Usage-Based Pricing for Books
By Arnold Kling
Joshua Gans suggests the model.
How would this occur? I imagine that there is a vast exchange available — maybe we could call it a library — where all books ever written are available. Publishers nominate reading prices for their books and consumers read books. One model has the consumers may the publishers the fees the publishers quote but that isn’t the only one. I could imagine that the exchange might sell access at a subscription fee that didn’t require consumers to feel the marginal cost of reading another chapter or trying a book. The subscription fees would then comprise revenue and the publishers would then get paid from that according to their nominated fees and information gathered on actual reading from consumers.
The same could hold for music, or for software apps. Gans alludes to the fact that there would be a lot of mental transaction costs associated with having consumers pay strictly on the basis of usage. Instead, some sort of tiered pricing model makes sense–pay on the basis of monthly usage (low, medium, or high) rather than on the basis of usage of each particular book or song.