Last week I reported on a pricing experiment where Techdirt offered DRM-free ebooks and allowed customers to name their price. Most didn't pay anything, while the most common payment was $5.
One reader criticized the posted results because Techdirt left out key bits of info like the dollar amount raised, the number of downloads, and other details which would help judge the financial success or failure of the experiment.
I think it was better to leave the information out; that way the experiment couldn't be written off simply because it didn't generate a high enough dollar figure. But that matters less now that I have the results of a similar pricing experiment, one which does include the dollar figures.
CAH has posted a thorough breakdown, which you can find here. I'll just cover the highlights:
- 85k card sets sold
- 19.79% of customers paid nothing
- 57% paid exactly $5
- mean price was $3.89
CAH reported that their cost per card set averaged around $3, so naturally they didn't clear that much money - around $70,000 out of $300,000 revenue. But since they regarded this as a charity endeavor, they were fine with it.
Now, some might think that I am going to launch into an argument against paying for content online, with paywalls being an easy target.
I was going to complain about paywalls but then I realized I knew of at least 2 different newspaper paywalls which in practice actually function in much the same way as the pricing experiment above.
I'm referring to the New York Times and the Wall Street Journal. One is well-known for having a paywall which is so porous it almost amounts to voluntary participation, while the other allows for most every link from a search engine to lead to a full article, not a stub. (At least, I've never encountered the WSJ paywall and been stymied.)
So what we have here is an ebook sale, a couple paywalls, and a card game, all of which seem to be using a functional model. What are we missing?
We still don't know if any of these examples are generating enough revenue. The paywalls were never expected to be a sole source of funding, so the fact they are adding revenue at all is a good sign. Oh, and you can ignore the reports that the NYTimes paywall reportedly cost a small fortune, not all of which has been recouped. No one else need repeat the NYTimes' mistakes.
So the question we need to ask about this particular model is this: did the ebook sale and card set generate enough revenue to be a primary retail model or was the income low enough that this concept could only be pulled out for sales, special offers, and limited time deals?
I don't know. But before anyone settles on this as being the hope for the future we really need to answer that question first.