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Why Your Content is Worthless

Posted on September 21, 2009 by MCM

Boing Boing pointed to an excellent post by Paul Graham where he explored the value of content in a post-medium world.  Some people disagreed, but I see it differently.  There is a reason your content is worthless, and it’s not the consumer’s fault.

I think he’s exactly right, but it seems he doesn’t quite realize WHY he’s exactly right.

Let’s say you have a hardcover, and the hardcover is $20. You pay $20 because that’s what a book costs. All good. Books are $20. There’s some fraction of that that goes to the printing, and the rest is obviously to pay for the words on the pages. Seems fair.

Now a new invention comes out called the paperback. The same book is now $7. Okay. $7 is even better than $20! That means that the percentage of the production price of the hardcover was actually bigger than we assumed… it had to be well over $13! The actual value of the words on the page must be some fraction of $7, and based on previous experience, it could even be as little as half of the cover price. Well, good to know.

Now we have e-books. E-Books have no physical framing whatsoever. They come downloaded to your laptop or Kindle, which means the publishers aren’t shelling out ANYTHING up front, which means their value is something in the range of the actual words on the page. Something like $2. It seems fair. That’s what a book is worth.

Now the publishers ask for $20 for that e-book, or $9.99, and no matter how you look at it, you’re paying a MASSIVE premium over what you KNOW the book is worth. Not ASSUME, but KNOW. How do you know? Years of experience buying “stuff”, where the content-producing industries very carefully taught you how to expect price based on the content wrapper. It was how they increased margins at different stages of a product’s life, and I bet they never expected it would come back to bite them.

I think most people have an appreciation of this dynamic, but they don’t appreciate it in the order it happened. Content has great value (probably more than anyone is willing to pay), but the producers have trained the marketplace to see it otherwise. This article is perfectly reasoned, assuming the producers’ case is true. Assuming basic content has no value, and the illusion has finally been broken by non-physical formats. The assumption is wrong, but the producers have worked hard for many decades to make it SEEM right.

Interestingly, I realize that all the “freemium” models that give away digital versions while charging for more elaborate packaging… those are all buying into this confusion, too. As with Cory’s new experiment, if you’re paying more for an exquisitely-packaged version of a book, are you paying for the words, or the exquisite packaging? You see? The best we can manage any more is to repeat the same actions that got us here in the first place. Content has virtually no value: if you pay more, it will either be for a physical embellishment, or corporate profit. So says history.

About MCM

MCM is the creator of the animated series RollBots. He also writes books, such as The Vector, The Pig and the Box, and Typhoon. When not doing such things, he is coding sites like this one. He is also insane.
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  • I think it's great that we are moving towards framing this debate in post-monetised terms. Content has value. Content has no monetary worth. What I want is a cultural world where you can put those two statements together and people say NEITHER:
    1. eh, you what? NOR
    2. yes, the value is aesthetic

    What we need is to rethink the value question in such a way that producers of cultural content are able to benefit from valued content production. As internet access begins to outstrip access to banking that just won't happen by equating value with money. The Internet globalises the issue. Unless we're careful that's going to lead to an exploitative IP mercantilism of the same kind we saw in fur, textile, and raw materials in the days of colonialism.
  • fixerdave
    I'm sorry, I feel like I've come into a conversation half way through and I don't understand the terms you're using. I have the links to your site but, honestly, my first browse didn't find anything on this "IP mercantilism," which intrigues me.

    I agree that creators of content, producers as I call them, can get a lot of non-monetary value from their efforts. The open-source software community is, for the most part, based on this. Work in this field is greatly valued, though not often financially. Journalism, photography, and even cartography are all drifting in this direction. However, there is also value in having professionals dedicated to their craft, rather than volunteers doing things off the side of their desks. Professional content producers, by definition, need some way to monetise their work. They do have to eat. Like you, I think the "1000 fans long-tail" concept shows the most promise. It offers an easy and gentle transition between the volunteer and professional systems. If enough people care about what a producer is doing, that producer will be able to slide into the professional category gracefully, rather than the current sink-or-swim approach.

    I can sort of see how globalisation can exploit content-producers but I'd appreciate a link to some other post you've made on this. I get the impression you've put a lot of thought into it.
  • Apologies. gratuitous and unnecessary jargonese. By IP mercantilism I just mean the buying and selling of other people's creative content. It will be portrayed as a benefit to the creator (who can't make use of money directly -so some kind of goods in kind will appear great, but will be of no use in makeing their quality of life better, whilst at the same time engendering a sense of dependence). I blogged about ithere:
    http://agnieszkasshoes.blogspot.com/2009/08/fro...
    but at the moment I'm at the thinking stage - I've been discussing it with some economists as well as creatives. My sense is that the answer llies in some kind of global barter-credit scheme (NOT like the awful carbon-trading scheme that's designed to make wetsern economies look good, though).

