The Banana Stand businesses I’ve been writing about are digital content businesses. Today I thought we could talk about the economics of selling lumps of data.
One upon a time, selling information was a lot closer to selling actual bananas. It came in the form of objects which were expensive to create and transport: Scrolls. Books. Videocassettes. Bricks with notes tied to them.
Even then, you could argue about the value of the information being transferred. But the medium had a relatively clear value attached to it, as well as undeniable scarcity. Only 5,000 of these books were printed, and if I have one of them in my library, that’s one less that anyone else can have. If you swipe it from my library, now you have it and I don’t.
Ubiquitous digital storage and transmission changed all this. The cost of producing information stayed more or less the same. But the cost of copying it dropped to essentially zero. Information wants to be free, as they say. Meaning: if information is free to transmit, people will tend to transmit it.
Since then, society in general and publishers in particular have been desperately trying to find ever more clever ways to impose pre-digital scarcity economics on post-scarcity products. Because they understandably still want to get paid. Authors got kids to feed. Record company execs got coke habits to support.
I’ve participated in this pseudo-scarcity economy a fair bit. I’ve sold a lot of e-books. I’ve hosted a subscription-based screencast business in which customers are, ostensibly, trading money for bytes.
It’s a strange world. We pretend a stream of bytes is “worth” some amount of money, and also pretend that this stream of bytes isn’t readily available for free from a coworker who already “owns” it, or on any number of piracy sites. (Piracy is the topic of a different article).
But in the absence of printing costs, what is a book or a video “worth”, anyway?
Maybe a book helps a customer do their work better. Is the book’s worth some function of the economic value of the work the information helped the reader accomplish?
Is it a percentage of the hours the author sunk into it? And if so, what are those hours worth?? Are they worth whatever their current day job salary breaks down to in hourly increments? Or more, because this is their most personal, creative work? Or less, because they enjoy writing it more than they enjoy punching out widgets?
Is it worth whatever the market will bear? Which market? The market of lucratively employed turbo-nerds who are going to expense your boutique tech book to a corporate training budget? Or the market of out-of-work single moms about to lose their apartments who might get a leg up on an interview by reading your book? These markets have very different budgets.
Personally, I find all this “worth”-calculation entirely intractable. You can pull this thread endlessly until you get down to the bedrock of our economic system. Which turns out to be not so much bedrock as a vast cobwebby collective exercise in faith, suspended over the void.
Exhausting. We have books to write and screencasts to produce and smug Instagram photos to post of ourselves at the coffee shop with our laptops, living the “lifestyle business” dream.
After all this time I don’t really know jack about how to price “right”. But I do know this: I’m not focused on getting money-for-information anymore. As much as possible, I’m trying to live in what I think of as the Tote Bag Economy.
What I mean is this: When National Public Radio does a fund drive and I send them money, they send me a tote bag. If I send them more money, maybe they send me a tote bag AND an umbrella. On the face of it, this looks like a pretty clear money-for-stuff transaction: the more money they get, the more stuff I get. And indeed, many of their contributors might well be incentivized by the stuff. It might be the lure that gets people over the line from thinking about it to opening their wallets.
But we all know that when I send NPR money, I’m not trading it for a tote bag. I’m not even trading it for a specific radio program that I listened to, or one that I’m hoping to listen to.
It’s not really about the tote bag. It’s about wanting NPR to keep being NPR and keep making shows about how fonts became Nazi symbols.
Likewise, when I send Jessica Lakritz money for a book of poetry, I don’t actually view it as buying the book. I don’t particularly care about receiving the book, even. I just want to support her in in continuing to inspire people and challenge how we relate to bodies with her physiopoetry.
When it comes to my own work, I make the baseline assumption that anyone who is reasonably motivated can find it for free. Either from a friend or posted on a pirate site.
If I sell a digital book or a video or a course as a “product”, it’s a tote bag. It’s a token. The people who get the most value from my work are also the people who want to see me keep doing what I do.
There are business models that map more directly to the tote bag economy. Patreon is probably the most direct and widespread implementation of “here is money to keep doing the things you do”. With Graceful.Dev, I’m moving further from a model of “money for bytes” and closer to a model of “here is my garden, please support my continued gardening”.
So that’s the Tote Bag Economy. I think it’s a useful way to think about value in a post-scarcity business like digital content. If you find this perspective helpful, let me sell you a tote bag.
I’ve come to this way of thinking as well: want me to continue doing the things that you appreciate? Here’s several ways to pay me. I’m not quite there yet, and finding ways to adjust the price based on how much the individual wants to pay (not sure if that’s the same as “equitable”) is tricky. Students, want-to-be software developers, early-career devs, established devs, etc., all have different money they can spend and different amounts they want to spend.
Right now, I’m more focused on building a community (slowly, so slowly) and not just an economic entity, but the latter is needed to support the former.
Yeah, it’s tricky to find ways to meet everyone where they are.
Looking back, I feel like after the initial seed of folks who followed my blog, the community and the economic entity evolved in tandem. A spiral. YMMV.