Understanding What's Scarce And What's Not...
from the sell-the-experience dept
A bunch of folks sent over Jeff Jarvis' recent blog post entitled stop selling scarcity, which I actually think is slightly misleading. If you read the details, he's actually saying that you should very much sell scarcities -- but that you should avoid pretending that you're selling a scarcity when you're really selling something that it infinitely available:If you are selling a scarcity -- an inventory -- of any nonphysical goods today, stop, turn around, and start selling value -- outcomes -- instead. Or you're screwed. Apply this rule to many enterprises: advertising, media, content, information, education, consultation, and to some extent, performance.I have to admit, while I get what he's saying, I'm not sure it's particularly useful to most people, because they've always thought they were selling "outcomes" in the first place. I think that a similar post by filmmaker Ross Pruden may actually be a lot more useful, in that he talks about selling experiences, which is something that's scarce:
You think you sell a movie--you do not.From that he points out the simple problem that many folks who were used to the old way are facing:
You think you sell a book--you do not.
You think you sell a song--you do not.
You sell an experience, something communicated, something elusive and ephemeral. Something mystical and transformative and inspiring. All these abstract things simply come in the shape of a movie, a book, or a song.
Never before has it been possible to strip away these experiences from the product... until now, the Digital Age.
The Digital Age lets us duplicate products infinitely. And, for the first time in human history, creators are not deprived of their original copy.
...now we can read a novel without buying a book.From there, he lists out a bunch of different scarcities that come up with you separate the experience from the physical product, and notes that this is how things have always worked in reality, it's just that conceptually we merged the experience with the scarce physical product, which is why it's often so difficult to separate them conceptually now that they've become untied in reality.
...now we can watch a movie without buying a movie ticket.
...now we can listen to a song without buying a record.
The key to the Digital Age is to recognize that many existing products already embed intangibles, which is why those products are still being bought. However, once those tangibles stop being offered, or a competitor offers better intangibles, the customer will go elsewhere.This is a great point, and more eloquent than my own post from a few years back on how every "product" was really a mix of scarce and infinite goods. To understand what the technology allows, and how to embrace it in a way that's sustainable, you need to be able to break out the components, and properly figure out what's really scarce, and what isn't.
Creators can sustain. They will sustain. The market wants to sustain creators. Yet only the ones who realize that they don't sell products, but experiences. Only those creators are the ones worthy of survival in the Digital Age.
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Filed Under: abundance, business models, scarcity
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And yet, for all the discussion of "experiences", without the basic product that people value and desire, all the experience in the world is worth crap.
The movie theater experience for a crappy movie is crap.
The book experience for a crappy book is crap.
A crappy song is a crappy song, no matter how you deliver it.
People enjoy the experience, they value the underlying product. If you forget that, you are doomed to fail.
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"And yet, for all the discussion of "experiences", without the basic product that people value and desire, all the experience in the world is worth crap."
And this:
"People enjoy the experience, they value the underlying product. If you forget that, you are doomed to fail."
I think you really meant:
And yet, for all the discussion of "product", without the basic experience that people value and desire, all the product in the world is worth crap.
And:
People enjoy the product, they value the underlying experience. If you forget that, you are doomed to fail.
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A good song is a good song, no "experience" is required to make that song good. All the experience in the world cannot make a bad song good.
A good movie is a good movie, no experience required. A great movie seen in the comfort of your home for the first time is still a great movie. Heck, a great movie seen in the discomfort of economy class in an airplane is still a good movie. A bad movie is always bad, all the experience in the world can't make an Ishtar or a Waterworld be anything other than horrible movies.
My point is that discounting the product as a disposable, intangible, infinite good with no market price is to miss the entire point. A Ferrari is not a fast car because of the badges or the zoomie sounding exhaust note, it is a fast car because of the product itself. You can slap the badges and a noisy exhaust on a yugo, but it won't be a Ferrari.
Failure to remember "it's the product, stupid" dooms you to never getting out the gate.
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any advancement, experience, abstraction, discussion, etc etc is a dead end if you the artist suck.
it also appears to me mike that after initially stating your slight disagreement with jeff jarvis, you then went through and commented on things demonstrating an agreement with him. just my impression.
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Only what you can measure (the experience) is real. You only know the product exists through the experience.
Of course, if you have a crappy experience then you might deduce that the product was crappy.
However if you don't have the experience then the product might as well not exist.
Moreover the experience is always scarce - since it always costs (at least) your time.
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So answer me this... Why must a movie exclusively go to theaters first?
If it is a "great movie" why not let me buy it on DVD (or *gasp* online) at the same time? It doesn't matter where I watch it... correct?