    Monetary models I've considered have included a variation on patronage where craetives offer half their working year for sale for small-scale commissions; and some kind of craetive escrow system, where creatives input free sample material to a creative network. If people like the sample they can pay into the system whcih then offers up front payment to produce similar work (at the same time funding by-projects provided the required deadlines are met). The flow of money is maintained by having the created projects placed in digital escrow - basically, locked away until payment is inputed to the project equivalent to that outputed to the creative, at which point the product is released universally. From what I've seen of your website and your interest in encryption and digital file management, I'm guessing Keliso has elements in common with this.
  • fixerdave
    "I'm guessing Keliso has elements in common with this"

    Yes, and no. I abandoned the idea of a "digital escrow" system fairly early on. It places those holding the content in a very difficult situation. Imagine what would happen if said escrow was hacked and the content released before it was funded? Very messy indeed. Keliso takes a far simpler approach - trust the producer. Of course, trust has to be earned and there are mechanisms, including legal, to deal with fraudulent activity.

    When trying to come up with an alternative content-funding system, our problem is that selling mass-produced copies of media, that happen to contain content we want, is much like oil. Like oil, it's such a great system that it's hard to imagine a world without it. But, just like oil, we did fine without mass-produced copies before, and we will again. Like oil, this mass-production created its own set of problems that we all try really, really hard to ignore. You've pointed a few out in your blog. And, finally, like oil, selling copies is coming to an end. We need alternatives.

    We need a new system to support the creation of content. Unfortunately, all the mass-patronage systems (using your great term) have a fundamental flaw: if everyone gets the same thing in the end, how can one person pay more while another pays less? It's not fair; fair is very important to humans. Ultimately, the answer is that people won't. If they pay, they're paying for something besides the content that everyone is going to get. Ultimately, they're paying for value-added. It may seem odd, but, in the end, every donation-based system, every long-tail 1000 fan system, every T-shirt and live performance system is, in reality, selling one form or another of value-added.

    This value-added thing doesn't have to be solid or obvious. It can be even more ephemeral than the content it's being attached to. The "limited" part of a limited-edition print for example. Better yet, contemplate the nature of fan-dom; why do people become fans? If you start thinking along these lines, you'll make progress on your new monetary model. You might even come up with the mechanism behind Keliso, before I get my money :) On the other hand, Keliso is just one of many possible value-added systems. It won't be too much longer before lots of them are in place.
  • I've been a value-added advocate for a while. Many people in the industry think I'm nuts, but the fact is I'm a fan of both writers and musicians, and I am happy to pay for value-added. So either I'm unique (I'd love to think so, but it's hardly likely) or there's a model in there.

    I've blogged about value added several times. What I've advocated is creatives trying to recreate the festival feel, the "I was there" desire for souvenirs, the "gig and merch" appeal of bands. Whcih can, but doesn't have to, involve actual gigs and merch, or actual festivals.

    A cautionary note. There's always a danger that models turn into "creatives helping creatives" which is great to an extent - I love supporting people who do great things (but like you I'm broke, so my support has to be, by and large, non monetary). But there's a danger that either 1. you end up with a closed loop of just producers without consumers or 2. you end up with soething functionally similar to a pyramid scheme that ends up exclusing consumers from production.
  • fixerdave
    Actually, your logic is flawed. Book contents, the words on the page, are worth a whole lot more than $2. It's hundreds, thousands, even tens of thousands of dollars. The book model just divides that cost up between all the copies.

    This division of cost between copies worked fine when it took mass-production technology (and investment in said) to make each copy. The price attached to a copy could easily include a percentage that went towards the content, assuming enough copies were sold. These days, the packaging is virtual. It costs exactly ZERO to make a copy of a digital work. Even if the entire cost of copying, 100%, went towards paying for the content, the end result is nothing. 100% of nothing is nothing. And that's exactly what a COPY of a digital work is worth: nothing. Zero, nadda, zippo, nothing at all.

    Any financial system that attempts to put value on something that can be copied for free is doomed to failure. You can't sell virtual copies, you have to sell something else, some kind of value-added download service for example. Either that, or creators of digital content must get the entire value of their work before it is published. This is the only logical way; when copies are free, you can only sell it once.
  • MCM
    I think we're arguing the same thing, but slightly differently. The content is almost priceless — it's worth far more than you get paid to write it, in almost every case. It's the copy that's worthless (in digital form). You're paying for the wrapper, not the content in those cases.

    I do disagree that value-added is a good solution, though... it's a nice thought to have, but even the value-addedness is just more content, and at some point in the future, that will become a given, and people will expect the added value for free. It's a very temporary fix, and one that puts extra burden on the creator/producer for no benefit.

    Most writers won't be paid for their work up front. Even in the publishing world, most authors aren't paid nearly enough in advances to survive, and that's considered the pinnacle of evolution for the medium. So up-front isn't workable. Ignoring "pay for value" and instead look at it as DONATING for value, and we've made some progress. But that takes a lot of cultural conditioning.

