David Levine & Michele Boldrin On New Business Models Like CwF + RtB

from the explain-away... dept

Reminder: As stated below, our special promotion where you get a free hoodie or lunch with Mike for buying both the Music Club and the Book Club package ends tonight! Don't miss out...

With our CwF + RtB experiment in full swing, we've asked some of the participants involved to provide some guest posts, including their thoughts on the experiment itself. Michele Boldrin and David Levine are two well-known economists who recently published Against Intellectual Monopoly, which is a part of our Techdirt Book Club (which gives you Against Monopoly along with four other excellent books, all signed by their authors). If you order both the Techdirt Book Club and the Techdirt Music Club before midnight PT tonight, we'll throw in a free Techdirt hoodie, or a free lunch with me (Mike). In the meantime, here's the guest post written by David and Michele:


On new business models for authors:

With copyright vanishing de facto, even as legal protections become more extreme, the question of how to get paid for creation without the monopoly granted by copyright becomes more salient. Historically one of the most important sources of revenue has been "complementary sales" -- the sale of something other than the copy. For example: in the case of music -- live performances; in the case of movies -- theatrical performances. In the case of news and blogs advertising has historically been the key, but the selling of the author is another potential source of revenue as the industry becomes more decentralized and competitive. Signed copies of books by authors is one possibility we'll be interested to see, but we also expect successful authors to extract substantial income from public speeches and similar events. Popularity, it seems clear, pays off quite well. Frankly, the two of us have a lot of confidence in the ability of the market to generate new and creative solutions even if we personally have no ability to predict what the specific outcomes will be. This period of experimentation with business models is essential and it will be interesting to see which models catch on. In the case of small comic strips the answer is already in -- comic strip based t-shirts amazingly enough turn out to be the trick.

Why we wrote Against Monopoly

The purpose of copyrights and patents is to grant a short-lived monopoly to encourage creation and innovation. We were led to write the book when we discovered that existing economic theory greatly exaggerated the importance of these temporary monopolies in providing incentives. This lead us to put into context a lot of data and case-studies showing that competitive markets work and work well even without these monopolies. The book (ironically under copyright, although a free copy is always available online) tried to put this all together in a way that would be comprehensible for a non-economists (that is, we tried to avoid the mathematics and jargon that economists love).

And thanks to Mike for the entrepreneurial spirit we academics can only admire.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, Aug 3rd, 2009 @ 5:57am

    We can all expect a huge round of applause from the choir. The rest of the audience is somewhat less impressed.

     

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      Xanthir, FCD (profile), Aug 3rd, 2009 @ 6:25am

      Re:

      Mind expositing why (presumably) you aren't that impressed? Or are you just here to shit on things and run?

      I suppose I should be impressed that your comment is more than a "FRIST!!!1", but this is honestly not much better.

       

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        Dark Helmet (profile), Aug 3rd, 2009 @ 6:36am

        Re: Re:

        THIRD!!!!1

         

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        Anonymous Coward, Aug 3rd, 2009 @ 8:33am

        Re: Re:

        It's because the material isn't any more impressive than High Times running a "legalize weed" piece from the usual suspects. It's at best advertising for techdirt's "Sheep sale" (buy stuff, get nothing but a warm feeling and a t-shirt), and at worst it's damning of the music business without offering a clear alternative for the masses.

        It's sort of like saying "get rid of the NFL, because the stuff the 12 year olds play at the park is football and it's free too!".

        So as I said, the choir will applaud the preaching they are use to, and the rest of us will look at it for what it is.

         

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          Chronno S. Trigger (profile), Aug 3rd, 2009 @ 8:50am

          Re: Re: Re:

          OK, I don't usually do this, but I have to call you an idiot.

          Using your NFL metaphor; This article is more about how the NFL can still make money even tough football is played by 12 year olds at the park for free.

          "buy stuff, get nothing but a warm feeling and a t-shirt"

          That quote would suggest that you're willing to purchase things just for the warm fuzzy feeling. This is one way to make money off of free, but the ideas put forth from Techdirt are more about providing something that people are willing to pay for. T-Shirts are one way to do it, physical copies are another in a long line of examples suggested by Techdirt and commentators.

