The Adams Theory Of Content Value

Scott Adams (yes – the same guy who does the Dilbert comic strips) wrote a blog post yesterday titled The Adams Theory of Content Value. He asserts that: “as our ability to search for media content improves, the economic value of that content will approach zero.” Which is a fancy way of saying things will become free because people will be better able to find good alternatives to the current non-free stuff. To wit:

At the moment, plenty of people still pay for media content. Those reasons will evaporate. Let’s consider books. Most people still prefer old-timey tree-based books, but the Kindle and other ebook readers are eating into that preference quickly. I haven’t yet heard of anyone buying a Kindle and later returning to a preference for regular paper books. It appears to be a one way ride. The Kindle, and similar devices, are designed for buying legal copies of books, which is a doomed attempt to forestall the inevitability of all media content becoming free.

I’m not sure why this notion makes me so uncomfortable. It could be because I’m supportive of writers making money off of their content, or it could be because I’m also building something that may go that way.

My immediate, almost visceral reaction to this is to argue that there is value in commercially-created content. I think of software when I make this argument: free, open-source software has existed for years, and yet consumers have historically opted to buy closed-source products over free, open source ones (e.g: the iPad, and the variant of OSX that runs on it).

But that doesn’t make sense. Software isn’t exactly the kind of content we’re talking about – people don’t need a book or a game or a song the same way they need Microsoft Office. And I suspect open-source software isn’t as widely adopted simply because its creators (i.e.: bored geeks) don’t spend enough time optimizing for non-geek users. So this is one argument that’s fairly easy to discredit.

But then where does this leave us? It leaves me with my original discomfort, certainly. It is true lately that content is a bad business to be in, and whatever business models there are that are working are vastly different from merely ‘selling’ content. iTunes works, but then they’re not really a store – some have described it as a tollbooth; a gateway that charges you at a rate below your threshold of attention. And even if that were not true, iTunes still sells its albums at a price-point lower than albums were sold pre-Internet. If we extrapolate this, we’d probably have to accept Adams’s theory as the logical end-point for the value of content.

I’m still not sure if he’s right, because the argument sounds a little odd to me. And I can’t figure that out. It’s simple, but is it too simplistic? I’d like your help here. What do you think?

PS: Sorry for the lack of updates. I’ve been spending the last three weeks programming (and all the learning that goes with that) for Pandamian. This post is my way of easing out of code and into the text editor – updates are forthcoming, I assure you.

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Category: Making Money · Publishing
  • Derek

    What Adams, and many others miss about media, in particular books, is that they are already free. Libraries contain nearly everything that you want to read already. (At least as far as published items) So the question is why are people still buying books now? The Answer: Convenience.

    For the future, I believe the answer will be the same. I could go out and pirate my music sure…I don’t, why? It’s more convenient for me to pay a small fee and get it delivered. This thinking will be and is already playing out in the form of the iPad and Kindle bookstores.

    I don’t think you will ever see prices being zero for books, but there is going to be a drastic price reduction over current prices,that’s a given.

    I guess in a way I have also reinforced what Adams has said to some extent, but I don’t think that obtaining a illegal copy of a book or a song or a movie will ever become easier than the future legal ways people will get their media.

    When the corresponding industries (Movies, Books, TV, Music) have a true, legitimate and convenient way to distribute and collect money for there wares, piracy will simply not be a big issue anymore.

  • Eli James

    Yes and that’s the problem. If we’re going to see a drastic price reduction for books (and other forms of content) … then this implies that traditional models of selling content would break down, sooner or later. It also implies that it’s no longer worthwhile to be in the content business. =(

    I’m not sure how to fix this – but whatever new business model that emerges from the change is going to look … very different.

    Scott Adam’s theory is beginning to look more and more plausible, my discomfort be damned.

  • Isa

    Couple of thoughts:

    1) Adams’ Kindle example is flat out wrong. Few people in publishing and content providing seem to get this but what the Kindle is doing is not shifting people away from buying books but adding another format with its own unique conveniences that allows publishers to catch consumers who wouldn’t normally buy the book in the first place. In my experience, the number one reason why people don’t buy books they are interested in is that they think to themselves “okay I’ll read it, but then where will I put it?” For most people a physical book is something you read once and then it becomes clutter. The Kindle is successful because it eliminates the clutter. Yet books still retain their sense of permanency and are therefore still attractive to the consumers who want a format they feel they can easily read again and again … consult as they wish.

