As for how do I define personal value of content, that gets into personal tastes and preferences, need and demand for specific information, and awareness of content. I will look at some of these in later posts.
As I discussed in Part 1 of this post, the price per individual piece of content is dropping due to the internet. The massive increase in the supply of all types of content that is good enough substitutes for content previously consumed has shifted the supply curve far to the right. This means that the intersection with the demand curve is at both a higher quantity of content produced and consumed, and at a lower price.
Here is the same chart again.
The distance between the two supply curves really depends on the time frames we are comparing. To look at 1991 to 2011 would reveal and almost infintesimal shift. (Although I want to explore in a separate post the upper limits of supply for any individual consumer, the observed supply is obviously a subset of the entire available internet.) Comparing 2010 to 2011 would still show a noticeable shift to the right as more and more content is produced and becomes available to consumers.
But coming back to demand, I will argue that the demand curve is steeper, or more inelastic, than most may assume. What does this mean? It means that there is a limit on the appetite for consuming additional content, even at low or near zero incremental prices. Demand is not perfectly inelastic. People surely consume more content and media today than they did 5 years ago, which was more than they did 10 years before that. Each day has only 24 hours, but the increase in recent years has often come for the ability to easily consume content during times that were previously underutilized. First was internet access on every work and home computer that facilitated surfing during every moment of down time. Now we have the mobile explosion, which enables content consumption in almost every remaining nook and cranny of previously inaccessible times. I can now read any book, news source, or watch a movie or listen to a podcast while taking a walk, sitting in a waiting room, riding a bus, and to some extent, even driving. I guess we still have certain subways with no cell phone access, some rural areas, and the few minutes of an airplane's take off and landing that we are limited to our own thoughts. (Optional detour: Scott Adams has an interesting hypothesis on the loss of boredom.) This reminds me of the story of the professor who puts stones in a jar and asks if it is full, then adds sand, then water, each filling in smaller and smaller voids. It is amazing how much content I will have to consume on an upcoming flight from Chicago to Hong Kong from inflight entertainment and stored on an ipad.
 |
| The demand curve was elastic, having a slope, as people were able to increase the amount of content as the supply increased and the price dropped. But at the saturation point, arguably about where we are now, the curve becomes steep, showing that no more total content will be consumed regardless of how much is produced or how low the price goes. |
I am going to argue that we have hit a saturation point of content consumption. Out of our 24 hour day, we are consuming as much content as we can amidst our other activities. Sure, this is going to make me look silly in a few years when I'm proven wrong in a big way, but let's work with that assumption for now.
The other fixed resource is money, especially in an economy such as today with stagnant personal income, less credit, and low inflation. People only have so much discretionary budget to spend on information and entertainment content.
So now we can talk about tradeoffs.
Along the inelastic portion of the demand curve, people will not consume an additional amount of content, no matter how much more is produced, or how it is priced. Even if it is free. That does not mean that someone will not choose to consume something new, just that they will do add it at the expense of something else.
Let's look at some examples and see how it works with a personal budget.
At the beginning of 2010 my family was paying roughly $150 to $200 per month for access to content. This included in round numbers:
- $130 for cable bundle, with 100+ television channels, internet access, and phone
- $15 for daily newspaper subscription
- $10-50 average spending between books (physical), music (a la carte, iTunes), Redbox movie rentals and the occasional trip the movie theater.
Since then we have changed our sources of content, but we are paying about about the same each month out of pocket.
- $100 for cable bundle with 50 television channels, and internet access
- $10 for Netflix streaming
- $15 for daily newspaper subscription (still)
- $10-$50 average spending between books (digital), music (a la carte, iTunes), apps and other mobile content, and still the occasional trip the movie theater.
The total content available for consumption is higher. Netflix has thousands of movie and television show titles that I can access. Mobile apps (we have an ipad and recently added an iphone) and ebooks provide significantly more hours of content for $10-$20 than a single hardcover book. And we will probably keep changing this mix. At some point we will probably end or reduce our newspaper subscription because we don't actually read the print product any more, instead getting our news from a variety of sources online that are for the most part fine substitutes. (Disclosure: I work for a newspaper company so I am clinging on more than I would be rationally.) We would use that budget savings to purchase access to something new, or just pocket the savings.
I still read content from my newspaper, occasionally in print, and almost daily online. But of all of the content I consume, it represents a lower portion than before. I glance at local and regional news, see what is the business section, and scan the sports columnists. That's it. I have different sources for national news, features, and even comics.
So... if the newspaper's share of content that I consume across all channels is decreasing... and I have more sources available... and my total budget on content is fixed... then it should follow that the share of my budget spent on the newspaper is less.
Then is it possible that I would ever pay for a newspaper online? Yes, it is possible. But not as much as I ever paid for a print subscription. It would have to be a small fraction of my budget, probably replacing a small portion of my print subscription, just as much as covers the value I get from those truly unique stories and analysis that I can't get anywhere else, mostly likely on local topics, priced competitively with similar online content.
Notice that I did not distinguish between platforms. It doesn't matter if the news will be available on a website, in an app, embedded in a tablet, or even printed on a piece of paper. I won't pay extra for access to any particular channel, but I will pay for valuable, unique content. Just not very much.
No comments:
Post a Comment