Three Checkboxes To Get People To Pay For Content?

from the pick-two-of-three dept

Jon sends in one of the more amusing opinion pieces written about conditions needed to get people to actually pay for content, written in the Guardian by Paul Carr. You have to get past the drunken bar fight part (which is what makes the article amusing) to the theory, which is that to get people to pay for content, it needs to hit at least two of the following three conditions:
  1. An experience that can't be replaced anywhere else for free.
  2. Making the purchase incredibly easy (key point: the real "cost" is price + hassle, so lowering the hassle factor is like dropping the cost)
  3. At the end, the buyer actually "owns" the purchase, rather than just "accessing" content.
It's definitely an interesting theory -- built mainly off of looking at the success of Tapulous and its iPhone apps. However, I'm not convinced that these three conditions actually will work in the long run. I think they can absolutely work in the short-run, however. The first point, for example, only works so long as the content can't be replicated by others. That's not really true of something like a video game. Either someone can figure out a way to copy it, or even taking unauthorized copying out of the equation, someone else can come up with a similar game and offer it for less (or even free, using a different business model).

The second point definitely does make sense. People absolutely are willing to pay for convenience... but, again, that second point goes away if the first point isn't there. That is, no matter how hassle free the buying process might be, if the experience can be substituted by a free option, then the ease of the buying process probably doesn't matter too much.

The third point is also somewhat in dispute. I do agree that if people are paying for "content," it's important that they get some sort of ownership and control over it, but I actually think that there's something to paying for access, depending on what that access is. Access to content? Eh. Access to people, however... is quite different.

So, while I'm not convinced that these three checkboxes work, it still makes for an amusing and worthwhile read if you're trying to understand these sorts of business models.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Weird Harold's former #5 fan, Mar 27th, 2009 @ 10:31am

    That is, no matter how hassle free the buying process might be, if the experience can be substituted by a free option, then the ease of the buying process probably doesn't matter too much.

    Well, that depends on how much hassle is involved with the "free" option. Let's say my car needs an oil change and someone just gives me 5 quarts of oil. I can change my own oil for free, or I can pay someone to do it for me. Given that I have no idea how to change my car's oil and would have to learn from scratch, paying someone else to do it for me is much more appealing than the "free" option.

     

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  2.  
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    Anonymous Coward, Mar 27th, 2009 @ 10:50am

    As just mentioned, in the earlier days of the web, many thing's were offered for "free." However, the true cost of the "free" made people prefer to pay. Ie, subscriptions, haveing to provide personal information, having to refer others, having to spend time reading surveys, etc.
    As you mention, time and effort is a "cost."
    Hell, breaking into a store and stealing a video game is "free" but it is also a "free" option that comes with too many costs.

     

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  3.  
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    spencermatthewp, Mar 27th, 2009 @ 11:09am

    Experience

    1. An experience that can't be replaced anywhere else for free.

    I think you missed the point. When you argue against this point you state The first point, for example, only works so long as the content can't be replicated by others. You try to take down a point about the experience by talking about content.

    This blog, as well as others, have pointed out that movie theaters are in the business of selling the movie going experience. They are not selling the movie itself. That is the point here.

    Wrap the content in an experience, and people will pay for it. If the experience is compelling enough, people will pay a lot for it. It does not matter if the content is available free elsewhere, the experience is the thing that matters.

    In your video game example, the experience would not be playing the game itself. But could be tournament, online access, release party, a "Golden Ticket" or any thing else your imagination comes up with that could not be replicated by the content alone.

    That's really the point. Experience is always separate from content. It is something that the music/movie industry just does not understand. It is why I have not entered a movie theater in several years. The experience at a theater is not sufficiently compelling for me to shell out the cost of buying the movie on DVD twice over.

    It surprises me that any one who is allowed to put an article on tech dirt would not understand that simple concept.

     

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  4.  
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    Whisk33, Mar 27th, 2009 @ 11:11am

    Re:

    Wouldn't the masses of people who are buying songs from Itunes and Amazon also be an example of how convenience can over compensate for cost? Or perhaps the ENTIRE service industry as we know it? I can buy "insert item" and install it myself for free or I can buy "insert item" and pay someone else to install it.

    I'm also not understanding how the point isn't valid. Even if someone copied the idea of the game and made it similar, do you think no one would buy the original still? Real world example: Just because a videogame gets cracked and put online, doesn't mean that the game's sales disappear.

     

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  5.  
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    hegemon13, Mar 27th, 2009 @ 11:22am

    Re: Experience

    Excellent write-up. I wanted to make a similar point, but you did the work for me. World of Warcraft is the first thing that came to mind. Unofficial servers exist, but according to everyone I know who plays the game, they don't come close to the gaming/community/etc experience on the pay servers.

