Techdirt. Stories filed under "premiums" Easily digestible tech news... http://www.techdirt.com/ en-us Techdirt. Stories filed under "premiums"http://www.techdirt.com/images/td-88x31.gifhttp://www.techdirt.com/ Thu, 22 Mar 2012 15:00:38 PDT High Tech Cows & Open Source Farm Equipment: Yes, The Economics Of Farming Is Relevant Mike Masnick http://www.techdirt.com/articles/20120320/04562818170/high-tech-cows-open-source-farm-equipment-yes-economics-farming-is-relevant.shtml http://www.techdirt.com/articles/20120320/04562818170/high-tech-cows-open-source-farm-equipment-yes-economics-farming-is-relevant.shtml not to respond, perhaps we can help lots of other industries move more smoothly into the future. So I'm always interested and intrigued by parallels in totally unexpected industries. Just recently, the good folks over at NPR's Planet Money put together a fascinating episode about modern farm economics (and host Adam Davidson also wrote a NY Times piece on the same subject). While it mainly focuses on Claudia, the high-tech cow, it also has some key economic points that will likely sound familiar to regular readers (unfortunately, these key economic points are only in the audio version of the podcast, and were left out of the transcript). Near the beginning, host Adam Davidson lays out his "four clear lessons about how to have a shot at thriving in the current global economy."
  1. Stay on top of technological change.
  2. Focus. Specialize on the things you can do best.
  3. Find some way to buffer yourself against unexpected changes that are definitely coming.
  4. Find something that you can sell that your customers are willing to pay a premium for because you've given them something they want which no one else can give them.
All of those sound familiar to one degree or another, but clearly number one and number four are ones that we hit on frequently. They then use the example of Fulper Farms to show how it can work. They talk about the technological change and innovation not just in process, but in the breeding of better cows, which leads to the "bleeding edge high tech cow." They then talk about specialization, where the Fulper's don't do everything that a farmer used to do, but instead focus on raising and milking cows, and rely on other experts to handle the breeding of cows (to get those high tech cows) and even cow nutrition (letting this other person stay up on the latest in cow nutrition science).

To some extent, it's like the differences we've talked about between gatekeepers and enablers. The gatekeepers wanted to be at the center of things and control all aspects of production, distribution, etc. But in a world of enablers there's much more specialization. So, for example, in the music world, musicians can pick and choose from best-of-breed solutions to help create, distribute, promote and monetize their work, rather than just relying on a single provider.

Not much time is spent on the third point, but there's a brief discussion about financial tools to help buffer the swings in the market -- things like grain futures and such, which are really just forms of insurance to protect in a volatile market. I'm a little less interested in this particular point. I think it can be important in some industries but is less of a key point long term.

But the fourth point was what I found the most interesting, and obviously fits most closely with some of the theories and business models I've espoused for years: sell something scarce which people want to buy. But, in a commoditized world such as farming, how is that even possible? Well, we hear the same thing in the music world all the time, where people insist that there's nothing to sell but the music, but then we see lots of folks get creative and do amazingly creative things. And the same thing is clearly happening on the Fulper Farm as well -- thanks in part to the youngest generation, who attended my own alma mater (Go Big Red!), and is applying some of what she learned about being more entrepreneurial back to the farm.

She's trying out a few things to take some special facets of what the farm has available, for which they can charge a premium:
Breanna realized they kept talking about this "problem" they had. They're really close to New York City. Land is really expensive in Northern New Jersey. There's not an agricultural world there, so they have to travel really far to buy ag equipment. There's all these problems being so close to New York City. And she realized, by using her farm as a case study in college, that being so close to the City might be the best way to make money. It might be their secret to being a successful farm. I looked and I couldn't find any farm closer to New York City. I think this is the closest one to Brooklyn... And people in Brooklyn are kind of obsessed with farming....

Breanna has figured out that there's money in that. She's working with a cheese maker who's going to help them make a premium Fulper-branded cheese. You and I, some time soon, can go to our local shop and buy really, really local... this is "the closest cheese to Brooklyn."...

