Features

Book review: The Curve

20 Sep 2013 by GrahamSmith
The Curve cover Publishing is in trouble. Newspapers lose money, as do many magazines; attempts to create online-only content providers are at best a work-in-progress; and pay walls seem to work for only a select few. Get two or three editors together and they will soon start moaning about how the industry is in its death throes because readers are not paying for content the way they used to. As Nicholas Lovell puts it: "Consumers expect more and more for free, yet the creation of the products they want is expensive. How can we afford to make the stuff that our audience and customers crave?" So far, so depressing, but Lovell thinks he has the answer, claiming his "is a book that answers the burning question of the internet age: how can we sustain a global economy when the price of everything digital falls to zero?" The answer is "The Curve" (illustrated below). What the curve illustrates is that it is possible to turn the internet and the new business conditions it has introduced into an advantage rather than a disadvantage. "The solution is to flip your thinking. To focus not on finding the biggest possible audience but to seek out the superfans who love what you do. To use the cheap distribution of the internet to start the process of connecting with fans — and then craft products, services and artistic creations for which they will pay lots of money…. The 21st century will be about relationships, about variable pricing, and about the ending of the tyranny of the physical." The Curve graph To use publishing as an example, this would mean (for instance) giving away the day to day news in the knowledge that it will be read by tens of thousands, possibly millions, and so act to market the publication in question, and then for those who really love that content, charge not just one fixed price, but a sliding scale upwards. Lovell's background as a consultant in electronic games gives the book lots of new case studies that normal business books don't have access to. And he is also up-to-date and very knowledgeable about the different strategies – providing an interesting critique of the Freemium apps that many of us have on our phones. In case this sounds like it is only about products that can easily be distributed digitally (words, computer software, music), the book also deals with the rise of 3D printing and what that will mean to manufacturers. What Lovell encourages is for us to understand where value lies for consumers, and then price accordingly. As Lovell asks (rhetorically): "Is the value in a book the collection of dead trees, or is it the ideas, thoughts and concepts contained therein?... We have spent nearly 500 years understanding that books have value without realising that they have two different elements of value. Books are an access device. Books are the content contained within that access device... The access device is becoming of less value to many consumers." The discussion of value is particularly interesting. Using the example of the price of a FA Cup Final ticket, which to Lovell is essentially worthless but on eBay might go for £10,400, Lovell discusses how various artists and software companies have designed their offerings so that the majority of what they do is given away for free, but pricing increases towards the top of the curve to cater for "superfans" who pay for those products and services in which they perceive value. He makes it clear that value is subjective, and can be easily manipulated by context and environment (there's a funny couple of pages on what people will pay for bottled water, and the differences they perceive, when in fact it's all identical tap water from the same source). What makes the book useful is that as well as having an informed view of what's happening, and few illusions about the devastating effects it has had on many corporations (though not on consumers – they are just fine), Lovell has suggestions as to what companies should do. Borrowing (with attribution) insights from everyone from Tim Harford's Adapt to The Lean Startup by Eric Reis, Lovell provides a sure-handed guide through the new world without patronising his readership (always a danger with someone who I'm sure can "speak geek") while at the same time explaining everything from basic economics to Amotz Zahavi's handicap principle derived from the behaviour of bowerbirds. Towards the end of the book, Lovell offers some insights into other industries, including fashion, restaurants, charities, law and accountancy. But throughout his message is the same — fighting the competition on price when the competition is free is not a strategy, it's suicide. I'm not sure his brief analysis of low cost airlines is correct — Ryanair may (almost) give some flights away for free, while making its profits from late-booking business travellers who rely on its service, but these are hardly "superfans". Still, his insights are such that I wish the book were longer. To take one example, he introduces a quote from Herbert Simon from 1971, namely "In an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumers… the attention of its recipients." This surely goes to the heart of it. If this is true, and companies follow Lovell's advice and give away much of what they product for free, then it becomes a world of free music, content, products and services, so how do you get noticed, and once noticed, create the superfans? After all, if everyone markets, doesn't the white noise just get louder and louder? For publishers one solution  might be to curate (another buzz word) the content on a particular subject area, decide what is most interesting, then analyse and comment on it, making sense of it for busy consumers. At least, I think that's a solution, but would we then give that content away, or charge for it as we (largely) do now? Still, the book proves its value by provoking all the right questions and debates on where value lies, and how much to charge for it. Ironically, given the nature of the content contained, it is currently not available for free, but can instead be bought for varying prices from all the normal online outlets or the few remaining brick and mortar stores (he deals with this paradox on page 195 – he has an emergent strategy of how to deal with the various scenarios). Luckily for Lovell, the book is worth its current price. Portfolio Penguin £20 Tom Otley For more business books, try GetAbstract – BT Plus Members get one month's membership free.
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