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The Physical Law of Extremes - The Digital Law of the Middle
March 31, 2011 - 11:15pm

Let me try out a theory on you. Not sure if it makes any sense, I'm one of those people that needs to write what I think, (and then discuss it with you), in order to get things straight in my head. And this NYTimes paywall thing is really bugging me.
Physical things that exist as single-use conduits of information (paper books, paper newspapers, paper magazines) and physical places that are containers or platforms for information delivery (college campuses, bookstores) will in persist, and even thrive. However, for these physical conduits and containers to survive, they will either need to move far up-market, or way down-market.

Books made of paper will need to be either really beautiful and offer a superior tactile experience, or they will need to be very cheaply produced on thin paper and be basically disposable. I'll be less price sensitive to a paper copy of the NYTimes or a magazine if real attention is paid to the quality of the design, layout, paper, and printing. Or I'll pick-up a free paper newspaper that I may or may not read, and will skimmed and thrown away.

What I will not buy is any one-time conduit of information (book, magazine, newspaper) that is somewhere in the middle. Too expensive to easily throw away, but too cheaply made to want to keep in my collection. Everything else, everything between the very low-end and very high-end product, will be delivered digitally.

The "big middle" of information delivery will move to digital, online delivery.

On the higher ed side, I think the connection is with how our campuses will look. We will in fact see an acceleration of amenities on residential, high tuition, campuses. Fancy classrooms, athletic facilities, libraries, dorms and food-service operations will get fancier. On the other end, lower-tuition institutions will become more spartan (in order to lower tuition even more), with most of these amenities outsourced moved to variable pricing schemes, with students paying per use. Physical campuses will continue to exist because it costs less money to provide a good, low-amenity (unbundled) education than a comparable learning experience online.

The "big middle" of higher ed will move to digital, online delivery.

If this theory is correct, when evaluating digital pricing we should first be asking: "Does the digital price fall somewhere in between the high price for a luxury physical good and the near zero price for a disposable or no-frills physical good?". The digital experience needs to be superior to that which can be had with a low-end physical experience, but not as good as what can be enjoyed with a high-end physical purchase.

This theory also suggest that, over time, most information services will migrate to digital, as the "middle" experience will be the most numerically common good. As the digital middle grows, the physical middle will be pushed further out on each quality tail.

What do you think? I know that this thinking is completely incomplete, what I want to know is where this thinking is wrong.

 

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