Pricing Models For The Digital Age

September 15, 2008

I already quoted Chris Anderson yesterday and must once again. He brought to my attention this great paper by Prof. Hal Varian (for all of you who have had not the honor to study a few semesters of economics… he is “god” … well my professors told me so… by the way Mr. Varian is the “chief economist” at Google at the moment…)

In this paper, Varian describes 14 business models that allow content creators to make money even if they cannot stop the content from being distributed for free.

  • Make original cheaper than copy.
  • Make copy more expensive than original.
  • Sell physical complements.
  • Sell information complements.
  • Subscriptions.
  • Sell personalized version.
  • Advertise yourself.
  • Advertise other things.
  • Monitoring. (ASCAP monitors the playing of music in public places, collects a flat fee, which it then divvies up among its members.)
  • Site licenses.
  • Media tax.
  • Ransom. (Allow potential readers to bid for content. If the sum of the bids is sufficiently high, the information content is provided.)
  • Pure public provision.
  • Prizes, awards and commissions.

Some of these models are better than others… some only work for a very specific kind of content, but they are all options.

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