Technology: Making digital goods valuable
MySpace just announced that it will begin selling music by the thousands of bands represented on the site.
In an online forum, someone asked:
That's an easy one... a music download represents the reduction of the music to "product" in a very uninteresting form.
Vinyl albums (ignore for the moment the necessity of the medium) presented music with a containing context, back-story, and other features that improved the experience of the music and that enhanced the value of owning one's own copy. The containers that black vinyl comes in are themselves often appreciated, sans music, as freestanding works of art and pop culture.
CD's were the start of the downfall of the valuation of music, not because of the digital music on the CD, but because the packaging and surrounding materials failed to evolve into some album-equivalent for the new format, and because so many packages were (and are) stripped down to nothing but a shiny disc in a plastic box. The containing experience, the context and the backstory were taken away, and the product lost some of its substance.
I do not suggest that the album aesthetic should have been literally scaled down and dropped into CD packaging, but that new forms appropriate to the medium should have evolved, and did not... with notable exceptions, of course.
And now, people are asked to pay money for the right to reproduce and decode bits... just bits. There's not even an album cover to hang on the wall.
I don't expect, going forward, that "pay for music" is going to have any traction all by itself. Bits aren't very interesting, or very personal.
The demand of the industry is that would-be buyers must be re-educated to "value" these ephemeral bits as the industry requires them to. But people aren't going to learn an exception for one kind of good, and won't be "trained" to value bits as they might value an album cover with lush inside graphics, or a super-thin cell phone, or a nice pair of shoes.
The problem with the industry's expectations - and here it acts like a parent disappointed in a child's sloppy skills at some task - is that people simply don't seem to work as the industry wishes they would. Perhaps a change in perceived valuation might happen eventually. But it's still the case that such a change could not be imposed by fiat into any generation that's alive right now except by force. That's DRM: imposing unintuitive, unfamiliar behaviors on people whose worlds, other than as consumers of media, don't work that way.
No industry can thrive with unhappy or confused customers forced into an arbitrary model of valuation for one kind of optional good. People get bored and move on, work around, or just ignore anomalies. That's why we have file sharing.
The whole story isn't really very interesting. The same issues trashed the first wave of web-hype startups that priced their goods at $0 and found "those customers who value the product at $0." There was no reason for the startups to be surprised when, once prices were raised above $0, people went away.
Bottom line: the difference between $0.00 and $0.05 is much greater, in terms of consumer behaviour, than the difference between $0.05 and $1.00. The difference in perceived valuation - by humans - of cool sunglasses and some digital bits is likewise substantial.
I've been working on some models for de-commodification of digital goods that I really oughtn't blast out in public just now, but would invite anyone with an interest to write me directly if you'd care to discuss in more detail.
The secret of creating valuation in digital goods is no secret - the "goods" have to be converted (or mapped, or attached) to something that has intrinsic value to normal people, acting as they do ordinarily, without imposing arbitrary exceptions. Customer perception of value cannot be changed on demand of a producer. Rather, the nature of the goods must change to engender perceived value among potential customers.
In an online forum, someone asked:
"... what are the chances that the apathetic teen generation will want to actually "pay" for music? They don't seem to buy it from shops, or any other download store, so why will MySpace be any different?My answer:
That's an easy one... a music download represents the reduction of the music to "product" in a very uninteresting form.
Vinyl albums (ignore for the moment the necessity of the medium) presented music with a containing context, back-story, and other features that improved the experience of the music and that enhanced the value of owning one's own copy. The containers that black vinyl comes in are themselves often appreciated, sans music, as freestanding works of art and pop culture.
CD's were the start of the downfall of the valuation of music, not because of the digital music on the CD, but because the packaging and surrounding materials failed to evolve into some album-equivalent for the new format, and because so many packages were (and are) stripped down to nothing but a shiny disc in a plastic box. The containing experience, the context and the backstory were taken away, and the product lost some of its substance.
I do not suggest that the album aesthetic should have been literally scaled down and dropped into CD packaging, but that new forms appropriate to the medium should have evolved, and did not... with notable exceptions, of course.
And now, people are asked to pay money for the right to reproduce and decode bits... just bits. There's not even an album cover to hang on the wall.
I don't expect, going forward, that "pay for music" is going to have any traction all by itself. Bits aren't very interesting, or very personal.
The demand of the industry is that would-be buyers must be re-educated to "value" these ephemeral bits as the industry requires them to. But people aren't going to learn an exception for one kind of good, and won't be "trained" to value bits as they might value an album cover with lush inside graphics, or a super-thin cell phone, or a nice pair of shoes.
The problem with the industry's expectations - and here it acts like a parent disappointed in a child's sloppy skills at some task - is that people simply don't seem to work as the industry wishes they would. Perhaps a change in perceived valuation might happen eventually. But it's still the case that such a change could not be imposed by fiat into any generation that's alive right now except by force. That's DRM: imposing unintuitive, unfamiliar behaviors on people whose worlds, other than as consumers of media, don't work that way.
No industry can thrive with unhappy or confused customers forced into an arbitrary model of valuation for one kind of optional good. People get bored and move on, work around, or just ignore anomalies. That's why we have file sharing.
The whole story isn't really very interesting. The same issues trashed the first wave of web-hype startups that priced their goods at $0 and found "those customers who value the product at $0." There was no reason for the startups to be surprised when, once prices were raised above $0, people went away.
Bottom line: the difference between $0.00 and $0.05 is much greater, in terms of consumer behaviour, than the difference between $0.05 and $1.00. The difference in perceived valuation - by humans - of cool sunglasses and some digital bits is likewise substantial.
I've been working on some models for de-commodification of digital goods that I really oughtn't blast out in public just now, but would invite anyone with an interest to write me directly if you'd care to discuss in more detail.
The secret of creating valuation in digital goods is no secret - the "goods" have to be converted (or mapped, or attached) to something that has intrinsic value to normal people, acting as they do ordinarily, without imposing arbitrary exceptions. Customer perception of value cannot be changed on demand of a producer. Rather, the nature of the goods must change to engender perceived value among potential customers.
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