Sunday, June 28, 2009

Business models: a question of honour?

There's a story in Purple Cow that caught my eye about two restaurants. The first, Brock's Restaurant in Stamford, Connecticut, has a sign up above their salad bar: "Sorry - No Sharing". There is an explanation that this rule is necessary so that the restaurant can continue to provide good value. In other words "please help us protect our profit margins".

Compare this to the wine policy at a restaurant called Frontiere. The owner puts an open bottle of wine on every table. At the end of the meal you tell the waiter how many glasses you have drunk. An honour system.

The brilliance of this idea is that two glasses of wine pay for the whole bottle at wholesale price.

Isn't the salad bar just like the media business? In this case the sign might read "Don't share music" or "Don't photocopy books". The underlying message is the same: "please help us protect our profit margins".

What if we were more like Frontiere? What if there was an honour system?

In journal publishing that is exactly what does happen. Journal articles have no DRM. Fair use allows for copying and sharing of articles. Publishers trust librarians to honour fair use. Librarian respect that trust. Articles are shared widely and everyone benefits.

Freeware has a similar business model. Download for free but make a contribution if you use it and like it. You might find it surprising but many people do.

So what might an honour system for books look like?

Suppose we make books available online by chapter. The student pays for one chapter but has access to all. If they download more we ask them to tell us and pay.

Just as in the wine example, pricing will be key. I'm certain that the low price for a single chapter will attract a larger number of customers. I doubt it would be enough to protect the margins. The success of the model will likely depend on how many customers pay for a second or third chapter. The other thing to remember is that the printed book will of course still sell although likely in smaller numbers. And they would be other derivative versions, such as the complete eBook, or the eBook as part of a collection or library, and for a textbook an online course.

I'm sure this sounds like a crazy idea to you. Maybe it wouldn't work. But maybe it just might. In any event, I would love to see someone experiment with new business models like this for books. I think everyone would benefit.

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