← Quora archive  ·  2011 Feb 16, 2011 08:31 PM PST

Question

Is paid digital content making a comeback? In what form(s)?

Answer

I've been going back and forth over this, but I think, on the whole, not.

A basic idea in pricing is that in an efficient market with competition, the price of the nth unit gets arbitrarily close to the marginal production cost of the nth unit, for sufficiently large n. For digital information, that means it gets arbitrarily close to zero.

Information markets are about as efficient as they get, which leaves the "with competition" escape clause. You may be able to sustain a non-zero price IF you are selling unique content.

But unique content (which includes personalized or customized commodity content -- unique-ized to one buyer) is necessary, not sufficient. To get to "sufficient" you have to ask: when you sell that information, does the buyer have an incentive to share it indiscriminately (and therefore needs to be policed, like music sharing), or is it in the buyer's interest to keep it from spreading further (privileged stock market information is an example; sharing makes it lose value).

So theoretically, you can sustain paid content if you are mainly in the second kind of business. I think areas like market research data, competitive intelligence, military intelligence and similar domains based on actual facts and numbers can sustain paid models indefinitely.

As for the article linked in the question, I don't think that represents paid content. That's selling access to relationships, not content. The content merely serves as the social object to gather around. Different game. You can mangle it a bit and say selling a relationship is the same as selling personalized/customized information, but umm... not really.

The obvious follow-on question, "Can you sell relationships and access?" is much harder.