A social, elastic model for paid content?
In his latest blog, John Battelle, who helped launch Wired, and later founded the online advertising network Federated Media Publishing, examines pay per view options.
His comments were prompted by Esquire’s new experiment with charging for a feature article. Battelle questions what would happen if social and elastic elements were added to the price of content.
The Sun and the Telegraph are just a couple of the newsbrands that have decided to put digital content behind paywalls, and it has been predicted that by 2016, most newsbrands will be charging readers to access online content. But what if the price of an article were to go down, as readership goes up?
Battelle’s theory model proposes that the price of an article goes down if enough people decide to buy it. His model never reaches zero, but suggests that there would be some kind of a demand/price curve that satisfies both readership and revenue.
“Perhaps a model could work like this: The piece costs $1.99 for the first 5,000 articles sold, garnering $10,000 in revenue (Ok, $9,500 for you sticklers). Once that threshold hits, the price adjusts dynamically to maintain at least $10,000 in overall revenue, but adjusting downward against the paying population as more and more readers commit (which also earns Esquire additional advertising revenue).
“A ‘clearing price’ is set, perhaps at 50 cents, after which all profits go to Esquire. In this case, the clearing price kicks in at 20,000 copies sold – everyone would pay .50 at that point, and it’s a win win win for all.”
Battelle dismisses one commenter who suggests that value increases with popularity, and perhaps the way to do it is to reverse it – instead starting the content at the lowest price, and as it becomes more popular, making it more expensive.
“I’m not sure that model would encourage the behaviours publishers would want,” Battelle said. “But I do think it’s about time that publishing got with the times with pricing optimisation.”
John Battelle’s full article can be read on his blog.