Value added content

August 4th, 2010

How do you get people to pay for something that they can get for free? Well, you can repackage it, add some new value and basically give it value by changing the nature of the product. For example it does not seem like you can imagine a real world freebie more basic than air, dirt or water. Yet all of these things are repackaged and sold at a premium.

The digital age has transformed items that used to have value into things that people expect for free. The most obvious example is music. Now musicians are forced to find new ways to supplement their income as fewer and fewer people are willing to pay for a song.

A friend recently pointed me to this really cool sculpture that the DJ and music producer Matthew Dear is offering along with his music. This a great example of the new music business models people are experimenting with. They are all about connecting with the fans in this personalized / direct way. In fact, the prevailing model that seems to be working is a combo of connection with fans + reasons to buy = sales (usually through some digital marketing medium platform like TopSpin or Nimbit). There are many examples now of people setting up “limited edition” box sets / glossy photos / signed pictures and comments / dinners with the actual stars and the list goes on. Trent Reznor made 1.6 million in a week doing it with a tiered system for his fans to buy and interact (check out the NIN site – they even have iphone apps).

It seems to me that there is a great opportunity to combine this need for personalization with the advances in mass customization. Mass customization is a topic I’m very interested in, and one of my favorite examples of this trend in action can be found on the Shapeways website. Here you can upload a 3D model and very quickly have a real solid object in your hands. There are no up front tooling costs or special skills (beyond 3d modeling) needed. A system could easily be set up to create a custom object for every album downloaded. So instead of it being this $125 limited edition precious thing like the Matthew Dear totem, it could be an equally unique and special $30 object.  I think that at $125 it is only going to attract the most dedicated fans – people who would have bought the album anyway.  However, at $20 or $30, you might get some people who might have just ripped a copy for free before, willing to pay this premium to get the music plus this little extra thing.  To make it a slam dunk, the”little extra thing” must also have some utility.  So, it is beautiful but is also a flower vase, for example. So, would you pay money for something you could otherwise get for free if you got a little something extra? One thing is certain – the music industry is going to change a lot in the next 10 years.

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