    2) Ease of finding content may lower barriers for creative people to enter the market in a meaningful way, but it won’t affect price. To claim otherwise is to assume scenarios like all vampire-werewolf romance novels are equally desirable to the consumer regardless of style, quality, characterization, potential Underworld references, etc. It just doesn’t fit with reality. It’s not just about perceived quality of content, social networks play a huge role in what people buy because people in general like to discuss what they read with friends. Since you’re never going to have an equal distribution of people across content options there is always going to be some content that is more desirable to consumers than others simply because the consumer wants to strengthen their connections and participate in the discussion with their friends

    3) eBooks will go down in price, but that’s because eBooks are ridiculously overpriced for their market right now anyway.

  • Eli James

    Thank you Isa,

    For most people a physical book is something you read once and then it becomes clutter.

    Yes, my experience seems to bear this out. But I’m not sure if this trend is the primary reason the Kindle (and the iPad, amongst other things) are successful. Is it the main contributing factor? Because if it is – that implies that a) the majority of content is going to go digital, and b) when content goes digital the price goes down, and drastically.

    After reading your comment I think I’ve figured what makes me so uncomfortable about Adams’s theory. He links ease of finding content to price, and the two aren’t correlated in any meaningful way (that I know of). I think you’re right on this: demand isn’t necessarily related to how well people can find the good stuff, it’s related to the content itself. Plus you can’t substitute one kind of good book with another the same way you can substitute a good piece of software for another …

    So this leads us to other half of his assertion: that the economic value of content is declining. And I think that – for whatever reason – this is true. Probably not to ease-of-finding … but certainly due to something else.

  • Isa

    Well certainly some people buy eReaders for the novelty (no pun intended ^o^) of it. I’m just speaking from my observation as a Kindle user among other Kindle users :)

    Is the economic value of content declining? I dunno I think a lot of very intelligent people are lured into that conclusion by only looking at one side of the digital revolution. They see the price going down … what they don’t see is the number of potential consumers shooting through the roof. Five years ago it was not possible for a indie publisher to reach a truly global market, each nation had kind of its own preferred search engines and platforms so even when you put your content on the world wide web it was unlikely to reach a world wide audience. Thanks to companies like Google, Facebook, Twitter and Apple that’s changing and more and more people are landing on the same platforms.

    It’s still way too early to see how this will go … but can a .99 product with a hundred million customers really be considered less economically valuable than a $9.99 product with a hundred thousand customers?

    Frankly I think this ‘digitalization makes things free’ panic is overblown. News media is having problems because the economic viability of news media was based on a monopoly on information distribution itself. When it became possible to find information without paying a company to deliver it to you, print media fell apart. But revenue from creative content is not based on maintaining a monopoly on information that can easily be gathered somewhere else, it’s based on the experience of the content itself.

  • Jan Oda

    Ok. Talking from the fan perspective here, and probably slightly incoherent due to lack of sleep. Somehow I’m never really awake when you update Novelr.

    1st. I agree with the convenience factor of the Kindle. It’s just so easy to own a book with one click of a mouse. Like yesterday, when I felt down, Anna bought me an ebook, and I could read it instantly. I also believe it’s the lack of convenience (drm, print books out of stock and so on) that is driving people to piracy. I’m sure you all have seen images like this: and this one.

    I might be naïve but I think piracy will cool down (though probably not dissapear) when ebooks get rid of drm, so users can be sure to keep their books, and when the prices are at a normal rate.

    2nd. I’m not necessarily against free content. I don’t necessarily think that the value of content is perceived only in the economical value. If I look at my buying history, once I really wanted a book, I never let price bug me, I just bought it anyway (often instead of buying clothes I actually needed). For me, the value of content lies not in how much it earned, or for how much it sells, but in how much joy it brought me, and with whom I can share it.

