Content Industry Could Learn From eBay Seller Turning A Profit With Public Domain Content
from the competing-with-free dept
Last year, Mike made the point that saying you can't compete with free is saying you can't compete, period. Every business makes a profit by adding value so that customers will be willing to pay above marginal cost for its products. The fact that the marginal cost of content (once it's been created) is zero doesn't change that principle. You can add value to free content just like you can add value to any other product. The New York Times Bits blog nicely illustrates this with a post about the market for public domain content on eBay. Apparently, there are a number of people who make a living by finding obscure, copyright-free content on the Internet, burning it on a DVD or other convenient format, and selling it on eBay. Despite the fact that every one of those customers could have tracked down the video for themselves and watched it on their computers, a lot of people are apparently willing to pay for a DVD version.This business model actually illustrates two good ways to add value to free content. First is convenience. A lot of people don't have a high-speed Internet connection, don't like watching videos on their computer monitors, or want to be able to take their content with them in a compact format. For those users, a DVD is a much nicer format than a file on their computer's hard drive. DVDs are also a much more convenient format for giving gifts: you can wrap a DVD and put it under the Christmas tree, something that's harder to do with a video on YouTube. Second is filtering and organization. There's way more content out there than any one person could possibly watch. So there's a lot of value in helping people separate the wheat from the chaff. That's a big part of the value we provide here at Techdirt: a lot of the information you'll find on our blog comes from other sites, but we try to highlight only the best and most relevant information, helping our readers to keep up with news in the technology world more easily. By the same token, people who sell public domain content on the Internet create value by filtering and organizing the information so it's easier for others to quickly and easily find what they're looking for.
I won't belabor the implications for traditional content industries. Like it or not, their content is available for free on peer-to-peer sites, and if they want to make a profit they're going to have to find ways to make their content more valuable than what you can get with BitTorrent. Two important principles for doing that are: use formats that convenient and versatile and make sure content is organized in a way that makes it easy for users to find what they're looking for. That means, for example, that you probably shouldn't cripple your products with DRM or sue companies that help people find your content.
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Filed Under: adding value, competing with free, ebay, public domain
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Re:
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DVD Copy 123
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Broken link
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eBay?
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Convenience Link
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compliments
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@Mr. Magoo
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Ah, thanks
I would like to point out that when I made my first post, the eBay mentions in the first paragraph weren't there.
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Despite all the free music available, the iTunes store continues to sell music.
People will pay a premium for convenience.
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Good
Personally I don't have a problem with this because the vast majority of the content is orphaned anyway or the copyright owners have zero interest in making it available.
What a shame there isn't a requirement that content be continuously available for copyright to extend past 5-10 yrs. Not worth it to you to keep your content available at a fair market price then you automatically give up copyright... no more orphaned works, no more lost knowledge.
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Re: Good
Could you please point to an example? I'm curious about what kind of things this is happening to.
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that's what i'm talking about
with BT, the content is free, but you have to find something, wait days for it to download, scan it for infection, unrar it, organize it... it's a total pain. PLUS, it's hard to find older music that may not be as popular, like the old punk, ska, goth, and techno i grew up listening to. it's not in used CD stores, it's not always on BT.
i would fully pay a reasonable price (not a dollar a track, more like 25-50 cents each) to use a system that let me instantly locate and instantly download tracks that are easy to use as i see fit. i'd do the same for movies and maybe even books.
if i could just pick from a menu and get my own custom made, professionally mastered CD in the mail, i'd be in heaven if the price was right. you could make lists of tracks (virtual mix tapes) so others can view and order it as well... like the recommendation system on netflix or the published shopping cart feature on newegg.
if you ask me the music industry brought this on themselves. they produce acts that target the lowest common denominator and saturate radio and TV with them. so everyone in the world only listens to a few acts, which are easily gotten on BT. good job guys, you put yourselves out of business.
the future of downloadable music is specificity. it's about reaching millions of tiny markets where media may not be shared as easily. a perfect example is dualcore (http://www.dualcoremusic.com) i heard about these guys on penny-arcade and heard snippets of their music and it sounds like it was made specifically for me (hiphop about computer hacking). the only way to get the music was to buy it, since no one i know is in to nerdcore and they weren't popular enough to be on BT.
i have purchased both of their CD's AND i am building up a catalog of old punk albums with emusic. thru emusic i also discovered the vitamin string quartet, they make string quartet covers of just about every song ever made. between old punk tracks, and vitamin strung versions of stuff i already have, i can download a monthly ration of 50 songs in less than 50 minutes.
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missing the point
This example of a successful business model for selling PD materials is useless as a model for the successful creation and sale of new works.
The packager of PD works has no investment to recoup in creation of the works themselves. Therefore, he can make a profit at a price competitive with even those who simply copy his product and value-added services.
On the other hand, the creator of a new movie/song/software application/book often has a huge investment in creation of the original work. Therefore, to turn a profit, the creator has to charge a price that enables recoupment of that investment. This puts the creator at a competitive disadvantage to competitors who can offer the same product and value-added services without having to recoup an investment in initial creation.
In this world, the economically rational decision would not be to invest in creation, but simply to free ride on the creativity of others.
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Re: missing the point
i agree. like you, i want to sit on my fat ass and watch the money from my sales pile up. this article makes it sound like i might have to do some work and apply some business sense if i want to make money and i don't like that at all.
i am not interested in business sense or hard work, that's why i went into music in the first place.
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Re: missing the point
If, and only if, you think the business model is simply the direct sale of those new works. Once you get rid of that assumption, the rest of your argument falls apart.
The packager of PD works has no investment to recoup in creation of the works themselves. Therefore, he can make a profit at a price competitive with even those who simply copy his product and value-added services.
Yes, but the packager also has incentive to get new works created so that he can continue to expand his inventory. Thus, both he and the creators have incentive to come up with a favorable business model (see the Coase theorem...).
On the other hand, the creator of a new movie/song/software application/book often has a huge investment in creation of the original work. Therefore, to turn a profit, the creator has to charge a price that enables recoupment of that investment. This puts the creator at a competitive disadvantage to competitors who can offer the same product and value-added services without having to recoup an investment in initial creation.
You should learn about sunk costs... If you are only focused on recouping your investment, you're going to fail no matter what. Instead, focus on finding something to sell that has more value and can be differentiated and you can more than recoup the investment costs.
In this world, the economically rational decision would not be to invest in creation, but simply to free ride on the creativity of others.
This is simply, factually and historically incorrect. It is, again, based on the assumption that the only model is selling the content over and over again directly. Yet, if you look historically at the creation of new works, that's very rarely been the economic model of choice. There are many other economic models, many of which are more efficient (and potentially more profitable). So, the economically rational decision would actually be to move away from the crutch of the "easy" business model, to better business models.
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Re: missing the point
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Re: Re: missing the point
Tim, did you mean "I'm definitely not saying", or some variation thereof? Otherwise I'm confused...
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selling the free stuff
I think this kind of thing does have implications for traditional content folks -- if they listen ...
More on that here http://charlotteanne.wordpress.com/2008/01/04/selling-the-free-stuff-for-1499/
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