WILL PEOPLE PAY FOR DIGITAL CONTENT?
Last month Clay Shirky (NYU) and Stephen Brill (Journalism Online) participated in a McKinsey Online debate about whether or not people will pay for digital content.
Whilst I generally agree with most of Clay Shirky’s writing I couldn’t agree with him on his argument that absolutely no people will pay. In my opinion Brill’s argument that a mix of paid and free systems, even on single websites, is more likely to be sustainable. I think some people will pay for content, and some wont. Like with all media, there is equilibrium between the two (i.e. 1/3rd of Australian households have Pay TV and 2/3rds have only free to air TV).
Shirky argues that sites already successfully charging access in the finance industry (FT.com, Economist.com and WSJ.com) are not sustainable. This is because pay-walls stop syndication of content and there are less opportunites to create ‘media cartels’ he argues. This is a very short term view, and one that mirrors the old attitude of major recording companies now ruing Apple’s iTunes innovative music store which has put them in an enviable bargaining position as the one dominant music purchase point in the world (and sharing only 30% of revenue with record companies). Record companies didn’t see it coming because they couldn’t conceive a digital experience that users would be willing to pay for.
If you’re first to market with an innovative digital experience, you can quickly monopolise it and charge for it. Just ask Apple (iTunes), Activision (Guitar Hero) or Amazon (Kindle) who all dominate their respective medium.
Which leads me to my main point: the bigger picture is the evolution already in place where clever publishers change their models to be more profitable.
Here are some broad areas this is already happening:
* experiences (i.e. a free blog about the travel industry could derive its income from organising events its loyal readers pay to attend – this is similar to how the music industry has evolved)
* education (i.e. free digital publication selling long form content in form of education or reference material)
* hardware (i.e. free blogs and PDFs read on a paid-for Kindle from Amazon, or discounted through an Amazon affiliate program)
* platforms (i.e. free to consume directly, but micro-charges others who remix or redistribute parts of it – like software API charges)
* gaming – which actually charges for all aspects at present: multi-player subscriptions, hardware and the games themselves.
People might be less willing to pay for content, but I believe they are more willing than ever to pay for experiences instead. The challenge for large incumbent media companies is to evolve their businesses to derive more income from experiences, and learn to leverage the audiences they attract with free content more effectively.
5 Comments
Crosbie Fitch said: (on November 26th, 2009 at 7:24 pm)
Stop calling it ‘content’. It’s not filler. No-one is going to pay for ’stuff to fill their copies with’ except traditional publishers.
In the digital domain copies cost nothing, so there’s no market there. However, there is as strong a market for art as there’s always been.
You may finally realise that players won’t pay for a copy of a game when they can download it for nothing, but you don’t seem to have yet realised that players will pay for the game they want to be produced. Similarly, fans will pay for a musician to make a digital studio recording just as they’ll pay them to perform at a concert, but they won’t pay for copies of either.
The copy is not the art.
It’s tricky to grok it, but the answer’s right there.
So don’t sell copies, sell the art.
People will pay for digital art, but they won’t pay for digital copies (whatever they contain).
Birdfeed is becoming Music’s new staple diet | The Music Balloon Blog said: (on November 27th, 2009 at 1:03 am)
[...] myth that people won’t pay for music is pure nonsense. The business model is simply changing. It’s no good simply taking a CD and putting it on the internet. We live in a new age of [...]
Sam Granleese said: (on November 27th, 2009 at 12:25 pm)
@Crosbie Fitch – thanks for adding your thoughts. I realise ‘content’ is a horrible jargon term – but one we are forced to use down under for industry to understand what we are talking about.
I agree that people will pay high quality (art, if you will). And I believe what you are talking about in ’selling the art’ is what I refer to, as part of, selling an experience.
Had a look at your blog too, nice work.
SG
Crosbie Fitch said: (on November 30th, 2009 at 8:13 pm)
Sam, the problem with ‘content’ is that it creates an unhelpful idea. Producers of copies sell copies. They want to sell billions of copies. They’re not in the business of selling content. Content is what they pay artists for. All it is, is STUFF to fill up their copies with. The copy is simply a container, a very cheap box of information that amuses the children – until they get bored with it and want a box with some other stuff in it.
Notice that although the publishers pay artists for content, this is a contemptuous term. No artist worthy of the name considers they produce mere content.
Anyway, given the artist has traditionally sold their art to the publisher as something the publisher can put in copies, and that the market for copies has ended, the artist is going to have to find a new buyer.
I suggest that buyer is the artist’s fans.
I’m not entirely sure about your use of ‘experience’. An experience certainly occurs, but I don’t think this is what is being sold. I suggest that concert goers pay the musician to perform IN HOPE OF a good experience. They’re paying the musician to work. The musician offers their labour in exchange for the money of their audience. The musician hopes their audience will have a good experience as a consequence, but this is not really theirs to sell.
Similarly when paid to record a studio performance, the artist hopes that those who’ve paid for the recording will enjoy it, but they are selling their labour in producing it, not ‘enjoyment’.
So, just as 10,000 fans can pay a musician to perform at a concert, so 10,000 fans can pay a musician to record a performance in a studio. Notice that they are not paying a publisher for copies, but a musician for their studio performance – their labour.
Remember: money=work
Buying and selling is all about voluntary exchange of equivalent goods or services, so an audience exchanging their money for the artist’s labour is a dimensionally correct transaction.
MAREK said: (on December 24th, 2009 at 7:29 am)
While on holiday in Sweden I have been absolutely bombarded with Spotify.
Everyone is using it, talking about it, selling it.
And very importantly, telco’s see it as a value-add within their packages to offer the subscription for free.
Even more importantly, thousands of people pay around AUD$18 per month to use the premium service.
Must say, its so good I would pay.