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Re: Re: Re: It's a product
1's and 0's on the other hand, (as represented by discrete electrical signal levels within integrated circuit devices) are not products. Or, more accurately, they are the product of tangible goods whose cost has already been paid.
If I send a "file" over the "internet" to "you" what is the cost? A pair of correct answers is A) Cost of internet for both parties + cost of electricity for both parties + time of both parties AND B) nothing extra, as both parties are already doing/paying for all of these things.
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The core act of listening to music is the experience. It is the heart of the issue. Listening to music (good or bad) is not a product, but an experience. When you can give out the experience for next to nothing, your product must change.
"A good movie is a good movie, no experience required."
False. Watching a good movie is an experience. Watching a movie (good or bad) is not a product.
"A great movie seen in the comfort of your home for the first time is still a great movie. Heck, a great movie seen in the discomfort of economy class in an airplane is still a good movie."
The experience of watching is the heart of it. And look at the difference in product. They can sell tickets & DVDs, but no one pays for the movie on the flight. They sell scarcities (like headphones) using the experience of watching a movie. It highlights the divide even further. Now take the fact you can deliver the experience of watching a movie for next to nothing. Like watching a movie on a flight, you must change your product.
"A bad movie is always bad, all the experience in the world can't make an Ishtar or a Waterworld be anything other than horrible movies."
The core reason the movies are bad is because the experience of watching them is bad. Flip-side, see Avatar for an excellent example of a mediocre movie being hugely successful because the act of watching (3D experience) is great. This better experience of watching commands higher ticket prices (product).
"My point is that discounting the product as a disposable, intangible, infinite good with no market price is to miss the entire point."
No it isn't. Never forget you're using an experience to sell product. That is the point. If your experience is crappy (the music sounds bad, the movie is boring) you cannot sell your product (MP3/CD, DVD/Tickets) even if it is cool. If the experience can be delivered for next to nothing, you old product of using the experience of the movie to sell the delivery must change.
"A Ferrari is not a fast car because of the badges or the zoomie sounding exhaust note, it is a fast car because of the product itself. You can slap the badges and a noisy exhaust on a yugo, but it won't be a Ferrari.""
But a Ferrari is not a good that can infinitely be copied with approaching zero cost at home by anyone. Therefore it is not an applicable example. Even so, even if you took the parts separately from a Ferrari, the cost of production is much lower that the price to buy. Why? Ferrari is selling an experience through a product, and therefore command the margins they do. They are selling the experience of luxury, speed, exclusivity etc.
"Failure to remember "it's the product, stupid" dooms you to never getting out the gate."
Failure to remember "it's the experience, stupid" dooms you to never selling your product.
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Yes, but... ?
Wonderful post. Thanks for the provocative and thoughtful response.
I very much buy what you and Prudan say about offering experiences, about that being separate from the tangible product. This is the problem so many in media have: newspapers think they make paper, and so on.
I also argue that sometimes, we don't offer an experience but a relationship (that's what marketing should be -- without advertising; it's what a newspaper that truly serves its community should be...).
OK, now here's the but:
How is the experience a scarcity? That may be scarce for the "buyer" or "consumer" -- that is, I have only so much time or emotional space for the experience. But I don't see how that's scarce for the producer. I think it's still about abundance, no?
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Experience v. Product
I think Avatar is a great counter example. The movie wasn't that great, but the 3D experience was fabulous. The story has been done a thousand times before, but I felt like I had gone on vacation, like I went to another world, and that I wanted to pay for.
Is what makes a Ferrari worth all the money just that it is FAST? Or do people buy a Ferrari because of the experience of seeing people's heads turn, and other knowing what kind of money the spent on that car. You could make a fast car a lot cheaper, but it wouldn't have the Ferrari experience.
I think the point of the article is not to try to divorce experience from products like a Ferrari, but media, where you can have the experience without the physical good, creates new challenges and opportunities.
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Experiences? For an advertiser it's all about results.
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Re: Yes, but... ?
Your only one step away. Your right in that the consumer's scarcity is time (and their money to spend). But you actually go to the very edge of the answer yourself.
Delivering the experience from the producer's point of view is NOT a scarcity anymore. These companies business revolved around selling the delivery model (e.g. DVD/CD product) through the experience (listening to good music, watching a good movie). Data is data, and delivery is near zero with the Internet and getting cheaper every day. That is the whole issue all recording based industries face. Trying to sell non-scarce copy delivery as scarce ones.