          Maybe you should check out the CwF + RtB offering at the top of the page for some more examples.

           

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            Anonymous Coward, Aug 3rd, 2009 @ 8:54am

            Re: Re: Re: Re:

            Sorry, you have it backwards.

            They are telling the NFL to go away, and replace them with 12 year olds (replacing professionals with total amateurs). They don't want the NFL to make money, they think they make too much money, they want them to stop, and be replaced with free. Oh yeah, they will sell t-shirts.

            I don't need to pay for warm fuzzy feelings. Why would I want to buy a t-shirt to prove that I need to pay to feel good?

            "
            Maybe you should check out the CwF + RtB offering at the top of the page for some more examples."

            Been there, did that, and I ain't paying for the t-shirt. Sorry, but the real math is "CwS + OTSS" (connect with sheep, offer them something stupid) and that equals income for no reason. It's not any different than running a classified ad that just says "send $5 to " and lists a PO box. If enough people do it, is it a valid business model?

             

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              Chronno S. Trigger (profile), Aug 3rd, 2009 @ 9:16am

              Re: Re: Re: Re: Re:

              And thus the reason I call you an idiot. How about you go and get educated and then come back. You obviously don't know what you're talking about. Maybe you should read one of those books that are offered in the CwF + RtB. They will explain to you why you are wrong in interpreting what is being said but will also offer examples of the correct use of CwF + RtB.

               

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                Anonymous Coward, Aug 3rd, 2009 @ 9:33am

                Re: Re: Re: Re: Re: Re:

                "but will also offer examples of the correct use of CwF + RtB."

                The correct use should be obvious. If it isn't obvious (or you have to follow a complicated system to make it "work") then it is unlikely to be a very natural process.

                As for the books, my usual answer: The guys who are pushing "FREE!", end of copyright, and end of whatever need to ship me the book for free, because after all, it's clear they don't value their own work, so why should I?

                 

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                  Anonymous Coward, Aug 3rd, 2009 @ 10:04am

                  Re: Re: Re: Re: Re: Re: Re:

                  well, why don't you start with The Pirate's Dilemma? it is available for free via the website (you have to pay if you want a printed copy because it costs them money to print the book, but the PDF is the complete version and it isn't restricted in any way). The simple fact is that a lot of the 'anti-copyright' books are available for free from the authors, you just have to look for a couple minutes.

                  Maybe once you learn a little more about the subject you'll be able to grasp the extremely simple concepts that this site talks about and rejoin the rest of us who are wanting an adult discussion on the subject.

                   

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                    Anonymous Coward, Aug 3rd, 2009 @ 10:59am

                    Re: Re: Re: Re: Re: Re: Re: Re:

                    "Maybe once you learn a little more about the subject you'll be able to grasp the extremely simple concepts that this site talks about and rejoin the rest of us who are wanting an adult discussion on the subject."

                    I'm having a very adult discussion on the subject. They are preaching to the choir, and expecting the choir to pay double for the same books (and the magical crystal ball). If you guys think past what they tell you and actually consider the situation, they are charging double for a reason - because some fools will pay it, and because they have to, because everyone else is just going to steal it (woops, infringe on the online copies that will be floating around).

                    $150 for books that cost $70 (and really cost about $5 to make) is way more shocking that $10 for a CD.

                     

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                      Anonymous Coward, Aug 3rd, 2009 @ 11:18am

                      Re: Re: Re: Re: Re: Re: Re: Re: Re:

                      Techdirt is open that they are making a profit off of this experiment, that is part of the whole point. But you are forgetting that all of this stuff is signed by the authors. Now you may not care about having signed copies, but many people do and this deal would be targeting them, not you. Think for a moment the amount of effort it would take to get a mint condition signed anything, much less from half a dozen or so different people. Signed copies frequently sell for a couple hundred bucks due to the effort involved.

                      You are also missing the rather large point that the sales here are targeting the collectors who want something physical. If you just care about the content, here is the complete Against Intellectual Monopoly book to read, straight from the authors (something you seem to have completely missed). How is anyone going to steal something given away for free?