Breanna had this other idea. Did you know that you could send your two daughters for a week to summer camp at Fulper Farms?.... Families pay a few hundred bucks, their kids have an awesome week experiencing agriculture.... You know what's amazing? A few weeks of summer camp that Breanna did as a college project? Brings in almost as much money as a whole year of milking cows.
Hello alternative revenue streams. I'm sure the purists will insist that just like a musician should only sell music, a dairy farmer should only sell dairy products. But a smart business person finds ways to capitalize on real scarcities, and that's exactly what Breanna appears to have done with the Fulper Farms.

The report concludes with another key point that we've definitely seen in the music business as well. Davidson notes that there's a lot more opportunity, and the average farm is now making more money than in the past, but it's a lot more volatile, and lots of the old guard simply don't make the transition well. Once again, this sounds mighty familiar.

It's kind of neat to see the parallels between such different industries when it comes down to the basic economics of progress and technological change.

Along those lines, perhaps there are even more parallels moving into the future. As I was working on this post, Leigh passed along a TED talk from about a year ago by Marcin Jakubowski, who is taking the concepts of the maker culture and the open source ethos and applying it to farming. It seems like an appropriate thing to end this post with, so check it out:

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]]> innovation-impacts-lots-of-industries http://www.techdirt.com/comment_rss.php?sid=20120320/04562818170 Thu, 19 Mar 2009 05:42:00 PDT Topspin Shows That Premium Offerings Get Sales: People Will Pay For Value Beyond The Music Mike Masnick http://www.techdirt.com/articles/20090317/0226494147.shtml http://www.techdirt.com/articles/20090317/0226494147.shtml real reason to buy, as discussed in my MidemNet presentation a couple months ago. We've seen all different variations on the tiered theme from Trent Reznor to Kristin Hersh to Jill Sobule to John Wesley Harding and many others. Personally, I still think that the most creative of the bunch is Josh Freese's tiers that go from just fun to ridiculous (one option lets you keep his car -- after you drop him off at home).

One of the companies that's doing a good job helping some musicians make this model work is TopSpin, who we've discussed before. In fact, TopSpin has helped Reznor and Freese with their offerings (as well as the Beastie Boys, who recently launched something similar, as well). With TopSpin's platform coming out of beta this week, the company has released some data on its success so far, and it's impressive -- especially for those of you who keep insisting that fans these days just want music for free and are unwilling to pay for anything.
  • Its campaigns have certainly helped bands grow their audience and improved ways to connect with fans. One of its first major projects was the release of David Byrne's latest album, and it increased his email list by 3000%. (Update: Originally we said 37%, but that was wrong. It's actually 30x, or 3000% as per Topspin).
  • The various projects have shown that people are quite willing to pay if they're provided with real value and given a real (rather than artificial) reason to buy. The average transaction price is $22 -- significantly more than what people are paying for "just the music" and even more than what an average CD costs.
  • Perhaps the most appealing stat: on a recent project 84% of the orders were premium offers above the lowest tier. People will pay more for being given real value, rather than just being forced to pay for the music.
This is great news. Unfortunately, TopSpin is still rather limited right now to bigger name artists (they pick and choose who they work with). I think the world is open for another player to come in and disrupt the market by making such systems available for anyone. Also, in the various projects that TopSpin has run so far, I still think the pricing is a little off (Reznor's was the exception, and he only used TopSpin's backend, rather than its whole program). Also, it seems pretty rare for artists using TopSpin to offer a free option, which limits opportunity greatly (and drives folks to file sharing, rather than opening up a better relationship with those fans, and maybe gaining an email contact and the ability to create sales later). This is (I hope?) an issue from the musicians' side, rather than TopSpin's.

It's also worth noting that the company has also announced a program with Berklee College of Music to teach courses to musicians in how to leverage TopSpin for better business models. Hopefully at least some of that class will include an explanation of how using free as a part of your business model can extend it even further.

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