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I guess you've never been to a midnight showing of Plan 9 From Outer Space or Rocky Horror Picture Show. The shared experience of watching a bad movie with a bunch of other people while making snide comments and throwing popcorn at the screen can actually make an entertaining experience (even though the movie is still bad).
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Ben, the problem with your line here is that you missed what underlies the whole thing: If the movie isn't good, even if the experience (nice chairs, 3D, THX sound, 9 foot tall screen, best popcorn ever, whatever) is amazing, it won't save Ishtar or Waterworld, and it won't make the Spice Girls movie into anything other than a promo vehicle.
You can have a good experience watching a movie, but the movie watching experience cannot make up for a crappy root product.
Have you ever watched the test patterns on an HD big screen TV. It's pretty amazing for the first 20 seconds or so, and then it's gone. No matter how nice the screen or how crisp the image, the test pattern itself is dull.
If your experience is crappy (the music sounds bad, the movie is boring)
This is where you are wrong - you are confusing the experience with the product. Experience is all that goes into showing you the product, the theater, the popcorn, the seats, the sound, the screen, the "presentation" as it were. It's on the same plane as an empty night club with no music. It's a beautiful place, amazing lights, great drinks, but without people and music, it's just another pretty room. A movie theater is just an empty dark room without the content, the product, what it is people line up for.
The Ferrari is a prefect example, because the pure marginal costs of producing 1 more car are lower the the selling costs, but that is only part of what it costs to make the car. Design, development, the factory, the equipment, the testing, the safety crashes (always painful to see), and all sort of other "non-marginal" costs stack up eat up much of the window sticker price. Yes, people are buying the Ferrari experience (beauty, grace, style, people look, whatever) but in the end, if the car didn't run, most people wouldn't buy them. Ferrari almost went out of business because their cars didn't run. All the experience in the world didn't make up for a car that needed excessive repairs all the time. The experience was nothing without the product.
With a good product, you can build a good experience around it. If Avatar truly sucked as a movie, all the 3D in the world would be meaningless, because nobody would sit through the movie. If it was just the 3D and all that which made it special, then it would be easier just to run a 3D demo reel and charge people to see that. It doesn't work, because people want to see the underlying product, the movie.
The experience alone wouldn't sell. What is truly scarce is good movies, good music, etc. Only focusing on the marginal reproduction costs is more than a marginal mistake.
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Experience and Products
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posted under a different name, you would consider them to be thoughtful opposition. You see my name at the top, and you blank out.
Debate ideas, not people.
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If you are selling the experience of a movie at the theater, with comfortable seats, a great screen, and a nice sound system, obviously the movie itself has value to you because you have to have something to show on your screen, to play through your speakers. How is this value any different if the price of the movie is $0, $10, or $10,000?
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You're confusing the experience with the product, TAM. You've yet to address the situations where the experience was good regardless of the content's "value".
I'm reminded of going to a Prince concert because some friends needed a ride there. I'm not particularly fond of this singer, but the experience of going was worth listening to music I did not prefer. While I didn't buy any music from Prince, the experience to this day remains very memorable to me.
While you do make accurate statements in the content's value, they still remain separate entities and it's this separation on how one should focus on the experience, rather than the content.
In your example of Ishtar and Waterworld, are you trying to tell me a theater couldn't host an event to which mocking the very movie couldn't be an entertaining experience?
It's a good thing the folks behind Mystery Science Theater 3000 don't agree with you, as watching this series, covering very bad movies, makes the experience very entertaining.
I should also point out the obvious in that I still enjoy the experience articles Techdirt delivers despite bad posts, often written by you of late.
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So it's "tells a person" not "tells people". Please get it right.
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This is really what Mike preaches over and over again. It's the combination of the movie and the experience that you can sell. Although the movie may work without the theater experience, the market has made the movie's price fall to free based on economics. So, the movie needs to be bundled with something scarce - like the theater going experience - to make it something customers want to pay for.
This is not because the movie has no value. It is because the cost of something is going to be based on the value and the supply. Value will create a demand, but if the supply is infinite, the cost will eventually drop to zero. Bundling it with something that has less value but also a limited supply creates a product with limited supply and some (possibly great) demand.
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That's not the experience I was talking about (though referred to in my Avatar example). The act of watching a movie IS the experience. I don't product a movie when I see a movie, good or bad. I experience a movie when I see a movie. Whether the movie is good or bad is the experience first, not the product first. The product is selling tickets/dvd's etc. and that can effect the experience, but the core is that watching a movie is experiencing a movie.
“You can have a good experience watching a movie, but the movie watching experience cannot make up for a crappy root product. "
If your movie is crappy, that means the experience will be crappy. Therefore you cannot sell your product (tickets etc.) If you experience of watching a movie is enhanced by 3D you can make the overall experience better and sell more product/higher priced product.
