Pay with your preferences
We are going to need to work out some new economic system for our content.
Quite simply, there are a lot of people now who don’t pay for content, and won’t going forward.
Oh, they may buy some things, but the regular, daily books/movies/TV/apps/music? Not really.
There are plenty of places to get free ones of all of those, if you aren’t particularly picky (and even if you are).
So, there is going to be a real challenge both for when you buy one thing at a time (like we typically do with e-books) and for “all you can eat” plans, like Netflix.
What can we do?
Pay with something else besides money.
There is something that we have which is clearly valuable to companies: the information about what we prefer.
Advertising something is easy. It used to be hard to reach people…picture a new restaurant in a small town in the 1920s.
Now, it’s simple. You can put something out there that is in reach of hundreds of millions of people with very little cost.
The problem is that you still have to be able to reach the specific people who are buying what you want to sell (very few things are of universal interest).
Let’s say you make, oh, a Doctor Who cat play structure. You need to reach people who like cats and Doctor Who. You can show the product to a million people without reaching anybody who will buy it.
For a seller, being able to identify who is a likely purchaser is worth a lot. Those people not only are more likely to actually buy it, they may be happy to get your ad and will want to see more from you.
One way to determine what you are likely to buy is to look at what you have bought in the past.
Amazon can do that no problem. As I’ve written about before, Amazon already does this. You can opt-out of “interest based ads”, but if you don’t, Amazon can already use your buying history (and other things) to let sellers know what to advertise to you. The advertiser doesn’t need to get to know who you are personally…Amazon could charge them to make their ad visible to people who have bought X from Amazon before, without revealing who you are as an individual (Amazon is famously protective of its customers’ privacy).
I’m going to call that “direct evidence” of the likelihood of you buying something…you’ve bought something similar before, or browsed to pages about that type of item.
Another big indicator of what you might buy, though, are your interests…what we can call the “indirect indicators”.
A seller wouldn’t need to figure out the logic. You don’t have to know why people who watch a particular show buy a particular item…just that they do.
A recent study in the Proceedings of the National Academy of Sciences called
got quite a bit of play. It showed that it was possible to predict a person’s political party and sexual orientation based on their Facebook likes.
It wasn’t 100% accurate, but it was pretty good at it…certainly, valuable enough for advertising purposes.
I would guess that what we read/watch/listen to has similar predictive qualities, even if they might not as good (I don’t know if they would be or not).
Haven’t you ever made a judgement about somebody based on the media they consume?
So, imagine this as a scenario:
Amazon (or Apple or Google) has you a customer. You agree to let them share what you read (although perhaps not you as an individual…see above).
That company then sells that information to advertisers, and shows you ads you want to see.
That’s already largely happening.
Now, I’m going to take this one step farther.
Amazon pays a content producer to make something (let’s say a book, although the bigger money would likely be in visual media). Why? They test the book to see what groups of people like reading it, and how that predicts their purchases.
Amazon sells that information to advertisers…for more than what it gave to the content producer.
The consumer doesn’t pay money for the book…they pay with their preferences.
I think there’s a possible system there.
Not everybody would have to along with it (many people wouldn’t). There are people who would still opt to pay $9.99 for an e-book, and $100 a month for cable, rather than have their information shared.
My guess is that a lot of the things that we get for free now might dry up in that system…unless you paid with your preferences.
One of the questions would be whether selling the preference information would make enough to pay for the production of , for example, a blockbuster movie. My intuition is that it would: look at how much people pay for Superbowl ads.
Putting out a movie also can mean a lot of sales in ancillary goods, and I would still think people will pay for things like t-shirts in the future.
That might mean that Amazon wouldn’t have to finance the entire production cost.
I can also see people being worried that the works being created would be skewed towards predictability rather than art, but much of what you see is already molded by forces other than pure art. For example, Iron Man 3 will, as I understand, basically have two versions…one of which is more attractive for China (a huge and growing movie market).
I’m just kicking this idea around…what do you think about it? Do you think the current systems will endure? Are there other good viable models? How would you sell this idea to people if it was going to be widely-adopted? Feel free to let me and my readers know what you think by commenting on this post.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.