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

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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.