                      Stop and think a moment, they aren't trying to get sales from everyone, but rather the "true fans", clearly you are not one. Everyone here is talking about how to connect with the true fans in the multitude of different ways it is possible.

                       

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                      Anonymous Coward, Aug 3rd, 2009 @ 11:21am

                      Re: Re: Re: Re: Re: Re: Re: Re: Re:

                      "$150 for books that cost $70 (and really cost about $5 to make) is way more shocking that $10 for a CD."

                      a large part of the cost in physical goods are also the storage, shipment, and the advertising of the physical good (which is why giving electronic versions away is really good, it is free advertising and those who wouldn't buy your book would just get it from the library)

                       

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              Fred McTaker (profile), Aug 3rd, 2009 @ 10:49am

              Re: Re: Re: Re: Re:

              Anonymous Idiot, you're just digging your hole deeper. If you actually bother to READ the article, they are saying something more like the NFL should give away those dumb "This year in football" type DVDs in download form, because they just amount to free advertising any time they're played on another venue anyway (like ESPN when they're short on actual content). They can thus distribute their advertising materials for free, and the cost of distribution drops to $0 with tools like Bittorrent. They can use that kind of "free" to market themselves, so that more people are willing to pay $100's for tickets to the *live* show, season tickets, and crappy food. How is that not making them money? Also, the "free" games of football in the park by non-professionals you keep on bringing up are a *free form of recruitment* for the NFL, so they're directly benefiting from that sort of activity without paying a dime. Most industries have to pay for all forms of recruitment activity. How could any sane business owner consider a service that directly benefits their industry, and is completely free to them, a bad thing?

               

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              Anonymous Coward, Aug 4th, 2009 @ 9:02am

              Re: Re: Re: Re: Re:

              "Been there, did that, and I ain't paying for the t-shirt. Sorry, but the real math is "CwS + OTSS" (connect with sheep, offer them something stupid) and that equals income for no reason. It's not any different than running a classified ad that just says "send $5 to " and lists a PO box. If enough people do it, is it a valid business model?"

              Err, actually, yes, that is a valid business model. A good business model makes money. If you're making money (and get to keep that money), then what's wrong with it? A better business model might make more money, but that doesn't make yours any worse. The only time you should start worrying is when the income starts dropping. Just because it becomes invalid after a period of time, or when more people start doing it, doesn't mean that it wasn't valid to begin with.

              There's actually a great story about a kid who paid off his university expenses by getting an "ad" in a highly read newspaper (actually it was in an actual column, so it wasn't just sitting in the classifieds). He asked for 1 penny. He got back $28000, which did indeed pay off his education.

              Now, if a thousand students tried doing the same, it probably wouldn't go so well. Doesn't make the first guy to do it successfully any less successful.

               

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    Hephaestus (profile), Aug 3rd, 2009 @ 7:46am

    hmmmm.....

    232 note/entry) It is possible to create a middle ground where both forms, Record industry monopoly, and free with incentive can be joined together.

     

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    jake, Aug 3rd, 2009 @ 9:09am

    boldrin&levine

    against intellectual monopoly: life changing book.

     

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    Anonymous Coward, Aug 3rd, 2009 @ 9:52am

    I just checked out the prices of these books on Amazon and the first 4 come to approx $74 (i couldn't find the Masnick effort), but the book club costs $150 leaving quite a lot of money for the "crystal ball" (which I doubt is the the magic kind), and "Approaching Infinity" by M Masnick which apparently is just a print of the various blog articles.

    No indication of how much (if any) of the profit goes to the authors who added appeal to their various books by signing them.

    Thanks to Mike for the entrepreneurial spirit ....

     

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      JJ, Aug 3rd, 2009 @ 11:36am

      Re:

      > I just checked out the prices of these books on Amazon and the first 4 come to approx $74

      Can you buy each of them signed? Nope. Those aren't available. This is unique and special.

      Nice try. Obviously the deal isn't for you. But if people are buying then why are you so upset? Jealous, I guess.

       

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        Anonymous Coward, Aug 3rd, 2009 @ 1:50pm

        Re: Re:

        Isn't the criticism of the RIAA that they keep most of the money themselves and only a small part goes to those who create the original content, and who are also usually responsible for the things that give added value ?

