The Internet changes everything. Also: water is wet, and Conan O’Brien is ridiculously tall. Seriously, if you haven’t realized that yet, just go back to living in your cave. If your product can be turned into ones and zeroes, your existing business model doesn’t work anymore. Your strategy probably relies on scarcity of physical goods.
Scarcity can still be a viable strategy, but only if you refocus on things that can actually be kept scarce. Here are three ways to use scarcity as a strategy in a digital world:
- Trust: what’s more scarce than trust? Ok, yes: good music put out by major record labels is pretty scarce. Other than that? Not much.
- Customer service: if I can get your particular combination of ones and zeroes cheaper some places, and completely free other places, why should I fork over my money to you? Because I know you’ll take care of me.
- Expertise: give away the “product” but charge for service– think Red Hat. Linux? Never mind, you cave-dweller. Red Hat distributes a version of the open-source operating system, Linux, for free. They make money by charging customers for service– e.g. setup, maintenance, trouble-shooting, etc.
Along the same lines, just digitizing existing stuff leaves your customers wanting more, and your competitors with an opportunity. When you redefine your unit of value– what you charge for– be prepared for the accompanying change in what the market expects, and how customers consume your product.
Suggested reading: Change This – Better Than Free