay in the F Word kitchen. The cooking team score according to the number of the 50 customers willing to pay for each course, starter/main/desert. Second, one of my favourite coaches and respected speaker applies a simple statement for engagements. He only ever accepts a propsective employers first offer, never an improved offer. If he was worth the improved offer and the company thought he was worth it, why did they not offer that in the first place.

    As a teacher, how many of my students would be willing to pay for their education? I am not sure education is quite ready for that model.

    Thanks, enjoyed the post.

    • Thank you very much for your comments Kristian!

      I really like the idea of the TV show. I guess that works as it aggregates the view of the audience and some celebrities will have to leave. I wonder how you would do it when you are teaching a workshop. What if half the people love what you are doing and the other half don’t?

      You are not sure education is quite ready for that model… I am very sure it isn’t ;-). At least not for primary or secondary education. However I have a feeling it might be relevant for tertiary education. If I go to a university now it does have a very real cost for me and thus I have very real expectations. Most universities currently do not seem to provide enough value to me, so I am not studying at the moment: a real shame.

      Cheers,

      Hans

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