         

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        Anonymous Coward, Aug 3rd, 2009 @ 3:31pm

        Re: Re:

        So 74 for the books, and 75 for a couple of signatures?

        Damn,I have a couple of autographed Wayne Gretzky autobiographies I just got very rich by owning at that rate.

         

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          Anonymous Coward, Aug 3rd, 2009 @ 4:13pm

          Re: Re: Re:

          "So 74 for the books, and 75 for a couple of signatures?

          Damn,I have a couple of autographed Wayne Gretzky autobiographies I just got very rich by owning at that rate.
          "

          Actually, if it is in really good condition, yes. At least one version of his autobiography is worth $270. That is more than double the price of a good condition unautographed copy, which is pretty standard for books if you do a few price comparisons ($50 bucks for a signs hardcover version of most autographed books is what I have found). This shows that the market believes that double the price of the original book is fair.

          enjoying that crow pie much?

          Again, obviously you are not the intended market, so don't complain that the intended market is happy with what is being offered.

           

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            Anonymous Coward, Aug 3rd, 2009 @ 7:10pm

            Re: Re: Re: Re:

            "enjoying that crow pie much?"

            Not at all - I would expect someone like Gretzky's stuff to be worth something, he in an internationally known sports star, a member of the hockey hall of fame, and generally a nice guy. So if I say Wayne Gretzky, most people know who I am talking about.

            I am trying to figure out the length of line to have the great one sign a book, and the length of a line to have "Michele Boldrin" sign one. Help me out here.

            I have a hard time imagining if a Gretzky signed autobiography runs about $130, why would a signed book by a relative unknown (outside of their field) be worth 60% of that?

            I missed something. Oh wait, they did the whole CwF thing. Yeah, right.

             

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              Anonymous Coward, Aug 3rd, 2009 @ 7:45pm

              Re: Re: Re: Re: Re:

              "I would expect someone like Gretzky's stuff to be worth something."

              Backpedaling much.

              "Damn, I have a couple of autographed Wayne Gretzky autobiographies I just got very rich by owning at that rate."

              Translation: I don't expect someone like Gretzky's stuff to be worth something.

               

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                Anonymous Coward, Aug 3rd, 2009 @ 7:48pm

                Re: Re: Re: Re: Re: Re:

                Incorrect. If you think $270 is "rich" then I am sure your Mom doesn't charge you rent for the basement.

                In the scale of things, $75 autographs from unknown authors would make Gretzky's about a million bucks (so two of them would be 2 million bucks, which registers as "rich" for most of the US population).

                Keep trying.

                 

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                  identicon
                  Anonymous Coward, Aug 3rd, 2009 @ 10:36pm

                  Re: Re: Re: Re: Re: Re: Re:

                  It was already pointed out that Gretzky's stuff sells, on average, for double the original price once it is signed. other Authors' books follow this trend of double the original price. You therefore (between the double talk and backpeddling) seem to be complaining that people are willing to pay the going average of double the original price of an unsigned copy for the convenience of not having to travel and wait in line to get the autograph.

                  again, you clearly aren't the intended target of the sales, so stop complaining that it isn't targetting you when it is (presumeably) effective at reaching its intended target

                   

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                  JJ, Aug 3rd, 2009 @ 10:46pm

                  Re: Re: Re: Re: Re: Re: Re:

                  > In the scale of things, $75 autographs from unknown authors

                  1. Unknown to you, perhaps, but that's your problem. Some of us are huge fans of these authors (for me, honestly, Patry's signature alone is probably worth the whole package).

                  2. You seem to ignore other parts of the package in calculating your price.

                  3. You seem to ignore that the total price is split among six different authors. I'm guessing you're doing this on purpose, because you realize that it's really not so crazy to think that a signed book might be less than $10 more than an unsigned book.

                  As the other AC pointed out, you're clearly not the target market for this, but lots of people apparently are. Why the hatred?

                   

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    Suzanne Lainson (profile), Aug 3rd, 2009 @ 5:34pm

    Transparency

    What the books sell for on Amazon versus the book club is a good start to help us understand this experiment.

