Publishing and the Gift Economy

Stephen Morse says he wouldn’t pay 99 cents for a magazine article, but Felix Salmon thinks Matter has a promising business model:

“If I were a content consumer,” says Morse, lapsing into a rather odd conditional, “I wouldn’t pay 99 cents for one article” when magazine subscriptions amortize out at a lower per-article cost, and besides there’s lots of great content out there which is absolutely free. Such things, he says, are “a much better value” than Matter. But here I think Morse misses the great hope of the 99-cent price: it’s low enough that substantially everybody in Matter’s target audience can afford to pay it without any real effect on their wealth or cashflow whatsoever. It’s less than the amount you tip a cab driver, or a bartender; in fact, it’s less than the cost of just about anything you might buy in the physical world. 99 cents is low enough that, for hundreds of thousands of people, worries about value disappear. They pay that on text messages all the time, which have much lower value. Why not pay it for something great, if doing so allows that thing to exist in the first place?

The tip issue seems like an interesting one. Why did I tip the bartender last night? In expectation of future good service? No. It’ll be a long time before I’m ever back in Ithaca and may well never visit that bar again. Did I do it because I’m a nice guy? Well, sort of. But I didn’t tip the cashier at the Hudson News in Philadelphia where I bought a Diet Coke on the way up here. The issue isn’t that I was a nice guy at the bar last night and a jackass at Hudson News a couple of days earlier. Nor was it that the bartender was objectively more in need of the money than the Hudson News cashier. It’s just convention. I’m a regular person doing the regular thing. And there’s nothing wrong with building a business around norms. Bars’ ability to hire staff is built around their expectation that potential staffers expect that patrons will tip. People who weren’t anticipating tips would demand higher wages and the whole structure of the industry would look different. So it’s hardly inconceivable that people will want to hand over small chunks of money to writers they admire.

But it is true that this isn’t currently the norm and it’s hard to know how to change norms. Suppose Chipotle suddenly wanted it to become the norm that customers throw 15 percent of their bill into the tip jar, thus making working at Chipotle a more appealing proposition without Chipotle actually raising wages. How would they go about doing that? I have no idea. The norm that you pay for books, but receive periodicals at an advertiser-subsidized discount seems well entrenched. At the same time, it’s totally arbitrary and maybe in a digitial world it’s ripe for a shift. But it seems to me that Matter has a classic business challenge in front of them. What they’re doing could work, but it seems hard. Which is precisely why nobody’s done it yet and the market opportunity is there for them.