"This is where you are wrong - you are confusing the experience with the product. Experience is all that goes into showing you the product, the theater, the popcorn, the seats, the sound, the screen, the "presentation" as it were."
No you are. The act of listening to music or watching a movie is not a product. It is an experience. It is the core of the activity. No one goes to "product" music. You experience music. You buy the CD's/live tickets (product). The product is the selling of the movie tickets, the popcorn, access to better sound/screens. The experience of seeing a good movie is what makes them worth paying access for.
" It's on the same plane as an empty night club with no music. It's a beautiful place, amazing lights, great drinks, but without people and music, it's just another pretty room. A movie theater is just an empty dark room without the content, the product, what it is people line up for."
You’re actually proving my point. No one buys the product (goes to nightclub/purchases theatre tickets) without a good experience (good music/good movie). Without the experience people won't show up to buy your product. Shitty nightclub music experience will keep people from buying your product (drinks/cover fees).
"The Ferrari is a prefect example, because the pure marginal costs of producing 1 more car are lower the the selling costs, but that is only part of what it costs to make the car."
But it is much more than zero. With movies, music the cost of creating one more copy is essentially zero.
"Design, development, the factory, the equipment, the testing, the safety crashes (always painful to see), and all sort of other "non-marginal" costs stack up eat up much of the window sticker price."
Of course it will increase sticker price, but Ferrari has HUGE margins and I never said they didn’t include those costs, in fact I highlighted it as a reason why it wasn’t a suitable example. The cost of delivery of a Ferrari is not zero. The cost of creating one more copy is much more than zero. The experience of owning a Ferrari requires a physical product. The cost of delivery for music/movies is near zero. The cost of creating another copy is near zero. The experience of watching a movie no longer requires access to a physical product. It can be done digitally.
"Yes, people are buying the Ferrari experience (beauty, grace, style, people look, whatever) but in the end, if the car didn't run, most people wouldn't buy them."
Well duh. If the cards didn't run it would take away from the experience of owning a Ferrari.
"Ferrari almost went out of business because their cars didn't run. All the experience in the world didn't make up for a car that needed excessive repairs all the time. The experience was nothing without the product."
So what you are saying is that a bad experience of owning a car can take away from the experience of owning that car. And now that they improved the experience of their cars they sell more product.
“With a good product, you can build a good experience around it.”
No, it is if you can create a good experience you can sell a product. If watching your movie is a good experience you can sell tickets/dvds. If listening to your music is a good experience you can use it to sell live tickets. If you have a cool limited edition box set dvd, but the experience of watching the movie is bad because the movie is bad, you cannot sell your product no matter how cool.
“ If Avatar truly sucked as a movie, all the 3D in the world would be meaningless, because nobody would sit through the movie.”
I didn’t say it sucked. I said it was mediocre as a movie. However, the act of watching the movie in 3-D propelled it past its’ shortcomings. The experience of watching it in 3D surpassed the experience of watching it in 2D. Therefore they were able to use the experience to command higher ticket prices (product). This also proves that you can, by improving consumer experiences, sell another product (higher tickets prices).
“ If it was just the 3D and all that which made it special, then it would be easier just to run a 3D demo reel and charge people to see that.”
Never said it was only the 3D. See above. It was the experience of watching a mediocre movie with amazing 3D. Therefore you can sell higher priced tickets. The tickets are your product. That is where the money is.
“ It doesn't work, because people want to see the underlying product, the movie.”
It doesn’t work, because the experience of watching a demo reel in 3D is not sufficient to get people to buy tickets (product). The good experience is simply not there to get people to buy a product. If your product can reproduced for free and delivered for free your in an even bigger problem.
“The experience alone wouldn't sell. What is truly scarce is good movies, good music, etc. Only focusing on the marginal reproduction costs is more than a marginal mistake.”
The product alone wouldn’t sell. What are truly scarce are good experiences for consumers and consumer’s money/time. Only focusing on selling non-scarce delivery and non-scarce copying is what is causing problems and is a huge mistake.
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The bad movies that TAM refers to are movies that people think are a waste of time. I think that would be a pretty good definition of what a bad movie is and why no matter how good the experience is, people won't like them -- translation: won't pay for them. Waterworld is a classic example; a movie few enjoyed. You can stand in a street and give out free DVDs of the movie, no one would touch them.
No matter good the experience is, a bad movie will never succeed.