    It’s true that people are getting used to free content, but I also get the feeling that more and more people are willing to support artists directly. It’s a mentality shift I think, and it’s a mentality shift I like. Personally I catch myself getting attached to artists who are independent and offer things for free to their fans. I have given money to artists I had never listened to or read, because they weren’t my genre. But I respected the choices they made, the way they handled their content, and their fans.

    In a way content started as something free, telling stories around a prehistoric campfire. Is it so wrong to go back to that, if a system is in place to support the people who tell the stories?

    Think of it as having a plumber come over. You pay a bit for the parts yes, but mostly you pay for the plumbers time and expertise. I believe that it could be the same with art. You pay if you enjoyed the stories, directly to the artist.

    3. I find it very strange that this concern is coming from you, and here. After all webfiction is 99.9% free. Aren’t we devaluating content ourselves then?

    4. I agree with Isa on the globalizing of the market, and I’d also like to add that I think the price decrease makes people buy more books instead of fewer. The books budgets haven’t changed, they just are spread over more people.

    And last but not least.

    Don’t Panic.

  • G.S. Williams

    Adams theory makes sense as “supply and demand” and here’s why: Let’s say there are two lemonade stands in town. One has the best lemonade in the world, it’s made from glacial ice melted into pure water, hand-picked fresh lemons and fresh sugar-cane. It tastes like ambrosia and costs $100 a glass. This lemonade stand is at the top of a hill on the edge of town, and celebrities will fly in by helicopter to taste it. It’s an experience.

    In the centre of town an eight-year old girl is selling lemonade from a frozen can, stirred in with tap-water. She’s selling it for a quarter a glass, and everyone is coming to her stand because it’s convenient and close by and they’ve been busy all day with lawn sales, gardening, shopping and work. That common-place glass of lemonade is refreshing, and they don’t have time to go up the hill.

    The easier it is to find something, the more prevalent it is, the less people pay for it — the supply is the convenience. Adams is right. The same logic applies to television and radio — television (before going digital) was everywhere and free. Studios made money off content with advertising.

    What you’re going to see is that fans who love content will pay for the rarified experience — if they love your work online, they’ll buy the paper book as a memento, a keepsake. They’ll be patrons through donations because they want to support their artist that they have a relationship with, and they’ll purchase merchandise if someone gets big enough to have t-shirts or toys.

    Distributors and merchandisers will flock to the people with the largest crowds. Since the content will be free, the money will be in what people can do with the content.

    I don’t know why anyone would panic, all of this is evident in Novelr’s many many intelligent articles.

  • V. J. Chambers

    I don’t know why everyone here is so quick to deny what Adams is saying, when I venture that none of us is actually making a living pursuing our creative pursuits. (And I may be wrong. Please correct me if I am.)

    From what I understand, it’s relatively difficult to make a living as a writer these days, no matter how you distribute. Still, those print authors who are bummed about the $20K they’re pulling in a year are still a far cry from my personal profits ($182 last year and a little more that $50 so far this year).

    On the one hand, I’m pretty annoyed with people who are being all doom and gloom about the state of publishing industry and how no one’s buying anything. It reminds me a lot of when I worked in professional theater, and people I worked with would moan about how they were barely above the poverty line working at building sets while putting in 70+ hours a week.

    They were right. Working in theater sucks. But professional theater went the way of the dinosaur with the advent of movies. It’s practically unheard of (besides Broadway) for a theater to actually be a commercial theater these days. Most are non-profits which operate only because of kind donations from really rich people and some grant money. The average professional theater only makes 30% of its budget through ticket sales.

    So people would complain to me that they barely made any money, and I would say to them, “You’re lucky to making a living doing this at all! No one wants to watch plays! Are you crazy? The fact our jobs even exist is like a miracle from heaven.”

    The funny thing, is, of course, that while professional theater is next to dead, theater itself is alive and kicking–albeit only as community theaters that are staffed entirely by volunteers.

    And actors, directors, set builders, and lighting technicians still make money working in a commercial business. Movies.

    Of course, movies apparently aren’t making eonugh money these days either if this trend to turn everything into 3-D is any sign.

    The truth is that whole mediums for art can and do disappear. And the truth is that consumers WILL opt for cheaper and more convenient options. And the effect of this is that people stop making money at whatever it was they were doing, and that jobs do disappear (or at least become very minimally available.)

