Value for Value

The value-for-value business model, as described by Adam Curry and John C. Dvorak on their podcast, No Agenda, seems to be the only truly viable business model for digital media.

The stumbling block that many people seem to have when it comes to content in digital form is that it is very difficult to force people to pay a set price for something that can be perfectly replicated ad infinitum.

If someone is a craftsman and makes eight doohickeys in a normal work day, and two doohickeys are stolen, it's easy to see how someone stole two hours of their time (not to mention supplies, wear on his tools, and a portion of the time developing the concept of the product). But what if the doohickey is a digital file?

Maybe they are producing a song, a computer wallpaper, or a short animation, and we'll assume that they continue to spend one hour on each product. If a “thief” somehow gets a “pirated” copy of the theoretical doohickey, he's not costing that craftsman one hour of work, but just a fraction, as that single product can be sold and sold again for the rest of time. Because of this, we are given the consequences of having higher per-item costs, piracy surcharges on our storage media, and the promotion of using digital rights/restrictions management to keep the files from being duplicated.

The only real solution to the dilemma is to let the customer pay what they want, if anything, and acquire the product in whichever way they'd like. For some industries, like music, it is a relatively simple switch. We have platforms for selling our music at customer-selected prices, and like a by-donation fundraiser, the buyers can sometimes give surprisingly large amounts of money. Many musicians are also changing their mindset as they realise that their recordings are basically a promotional item to make fans buy high-end versions, like vinyl, or merchandise and concert tickets.

Other industries have a harder time making the change. For products that are not just a part of a wider range of material, like a movie or a podcast, craftsmen need to be able to make money directly for the work that is being produced. This is where value for value comes in to play.

Value for value is like the busker at the farmers market. They are there, putting on a show, not getting any guaranteed reward for their effort, but their accordion case is sitting there “asking” for money, and people will give what they feel the musician’s performance is worth. It's not a donation: it is a direct payment for the performance. The thing that makes it different from pay-what-you-want or using a crowdfunding model to raise funds is that those systems take payment before the work is delivered (or even produced), but value for value means the customer is giving money when they want, and choosing exactly how much to give.

The No Agenda Show is the prime example of this. The hosts put in a tonne of work, researching and developing the show, and listeners aren't asked to give money before they download or have listened to it, but are just asked a few times throughout an episode to support the show. Because of the consistently outstanding product, many of the supporters are signed up on per-episode and per-month giving plans, so Dvorak and Curry can have some expectation of what their funding will look like and it's not just a blind hope.

As a consumer, support the creators of content you consume. Once you're in the mindset of giving value in the amount that you feel the product is worth, and not letting “the system” set prices for you, there's a mindset shift and you start to value quality content more.

As a creator, don't be afraid to put your work out there for free. It’ll take some time to get used to it, but you can make real money from it.