However, if the experience is lousy, it could be a potential loss of sale...bad quality pirated DVDs can ruin your mood, you might end up saying "fuck it, I'm watching something else." Or the whole theater experience may be too much of a pain -- expensive tickets, parking problems, pricey popcorn, noisy teenagers...could be anything. So, even if the movie is good, "bad experience" can lead to potential loss of revenue.
Poor Hollywood...how are they gonna (finally) give the customer what she really wants!
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Hi. My name is Irrefutable Evidence That You're Idiotic Statement Is Wrong. I don't believe we've met....
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I just don't see how "You only fit around here if you use the same name for every post and just repeat what Mike said" has any basis in reality....
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2. "Sounding like a troll and being a troll are not too different." Are they different at all? If what you write is trolling, then you're a troll, yes? Note that I'm not saying that is the case.
3. "I have a different opinion and you jump right to troll, nice one." He was disagreeing with you, like I am now. Note that I am disagreeing with you without calling you a troll. It happens all the time around here, and we are questioning why you would claim otherwise.
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2. No. There seem to be varying definitions of Troll, it is applied loosely around here in my opinion.
3. Right, not everyone here is an ass, just a lot of folks.
Apparently my issue is not with you, nasch.
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Not all of us are writers or have the amount of time you seem to have to post here. So my posts are often more terse and to the point. Maybe I do not explain myself well enough, I am often labled a troll when I am on topic and trying to debate the issue (not the case this time). You do not have to agree with my but jumping to terms like 'troll' and 'idiotic' really do not help move the conversation forward.
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Fair enough.
FYI, not a professional writer....yet. I just have the kind of 8-5 that allows me to multi-task on the net....
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Indeed, but it's the scarcity to the consumer that matters. You can't "copy" an experience. That's what makes it scarce. But what's good for the content creator is that they can help create scarce experiences through the use of abundant content. In other words, it makes at least a major input *resource* incredibly cheap, if you know how to use it well.
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When I talk about experience, I was referring to the "movie going experience", which in theory is what drags people to pay $10 a ticket to see a movie instead of waiting and watching it at home.
In your case, your experience could happen anywhere. Obviously, as movies can be pirated and made widely available for free, there is no reason to have theaters anymore. In fact, anyone paying to see a movie is a fool, as the product is out there for nothing.
Now all we need to do is explain to people why they are fools, and the entire movie industry will be saved.
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the first thing you have ever said thats good and you did not say it..
Now we have to find a way to express an experience in different ways and its not easy anymore I have been trying for the last 5 years on a 6 album project that’s almost completed I will never accept thieving is ok for promotion I live for my music and I work hard to achieve the gods I set myself I don’t care if people don’t support me because I call them a thief because that’s what the truth is if you steal another persons work I don’t need to be surrounded by thieves that love my music and I don’t care what backlash it gets me because i’m an artist and as such my art is the work and it has value imp not a slave to the public of my fans they follow if thy chose but if they steal they are not fans or supporters they are thieves.
I will control my work because its my baby I will protect it from thieving low life’s where ever I can because its mine those that buy it only license it they never on it
One day this will be the way again and excuses about fat cats and corporations will not stand because the artist want to control their work how they see fit i’m added value and I don’t tolerate thieves I don’t need your help support or promotion and I hope you music thieves all get put in prison for being the common low life criminals you have to realise that you truly are
my albums are a bigger trip but its not about t-shirts and ROI on merchandise its about a trip through the musical world and hopefully people will want to buy it and not steal
http://www.youtube/markryder
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Re: the first thing you have ever said thats good and you did not say it..
Now we have to find a way to express an experience in different ways and its not easy anymore I have been trying for the last 5 years on a 6 album project that’s almost completed I will never accept thieving is ok for promotion I live for my music and I work hard to achieve the gods I set myself I don’t care if people don’t support me because I call them a thief because that’s what the truth is if you steal another persons work I don’t need to be surrounded by thieves that love my music and I don’t care what backlash it gets me because i’m an artist and as such my art is the work and it has value imp not a slave to the public of my fans they follow if thy chose but if they steal they are not fans or supporters they are thieves."
Please, for the love of reading, use some grammar. You let your thoughts bleed onto the page like Molly Bloom's soliloquy, leaving any possible respect trailing behind your ironic assertion that Mike has no brain.
My disdain from trying to read your run on sentences aside; why work as an artist if not enough people are willing to support you enough to be considered fans? It makes no sense to me that people work for the sole purpose of making money and then complain when they're not able to make enough. If you're just in it for the business then there are plenty of other ways to make money. If you're in it for the music then I suggest it might serve you to find out what people are willing to pay for by communicating with those who have heard your work, before you hang your livelihood on producing more and then expecting them to pay.
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