Friday, May 1, 2009

Value for value

So as I discussed in a previous post money is a way to abstract value, which was a great invention to take people beyond barter, where, for instance, a shoemaker would need to find someone who needed his shoes who had something he wanted in exchange.

Money abstracts value allowing the shoemaker to instead sell his shoes, and trade the money for something he values later on: value for value.

So all money really does is shift the value for value exchange in time because the money has no intrinsic value. It is a symbol of value.

The Web has, however, revealed a weird situation where companies are giving value, like news for instance, and not receiving commensurate value in return, where the perception has been that people will not pay for value, which defies thousands of years of human history!

The subtle answer then is that on the Web people are refusing to pay for something before they see value, which is something that actually occurs in other areas, and I have a story, from years ago when I lived in the Atlanta metro area.

I was at a restaurant having a meal, when I noticed a couple who had ordered a full meal and finished eating it, just get up and walk out the door without paying!!! They had noticed that the one server--it was a slow period--had gone to the back of the restaurant for something, and they just took off--they stole value.

They stole the meal.

I think some people might suppose that most people would steal value on the Web! But most of us I think would not get up and leave just because there were no servers watching. I don't think most people only pay for meals at restaurants because someone is watching over them.

But all restaurants do not force you to pay upfront.

Some do. Fast food restaurants get your money upfront.

The experiment on the Web with pay was like with fast food, but with fast food you generally know what you're going to get, and it's more of a commodity. With the Web people didn't know if they'd value what they were getting.

You still don't. I don't know if I'll value information I receive on the Web until after I get it, but then I have no option to pay for it, so the Pay Back Value concept is just giving the Web something that is already available in other areas.

Advertising doesn't work well on the web. The television model worked with a passive audience for a long time, but it is facing change as well as people with DVR's fast forward through commercials!

If no solution is found then value is being given for less value or nothing in return, which breaks the value for value principle.

Collapsing business models are the result, and we're seeing that now with newspapers, but will see that grow into other areas as time progresses.

Value for value is the very principle behind money.

It cannot be escaped.

James Harris
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