Pricing Digital Content

Free: The Future of a Radical Price is a new book by Chris Anderson, editor of Wired.

Priced to Sell is Malcolm Gladwell's review of Free in The New Yorker.

But Seth Godin says (for the first time) Malcolm is wrong.

I've only read the two reviews, not the book. Chris says info wants to be free and money can be made by selling around it (Google gives away search and sells ads). Malcolm says free is just another price point and somethings will still cost money. Seth says "oh yeah..."

I think about this stuff in the background a lot but don't know anything more than anyone else but I want to make a few points. Publishers made lots of money because publishing was expensive. They were the only ones that could get content out to a lot of people. Now publishing is cheap, so publishers will make less money. It's not clear if it's none, but it's going to be less.

One of the bases of economics is that scarcity commands a higher price.

One of the hardest problems in business is pricing things effectively. Too high and you don't sell enough, too cheap and you don't make enough. But sometimes, too cheap means you don't sell enough (if people find your product is too cheap to be worth it) and competition matters a lot. If various big newspapers are giving away their content online, I'm not going to pay for the Boston Globe. I might pay for the Wall Street Journal if I think their content (which at least was specialized and useful) is worth it.

Gladwell cites a case where James Moroney, the publisher of the Dallas Morning News wasn't willing to pay Amazon 70% to distribute the news via the Kindle. He was outraged. I wonder how much the reporter got.

Or how much a book author gets (not much) or a musician (again not much).

Making publishing cheap should allow the profit to go directly to the creator. Lots of people say that with more content editors will be more important to help people find what they want, but I find that amazon and netflix point me at content better than a lot of traditional reviewers. Maybe editing will be free too. If all you have to pay is the creator, maybe you don't need to pay so much.