    Anyway, I definitely agree with your sentiment, just maybe not your execution.
  • fixerdave
    "but even the value-addedness is just more content, and at some point in the future, that will become a given"

    I'd like to throw a very specific distinction in here. Some things can be copied for free, other things can't. Yes, some of the "can't be copied" things will be copyable in the future, but others never will. Obviously, the value someone's adding to content should be the latter, if this person wants to make money selling copies.

    I don't know, maybe I'm so conditioned by manufactures, "carefully taught ... how to expect price based on the content wrapper" as you put it, that I just don't see significant numbers of people paying for virtual copies. Perhaps, eventually, our culture may shift away from this to something where people will pay, but I doubt it. Honestly, I would expect the majority of content production to become a volunteer effort before that happened. This process is already rather far along in the software world.

    If we're going to maintain a professional class of content producers (authors, musicians, programmers, photographers, etc..) then we need either a system that adds non-copyable value to the digital copies being distributed, or an up-front pay-for-production system, or both.

    Now, I'm going to add a disclaimer here because I'm trying to sell an idea, a web system that does both. It adds value while paying content-producers up front. No, the website doesn't exist yet; no, I'm not looking for funds to build it myself. I just want to sell the idea and get on with my life.

    I do enjoy intelligent conversation and this topic is very dear to my heart. I've invested quite a lot of time thinking about it. However, I have this idea that I want to sell. I think this idea is the greatest, it will solve all the world's problems, and make the people who develop it billionaires. But, obviously, I'm a little biased :) Honestly, hyperbole aside, I do think it will work or I wouldn't have wasted the last 4 years trying to make it happen.

    The reason I bring this up is because, while I do enjoy the discussion, I have no intention of "publishing" my idea until I get my money. Thus, I wind up writing in circles, without getting to the point. I'd like to apologise for this now; hopefully, I'll be able to move beyond this soon. When I read blogs on this, talking about the problem and wandering all around what I think is an obvious solution, I just want to scream out the answer. But, I bite my tongue... It's kind of like reading Darwin's Origin of Species, with his beautiful yet tortured logic, and wanting to scream out "Mendel, read Mendal!"
  • Good point. Sounds like another one of those golden triangles, like resources-time-money etc, like distribution-productioncost-value or something.

    Thing is, Paul Graham *is* a money guy. If you can demonstrate success as self-publisher, that is fantastic - for you - but if you can demonstrate that this success is not just a one off, and you can demonstrate this to someone like Paul Graham, you may have a blueprint for something along the lines of "micro-VC for bootstrapping creators and/or curators of commerically viable cultural commons" and this would be a couple of huge steps in the write [sic] direction.
  • MCM
    I don't think you can ever really demonstrate success as a self-publisher to the extent that Paul Graham would look at you. If there's fickleness in the tech industry (either software or services), there's even more in entertainment. There's no way to even halfway guarantee audience engagement or ROI when even a second book by the same author can perform in a totally different way than their first. Angel investors may gamble, but I don't think they gamble in the same way as movie producers or book publishers :)
  • It's pleasant to see they are even paying attention, though. Moot point anyways, most VC's don't have deep pockets these days anyway. I think the point Graham makes about the word "content" being part of the issue is valid. If you start to pick apart language, you can call out "publishing" "author" "reader" "audience" "book" etc too. Sounds like fun. Let's create a banned list!
  • Devil's Advocate: I would argue that "dis-content" is reaching a vanishing point - when the cheap paperback was introduced, it was more portable and cheaper than the heavier volume, so the change scratched a consumer discontent. The iPhone etc eliminates portability issues. People can locate themselves wherever they want on the continuum from "free-no frills" to "sharkskin end-pages" or whatever, and this removal of discontent is disorienting for consumers and producers alike, so we get confused.

    We tivo millions of hours of Oprah because we can, but who has time to watch millions of hours of Oprah? We decide that, based on the whuffie-factor of her tweets, or some other insane metric, that Oprah has no value.
  • kdnewton
    I figure $5 for a digital download is approaching the "affordable for me" mark. At that point I can see it as paying $2-$3 for the book and an additional $2-$3 as a 'tip' of appreciation to the author.

    For example:
    Wil Wheaton's Sunken Treasure (http://www.lulu.com/content/6060063) is hosted at LuLu, and it's priced at $5. I'm a little hesitant, honestly, to purchase it there as I know a portion of that $5 is going to LuLu. If he were providing the digital download himself, it would be a different story.

    I suppose I'm just weird like that.
  • "price based on the content wrapper" esp relevant to #IndustrialDesign: "Why Your Content is Worthless" - http://bit.ly/368lPI #IndDes
  • "price based on the content wrapper" esp relevant to Design(ers): "Why Your Content is Worthless" - http://bit.ly/368lPI #IndDes RT @reBang
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