     

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  6.  
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    Anonymous Coward, Mar 27th, 2009 @ 11:28am

    Don't be silly

    There's many more than 3 checkboxes. I came up with 7 last night.

     

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  7.  
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    Comboman, Mar 27th, 2009 @ 12:03pm

    one more checkbox

    4) The paid version has some prestige or convenience factor that the free version does not.

    Lots of people pay good money for bottled water that you can get out of any tap or water fountain for free.

     

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  8.  
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    seeker5528, Mar 27th, 2009 @ 1:07pm

    Re: Free

    "As just mentioned, in the earlier days of the web, many thing's were offered for "free." However, the true cost of the "free" made people prefer to pay. Ie, subscriptions, haveing to provide personal information, having to refer others, having to spend time reading surveys, etc."

    If you have to provide personal information, refer others, do surveys, etc... then it is not free is it?

    Not only is it not free, the experience people have had with that crap then taints their judgment in regard to stuff that actually is free.

    There are some good, free, open source, first person shooter games out there, download, run, no strings, doesn't stop me from buying commercial first person shooters.

    There is lots of music out there, last fm has free downloads, besonic has free downloads, artists who's stuff I like just as much as anything I might buy, doesn't keep me from buying CDs.

    With music especially, since there is a lot of it out there, small files, easy to download, it's easy to stick to your guns and say 'if it's got digital restrictions, I'm not paying for it'.

    Later, Seeker

     

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  9.  
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    B, Mar 27th, 2009 @ 1:11pm

    Re: one more checkbox

    All that really eays is lots of people are really stupid.

     

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  10.  
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    Rekrul, Mar 28th, 2009 @ 6:24am

    1. An experience that can't be replaced anywhere else for free.

    When most people see/hear the word "experience" they think of things like "social networks", but the "experience" can be as simple as providing an easy to use interface.

    Finding a free (AKA pirate) copy of something on the net can often be a frustrating experience. Just released movies and shows are easy to find, but if you want something older, you'll have to hunt for it. When you find a copy, there's no way to tell ahead of time whether the quality is any good, or if it's even in English (or the language of your choice).

    I can't tell you how many movies I've downloaded that visibly had the wrong aspect ratio, or that were dubbed into another language, or that had a Russian voice repeating all the dialog over the over original actors, or that had hard-coded subs for another language.

    I'd love an online store where finding the exact movie or show you wanted was easy.

    2. Making the purchase incredibly easy (key point: the real "cost" is price + hassle, so lowering the hassle factor is like dropping the cost)

    For me, this would mean no special software is required (like iTunes) and not even any fancy browser tricks. Do web sites really need to use 20MB of Flash to present animated menus??? Make it easy to search and to buy the content. There also shouldn't be any subscription needed, even just for making purchases, you should just be able to pick out what you want and then pay for it, like you can with any other product.

    3. At the end, the buyer actually "owns" the purchase, rather than just "accessing" content.

    Agreed, the files need to be DRM-free. Some people will say that if they do this the files will get pirated. While that's true to some extent, it overlooks the fact that people are already making their own DRM-free files and pirating them. It's not like they need an official source to do it for them.

    I'd add a couple more points though;

    4. A good selection needs to be offered.

    This is the digital age, there's no practical reason that companies can't put their entire catalog online (other than the screwed up licensing system) for sale. You should be able to visit any online store and be able to select from thousands of movies and shows, not just what came out in the last 5 years and a few "classics".

    5. The price needs to be low enough to entice people to buy.

    Digital distribution is cheaper than physical distribution and should be priced accordingly. If they try to sell movie downloads for $10 each, nobody will buy. Sell them for $1-3 each and many people will buy.

    iTunes, with all its limitations and hoops to jump through, proves that some people will pay for legal content. Think how much more successful it would be if all the content was DRM-free, accessable with just a browser, had a bigger selection and even lower prices.

    Of course the content industry is too short-sighted to see any of this.

     

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  11.  
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    Easily Amused, Mar 28th, 2009 @ 9:25am

    Re: Experience

    Almost word for word what I was composing in my head when i read the article... nice job :)

     

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  12.  
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    another anonymous coward, Mar 29th, 2009 @ 7:58am

    Another point:

    Porn companies figured this out 15 years ago.. They have no problem getting people to pay for media..