    So, on the one hand, I want to scream at people, “Getting paid for making art is not a right. It is a privilege.”

    On the other hand, I don’t think this rosy attitude of, “No, everything will be fine, people won’t pirate stuff, people will directly support artists, and we’ll all be able to be Stephen King,” is really very accurate. (Not that this exact attitude has been expressed in this thread. I’m exaggerating.) I guess what I’m saying is that I agree with Scott Adams for the most part. Most writers are not going to be able to make a decent living through writing alone. (Heck, isn’t that already true?) The difference is that Adams is bitter about it, and I don’t see the point in moaning about something that I have next to no control over.

  • G.S. Williams

    Oh, on another note — the price of books ($40 hardcovers?) coming down digitally makes sense — after all, the production costs disappear. An actual author is making only a small percentage of the book price, most of it goes to publishers — so digital fiction means more affordability for readers and more money direct to the writer.

    I remember reading a Macleans magazine writer speculating that he would likely have hundreds of books on the Ipad or Kindle, since he has hundreds and thousands of songs on his ipod — its’ so much more convenient than going to a store and buying a cd.

  • Elizabeth Barrette

    Adams’ premise is valid as a market force, but it is not valid as a market *prediction* because it is not the only force in effect.

    A countervailing force is that creative material has a high uniquity factor: consumers often develop a taste for a specific author or artist, and someone else’s work is not necessarily an adequate replacement for that.

    This has already been demonstrated. Remember when tried to fix all the e-book prices to the same level, and Macmillan balked? Macmillan won, even though Amazon is huge, because Amazon acknowledged that “Macmillan has a monopoly on its own titles.” So does every creator or publisher.

    If people just want “something to read,” they can browse the free stuff and take what they get. They’d better have a high tolerance for sorting slush piles, though, because free stuff is rarely as good as paid stuff on average. If they want something from a specific creator who’s charging a fee for it, they can either pay the fee or go without. The rise of crowdfunding indicates that some people are not only willing but *happy* to support creators — far more so than when they’re going through intermediaries and the creator only gets 5% of the cover price.

  • Eli James

    Thank you, Elizabeth. That was well said indeed.

  • Riles

    I know why it bugs me. Where do all of the books go? The editors, the agents, the writers, the printers? They would just disappear. So would good quality fiction.

    Take a look at any Fanfiction website and you’ll see a smidgen of promise in maybe 2 or 3 writers, knowing, that they’re working on their skills on Fanfiction rather than on their own, that they’ll lose that crutch and turn out some pieces people could only dream off.

    Than there’s the people who only write for comments or to get recognized, who’ll change their story through what they find out the audience likes and thus outputs formula fiction.

    The good, quality writers would be lost in the crowd… through the current publication process, a lot of writers who don’t care about their work never make it. The process weeds out those who are heartless, soulless, and without passion. In order to be read, you have to force yourself to make it.

    Losing the struggle, that is what is terrifying about people only reading the free items on the net, rather than books. We would be losing so much of our culture.

  • Isa

    a lot of writers who don’t care about their work never make it. The process weeds out those who are heartless, soulless, and without passion. In order to be read, you have to force yourself to make it.

    I’d like to hear you tell that Thelma Toole … or the Pulitzer Prize committee for that matter. This is a little lie aspiring writers tell themselves as a motivational tool, and while it might be nice to think it *is* true the fact remains that since the writers who fall through the cracks are generally nameless and unknown we cannot compare their quality or their passion with those who push through. One can’t really say whether the strongest do survive or whether the publishing world is a petty, arbitrary system that recruits mainly on nepotism and who you know.

    To be frank, I think the loss of the writers, the editors … well maybe not the printers, I like those guys … but (anyway!) The loss of these people would do much to IMPROVE the quality of fiction published. Life experience plays a huge part in having something compelling and worthwhile to say, and yet the publishing industry has closed itself off so much that the writers with the best odds are the ones with industry connections: English degree, followed by magazine/publishing house internship, then admin/editor position, then short story submissions, then agent, then first novel … everyone has the same experience so everyone puts out the same boring crap.

    Loss of the professional writer and professional editor, in my opinion, would not mean there would be no more writers or editors but that maybe unique stories would have a better chance of hitting the shelves.