Future of Music Coalition Policy Intern Cody Duncan describes some recent innovations in video game bundling, and suggests that musicians (and presumably purveyors of other digital content) can learn a thing or two. As a systems geek, I’m particularly impressed by some of the thinking around combining pay-what-you-can with gamification:

Taking a cue from the success of Steam’s bundle sales for independent games, independent game developers David and Jeffrey Rosen of Wolfire Games tried a similar approach, selling games on a pay-what-you-want model…In addition, Wolfire adopted a new and innovative pricing system. Think Radiohead’s In Rainbows, with a dash of gamification and some charitable giving. Basically it works like this: Name your price. If you pay more than the average (which is constantly visible and updating), you receive bonus material, typically another game or two. These schemes seem to mitigate some of the problems artists have faced under a raw pay-what-you-want model, turning a race to the bottom into a race to the top (or at least an average). A portion of each sale goes to one or two charities, and in a move that capitalizes on the gamer demographic, there’s a kind of high score board where those who paid the most are placed on a list of contributors.

This idea takes me back to the Audiences at the Gate guided crowdsourcing concept for grantmaking that Daniel Reid and I co-developed a couple of years ago. That system attempts to use gamification to take the popularity contest element out of crowdfunding and instead turn the focus on to identifying expert curators. Much as the refinement of manufacturing processes played a huge role in the economic advances of the past two centuries, I suspect that many of the innovations of the future will emerge from introducing complexity into, as Cody puts it, the “raw” elements of revolutionary ideas, so as to correct the negative side effects and perverse incentives that may come with them.

  • Alas due to archaic telecommunications policies, my pager does not work when I am in Canada. But now that I’m back …

    Interesting article. A question that arose for me was, ‘what are bundles for?’ In other words, why do cultural content providers make packages of content rather than offering everything a la carte? I think there are two possibilities.

    One is what we see in cable television: we pay a subscription for a bundle of channels for which the marginal cost of providing any additional channel is zero. Any one of us only ever watches a small proportion of the channels in the bundle. But in general we watch different channels from each other. For cable companies, the optimal pricing strategy for a basic bundle is to essentially charge everyone for a big bundle, which we buy knowing we will only watch a few channels because those channels are worth it to us.

    The second is what we see in a museum. The art on offer is presented as a bundle (yes, there are special exhibitions that might cost more, they are the equivalent of HBO, offered to those consumers who would highly value that one specific thing) – we can’t go to the AIC just to see the abstract expressionists. In this case, the bundle is offered in part because the museum is curating for us, making selections of what to show and how to show it that help us enjoy the museum experience. Cable television is not curating – we know what’s on ESPN.

    In this article, the entrepreneurs are doing a bit of both – the article stresses the curatorial part (here’s a band you might not of heard of but you might like), but I think there is also an element of the cable television model at work as well: different people value parts of the bundle differently, and the bundling strategy is a way to offer a package that will appeal to many even if they use only part of the package.

    The get-bonus-stuff-if-you-pay-more-than-average is interesting, combining dynamic pricing with the standard pay-more-get-more-quality model that is fairly commonplace.