     

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  13.  
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    bulljustin, Mar 31st, 2009 @ 5:08pm

    Sell the sizzle, not the steak

    The guy missed a few points in his article, not the least of which was the opportunity to talk to someone who has been successful and see if his hunch played out. He also missed the crucial factor of perception in his equation:

    Perceived Cost = Price + Hassle - Perceived Value

    When the buyer's perceived cost drops below 0 he will buy, no matter what the real cost is. You can drop the perceived cost by reducing sale price, reducing hassle of purchase and ownership, and/or increasing the perceived value. You can only reduce the price so much before it costs more to produce that you can expect to make. You can only reduce the hassle so much before it negatively affects perceived value.

    Some people only see value in things they buy, while some people only see value in things they get for free. Managing perceived value is the hardest thing a content producer must do. Mismanaging the perceived value of a product can be devastating. Just look at the debacle Metallica created by working hard to shut down Napster and the resultant loss of their brand's perceived value. There are still avid anti-Metallica folks out there that won't ever buy from that band again. They have won many back, but how long has it taken and how much of a hit are they still taking now from the setback those moves created? Apple, on the other hand, is a master of managing perceived value. You cannot find an apple laptop for less than $1000 with sufficient power, screen size, keyboard, etc. yet they sell a whole lot of laptops. Their marketing department established and maintains their lead in market share for portable music players. You see white headphones and you immediately think Apple.

    Perceived value is only place where the seller can act to maximize without limit. The higher one can make the perceived value, the greater the hassle buyers will accept and the higher the price the buyers will pay. iTunes is the perfect example of this, with its perceived value based on the integration with the iPod, legal issues, and breadth of catalog have made people willing to pay ~$1 for something that should be free.

    This brings up the problems experienced by most industries impacted by the internet, they have a higher perceived value of their content than their users do. The internet greatly reduced the hassle factor, which should have decreased the real cost of music, video, news, etc. Instead, the great proliferation of these things also lowered their perceived value. Major players need to find ways to increase the perceived value of their product.

    The first step is to define the actual product. Restaurants do not sell food, they sell the cooking ability of their chef(s) and the ease of not cooking or cleaning up. They increase the the perceived value of the meal by putting the steak on cast iron making it sizzle. Their product, then, is not the steak itself as it cannot compete on a strictly price basis with the same good prepared at home, but the experience of watching all those envious diners wishing they had a steak, too. By extension, newspapers do not sell the news, record labels do not sell music, movie studios do not sell stories on film, and publishers do not sell books. Each of these sells the experience of enjoying their "content" and then the ability to leverage their customer base for other things.

    Mike has pointed this out several times on this blog, and frankly he is usually right. I find it odd, therefore, that he juxtaposes his usual stance of increasing the perceived value with some of his comments.

    The first point, for example, only works so long as the content can't be replicated by others.

    The first point was about the experience, not the content. If the experience cannot be replicated easily, then replicating the content doesn't matter. It's the experience that has been sold, not the content. Tapulous sold the experience of playing a game on the iPhone that couldn't be replicated because of licensing deals with bands and hardware manufacturers. They have increased the perceived value of their product by adding an artificial limitation - the iPhone. Harley Davidson did the same thing by limiting production back in the 80's, which also allowed them to increase the price of the product they made and put more effort into quality thereby increasing the perceived value of their brand. As any hardcore biker will tell you, if you don't ride a Harley, you don't really ride.

    I do agree that if people are paying for "content," it's important that they get some sort of ownership and control over it, but I actually think that there's something to paying for access, depending on what that access is.

    Since the point he made was access to the content and solely the content, you made his argument for him. You again argue for increasing the value of the experience by accessing the people involved in the content creation. I know that you are constantly reiterating this point, and I agree with you on it. That access, however, if just one way to increase the perceived value of the content. The folks who make it in this tumultuous time will be those who find ways to increase the perceived value of their infinite goods through finite services and public opinion.

     

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  14.  
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    Grae, Apr 2nd, 2009 @ 11:33am

    Re: Re: Experience

    Having tried both myself, I can say that the unofficial World of Warcraft servers are generally a complete mess when compared to the genuine article.

    I've actually tried the "free" servers a few times, and every time the features advertised on their websites simply don't work when you actually try and play. I've also found some free servers that are really just attempts to get you to install malware ("you need our custom executable to play!")

    This why I still pay $15/month, because I like World of Warcraft, but the "free" experience is a worse value and a greater hassle.

     

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  15.  
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    Jack Sombra, Apr 3rd, 2009 @ 2:02am

    Funny that you should mention video games because as soon as i hit point 3 i recognized something that serious breaks these rules (especially point 3 and to a lesser extent 2) and that MMO's

    Players of MMO's never own the content (and if you accept game makers arguments they don't even own the client or their characters) but despite that the industry is growing like wildfire

     

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