MobileRead Forums - View Single Post - interesting article on the economics of e-content

andym · 10-03-2007, 06:31 AM

Maybe the guy should attend an Economics 101 class.

If you have a PC and internet access these are costs that you have already paid and what matters for purchasing decisions is the incremental cost of the content. People don't say, 'I've paid a truckload of money for my car therefore I'm not going to buy any petrol', or to take a less absurd example, in comparing transport costs, they compare the cost of the petrol with (say) the train fare and don't take into account the whole cost of ownership.

There are plenty of examples where people do pay for devices and then pay for content. Video and DVD purchase and rental, music downloads. People do pay for access to content on the internet - usually access to specialised databases.

In general I think the major reason why people don't pay for content on the internet is that there is a lot of competitive pressure from advertising supported media, and because no one has come up with a simple system for casual one-off 'micro-payments'.

There is an element of truth in the argument though in relation to eBooks which is that people (or at least some people) will look at the devices and they will consider the cost of ownership and the cost of books and take that into account in their buying decisions. So if a device costs $300, and it can only be used for reading, then some (many?) consumers 'that costs me x dollars per book' and unless you are a heavy reader you may decide that the other benefits (ease of download, portability, ease of storage) don't justiy the additional cost.

You could say that if there was more content out there and the content was cheaper, more people would buy readers and the prices of the readers would fall and publishers would sell more and make more money and everyone would be hapy. That's probably true, but if I were an individual publisher I would say, 'the high price of the devices isn't my problem, if I cut prices I will simply cut my revenues'. Economists call this a 'common action' problem, and there isn't an easy solution too it.

I should say that I'm not trying to justify publishers charging more for eBooks than pBooks.

10-03-2007, 06:31 AM	#5
andym Groupie Posts: 189 Karma: 793 Join Date: Oct 2006	Maybe the guy should attend an Economics 101 class. If you have a PC and internet access these are costs that you have already paid and what matters for purchasing decisions is the incremental cost of the content. People don't say, 'I've paid a truckload of money for my car therefore I'm not going to buy any petrol', or to take a less absurd example, in comparing transport costs, they compare the cost of the petrol with (say) the train fare and don't take into account the whole cost of ownership. There are plenty of examples where people do pay for devices and then pay for content. Video and DVD purchase and rental, music downloads. People do pay for access to content on the internet - usually access to specialised databases. In general I think the major reason why people don't pay for content on the internet is that there is a lot of competitive pressure from advertising supported media, and because no one has come up with a simple system for casual one-off 'micro-payments'. There is an element of truth in the argument though in relation to eBooks which is that people (or at least some people) will look at the devices and they will consider the cost of ownership and the cost of books and take that into account in their buying decisions. So if a device costs $300, and it can only be used for reading, then some (many?) consumers 'that costs me x dollars per book' and unless you are a heavy reader you may decide that the other benefits (ease of download, portability, ease of storage) don't justiy the additional cost. You could say that if there was more content out there and the content was cheaper, more people would buy readers and the prices of the readers would fall and publishers would sell more and make more money and everyone would be hapy. That's probably true, but if I were an individual publisher I would say, 'the high price of the devices isn't my problem, if I cut prices I will simply cut my revenues'. Economists call this a 'common action' problem, and there isn't an easy solution too it. I should say that I'm not trying to justify publishers charging more for eBooks than pBooks.