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  • Just Spent $229.50 for Digital Content - Why?

    By Joshua Kim March 29, 2011 9:30 pm EDT

    When will you pay for digital content? If you are in the information business, and education is an information business, it probably makes sense to spend some time thinking about this question.

    I just answered that question for myself, giving Audible (really Amazon), $229.50 of my money in exchange for 25 audiobook credits (works out to $9.18 a book).

    So I'm willing to give Amazon (Audible) $229.50 for the right to download some bytes, yet I'm unwilling to give the NYTimes $240 a year for iPad and Web access? Is this inconsistent?

    In thinking about why we are willing to pay for some digital content, and not other, I've come to the conclusion that we need some better digital content economic theory to help both explain and predict our choices. We all have opinions about whether or not the NYTimes paywall makes sense, how much a an e-book from Amazon or B&N should cost, and how much we should pay to rent movies from Netflix or iTunes. What is missing, I think, is a rigorous theoretical framework in which we can evaluate and test our opinions.

    Actually, I'm sure that this literature exists. But the digital economics literature has not yet been popularized. I think we about have enough books on behavioral economics (everything from Blunder to Nudge to Predictably Irrational to Sway - I hope Kahneman and Tversky get a royalty for every time they are cited), what is is missing are concise, well-written books on digital economics.

    Can anyone point us to some good books and articles on the economics of digital content?

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Comments on Just Spent $229.50 for Digital Content - Why?

  • Costs and benefits
  • Posted by Max Masnick on March 30, 2011 at 8:30am EDT
  • I'm not willing to pay for the NYT because the value added of NYT content over the plethora of free news sources is just not that high (certainly not $240/yr).

    Arguably, high quality audio books are worth the money because there is no cheaper alternative that offers anywhere near the same experience. (Someday the voice on the Kindle won't sound like a robot and Audible will subsequently fade away.)
  • Paid Content Top 50
  • Posted by Jim Knight , V.P. of Business Development at Digital Technology Systems on March 30, 2011 at 8:46am EDT
  • This article below lists the Top 50 Paid Content Producers and gives some very interesting and relevant information: The Economics of Digital Content...
    http://paidcontent.org/list/the-most-successful-digital-companies/
  • half-joking, half-serious
  • Posted by Cathar on March 30, 2011 at 10:30am EDT
  • http://www.theonion.com/articles/nytimescoms-plan-to-charge-people-money-for-consum,19847/
  • Value
  • Posted by sibyl on April 1, 2011 at 9:45pm EDT
  • Although producers often assign value to their products based on amortizing their costs, they also coordinate the price against their previous experience. NYT.com thinks we should pay $240 because that's close to what it costs to buy the physical paper.

    But consumers assign value the same way. I will spend $100 to buy a chair because when I spent $50 on a chair, it broke, and I can't make my own chair because I can't even make an ashtray. But I don't want to pay for NYT.com because I used to pay nothing for it.

    Napster's early success happened because consumers wanted to stop paying $18 for full CDs. iTunes broke Napster and made money because it found a reasonable price point, 99 cents per song, which is what I used to pay for singles in the 80s. (And it helped that iTunes also worked with software and hardware that were more convenient to use than ripping and burning CDs.)

    You buy audiobooks because you get a $30 book for $9, in a format you like, without storage and disposal problems. (Me, I use the library to spend less money, but you get more control over what you read, and when, and how often. And my library has many more paper books than audio books.)

    I won't pay $240 for NYT.com because I can get equivalent content elsewhere for less. But I would probably pay $24, because the quality and convenience would justify the price. Would I pay $120? Probably not. I don't know what the sweet spot is, but $240 ain't it.

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