A Manifesto for the content industry 11 - This is a global market

If you charge western prices to the third world then people will find a way to get the content for free. 99c might not be a lot to readers of this blog but it’s a day’s wage to large amounts of the globe. The bad news is that you can’t stop a European going to an African website and buying from there, your unit cost is zero, expect your prices to trend that way.

This will be a short entry because it’s really just simple economics (even if it’s frequently missed by a great number of corporations who should know better).

Point 1: Once something is on the web it is effectively available everywhere. Sure you can try blocking things by regions and this will work for casual users and non-techy folks* but these things are easy to work around.
Point 2: Your unit cost is effectively zero**, everyone understands this, your unit price will have to be close to that for people to feel that they’re not being ripped off.
“Close to zero” is a variable though. In Western Europe or North America you can just about get away with 99c (or 99p) being “close to zero”. In the Far East, Eastern Europe, Russia, India and other areas of Asia, South America, anywhere in Africa, 99c gets ever further away from “close to zero” and ever closer to “a day’s wage”.
People will not pay a day’s wage for a digital entertainment file.

If you price your product that way then you can expect a high proportion of piracy in those countries. So you have two options: local pricing or acceptance that that market is not going to provide you with any income from digital downloads***.
However if you go for local pricing we get back to this “global market” thing. I have a friend who buys all his MP3s from a Russian site. It’s all completely legit (as far as he’s aware), but only a 10 th of the price. No laws broken, no copyright infringed, 1/10th the outlay.

But maybe 10 times the risk?
I’ve never used this site for two reasons:
1) I’m not comfortable giving my credit card details to a Russian website.
2) I’m not convinced that any of that money will ever make it back to the original artist.

And those two reasons mean a business opportunity still exists.
Let’s face it, a lot of the countries that have the lowest standards of living are also rife with corruption, if you run a trusted, 1st world web-company then that alone will be reason for some people to buy (see Amazon and iTunes for examples).
Secondly the success of things like Kickstarter, NoiseTrade and Bandcamp shows that there are a lot of customers out there who want to support the artist.
If you can facilitate that, show that you’re helping to get that content made, and provide a trustworthy service, then there’s a place for you.

* Warning, non-techy folks are a decreasing proportion of the population, building your business model on them is not a long-term strategy.
** I know that there are hosting and management costs for large businesses, but those large businesses are shifting lots of units.
*** It could still provide you with income from other channels though, don’t write it off.

A Manifesto for the content industry 6 – Focus on Quality

Focus on quality. A corollary to adding value; you cannot compete on quantity, it’s you vs the world, you have to be better than good.

So what do I mean by focusing quality? Well, simply put, it is finding and exploiting (in a positive sense) the great stuff.

First though, some numbers to explain why quality is the differentiator for any kind of business based on digital content:

•At least 35 hours of content is uploaded to Youtube every minute.

•The movie featured in this blog post was shot on an $800 SLR.

•Garage Band recording software is available from £13 and a fully specc’d copy of Cubase from £190

•e-books now outsell paper books on amazon and can be produced with free software and the cheapest pc you can find.

•Portable digital recorders with condenser mics now cost less than £100.

•You tube, Picasa, Bandcamp, and oodles of other sites allow creators to upload and share / sell their content for free.

•Over $100million was pledged to Kickstarter projects last year.

•There are over 200 million blogs and this number rises every year.

What all of this means is that it is easier than ever for creators to produce good content, easier than ever for them to share it directly with their fans, and easier than ever for people to find new content.

What’s not easy to do is find the best content. There’s so much good stuff out there that finding the great stuff, and getting in front of the right people, is a challenge for creators and consumers alike.

As with adding value, focusing on quality is where middlemen have a role.

We touched on this in the previous instalment (I used the example of the difference in production values on albums by The National) and these two aspects do sit together to a great extent, getting top quality content in front of the right audience is still a real challenge at all levels of the industry.

In the TV and music world there is currently a focus on the reality TV shows and their offspring, Big Brother, X-factor and their ilk. This is very much a lower-end-of-the-market play and, whilst it offers high returns for low overheads in the short term, the numbers indicate that this may have a short life span. Audiences for Big Brother and similar shows have fallen heavily since their early highs and whilst the X-factor continues to grow its TV viewing figures, the sales of singles are falling (even when downloads are taken into account). The limited longevity of the acts also means that there is very little “long tail” to be capitalised on.

By focusing on the lower end of the quality scale the output becomes a commodity rather than “art”, which, as well as removing any long-term re-sale value from the product, makes it open to competition from lower / zero cost producers, removes a lot of potential for any brand loyalty and makes the operation very vulnerable to a sudden shift in public opinion.

The competition for consumers attention is more open than ever, whilst the major content producers also own the major media and distribution channels a demand can be created, but as the net democratises the flow of information, and as peer-recommendation outgrows media hype, the money that people have to spend on entertainment will move towards quality output, even as they continue to watch and listen to the mass produced output.

* This may be my first ever blog post that has no asterisk'd footnotes. Oh wait.