    Now I'd like to know whether the books and records are purchased by Techdirt from the artists at full retail or at wholesale prices. Are the artists making as much via Techdirt as they would on their own?

    I'm going to guess that you can get the books and CDs signed by the artists if you see them in person at a show or a book store, or if you purchase them directly from the artists via their websites. So if you want signed copies, you can get them via a package deal via Techdirt, or perhaps individually from the artists involved.

    Is there a value to the purchaser in the Techdirt bundling? People used to join book and record clubs to get items at discounted prices. The Techdirt package, in contrast, is more expensive than retail, presumably because of perceived added value.

    What would be really helpful would be a day-to-day log of what is selling on the Techdirt CwF+RtB experiment. That's one thing I like about Amanda Palmer. She seems to be pretty willing to share how much she makes in tips, sales, etc. as she goes along.

     

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    Suzanne Lainson (profile), Aug 3rd, 2009 @ 11:35pm

    Getting the autograph in person

    Actually, a lot of people like to go stand in line to get the autograph. That's part of the process. To meet the artist, author, musician, etc., say hello, etc. Then you have a story to tell in addition to having the autographed copy.

    And usually you get that autograph for no additional cost. If you are at a show or bookstore, all you have to do is buy a copy there or bring one you already own and get it signed.

    So there might be value to some to get an autographed copy sent to you, but for others it's more fun to buy it directly from the artist.

     

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      Mike Masnick (profile), Aug 4th, 2009 @ 2:40am

      Re: Getting the autograph in person

      Actually, a lot of people like to go stand in line to get the autograph.

      Yes, but unless you plan on traveling to five different locations across the country and tracking down each of these authors, that's not going to happen.

      In this case, it's really not feasible for a single individual to get these things any where else, unless you want to include airfare to five different locations all around the country.

       

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        Suzanne Lainson (profile), Aug 4th, 2009 @ 10:27am

        Re: Re: Getting the autograph in person

        "Yes, but unless you plan on traveling to five different locations across the country and tracking down each of these authors, that's not going to happen."

        The way it usually works is that the artist/author goes on tour and comes to your area. You don't get all the signed items at the same time, but if you are a fan of these creative people, you are very likely to go see them when they come to your town.

         

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          Anonymous Coward, Aug 4th, 2009 @ 12:58pm

          Re: Re: Re: Getting the autograph in person

          "The way it usually works is that the artist/author goes on tour and comes to your area. You don't get all the signed items at the same time, but if you are a fan of these creative people, you are very likely to go see them when they come to your town."

          That's assuming you live in an area where an author is going to stop on his tour, meaning at best you typically have to travel cross-state if you don't live in the subburbs of a major city, nevermind if you live in the butt-crack of nowhere and there is no reason for any author to make a tour stop. And that is still not factoring in the probability of the author YOU want coming.

          Oh, and then you have to take into account the cost to go see the author and get the signature such as the cost of gas, which will probably equal a full tank, a possible day's worth of work that you take off in order to attend the event and/or for conventions there is the cost of entrance to the event. considering that even taking an hour off of work it is costing you (assuming you have a decent, but not amazing job) $10-20, if you are lucky enough that it is in your town and you can do it within an hour, but there is teh long-line, better figure 2 full hours minimum, so $20-40 for one signature.

          once you look at it that way, getting a single signature could cost you $75 easily so you are saving a ton of money buying the books this way. Even if you are lucky enough to have all the authors in the same place, if you have to wait for them to come one at a time you can multiple those costs even more.

           

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            Suzanne Lainson (profile), Aug 4th, 2009 @ 2:18pm

            Re: Re: Re: Re: Getting the autograph in person

            True.

            My experience has been, watching authors and musicians do this sort of thing, is that most signed copies are purchased in face-to-face situations because the people who care that much will make the effort to go to see the artists they admire. They want that personal interaction, not just the signature. I think the reason Amanda Palmer had as much success with her online auction as she did was that it was interactive.

            I guess we'll just have to see how many of the signed copies are sold through Techdirt.

             

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    sprearson81 (profile), Jun 9th, 2012 @ 5:51am

    Not dissimilar to my experience.

     

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