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From: rb@ccivax.UUCP (rex ballard)
Newsgroups: net.audio,net.micro
Subject: Re: CD-ROMs
Message-ID: <288@ccivax.UUCP>
Date: Wed, 2-Oct-85 19:35:32 EDT
Article-I.D.: ccivax.288
Posted: Wed Oct  2 19:35:32 1985
Date-Received: Sun, 6-Oct-85 05:21:48 EDT
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Xref: watmath net.audio:6039 net.micro:12234

> >The same magazine article states that;
> >"The compact disks themselves are cheap to
> >make and getting cheaper.  Factories stamp them out like cookies
> >from thin sheets of partially melted plastic at a cost of less than
> >$1 each.  About 15 million disks will be produced this year
> >It appears that manufactures are using a pricing factor of 14, is this
> >a standard value in the audio business?
> 
> I just bought Lotus 1-2-3 for $300.  Let's see.  There are 3 disks in
> the package- at wholesale prices, that's about $3.  It appears Lotus
> Development is using a pricing factor of 100, is this a standard value
> in the software business?
> 
> Ben Broder
> ..ihnp4!princeton!moncol!ben
> ..vax135!petsd!moncol!ben

Cost of production is only part of the price, records (LP's and 45's) cost
even less to produce ($.25/copy).  If you look at the "Bargain Rack" at
a Woolworths or Kmart, you can find records for $1.00 each.  The larger
cost is that of "getting it on the dealer's shelves".  To get good positioning
on those shelves requires that you are "perceived" to be a "Top-40" by the
dealer.  I remember an Elton John record that was "Number 2 on the charts"
THREE DAYS BEFORE IT WAS RELEASED!!   If you want your product carried by
dealers and your product is for an established product, you will have to
spend enough on advertising to BOTH POTENTIAL DEALERS AND CUSTOMERS to
"create" a demand for your product.  On newer computers, less is required,
but heavy marketing is still required.

This expense has to be recovered over the life-span of the product.  Suppose
you sell a product to a customer.  He will use that software for as long
as 5 years, and expect "free" or "low cost" upgrades, phone support, and
immediate attention if he has trouble.  The 100 * cost of production value
is largely a product of "IBM mainframe oriented" marketing.  When IBM,
or any mini/mainframe software is "leased" to a customer, the customer 
expects enhancements, upgrades, and bug fixes immediately.  This is
understandable if you consider that "down time losses" for a machine
connected to 200 users can run well over $200 per MINUTE.  If your
information operator can't look up your phone number on our computers,
we hear about it immediately.

Unfortunately, most publishers don't realize that "personal computer"
software is a completely different market.  Many low cost and share-ware
programs as well as public domain stuff is used just because it's cheap.
You could probably publish your own version of "grep" and sell it for
$5/copy and make a lot of money (not millions, but some) if the same
product is not in public domain.  Even if it were, if you gave the dealer
a half dozen copies to sell on consignment, you could sell a few per month
just because it's on the dealers "shelf".  Actually, your dealer would
probably have to put it in the "bargain box" because "shelf space" is
not cheap.  The dealer will expect at least 50% so be realistic about
your pricing.  Ask your dealer if he has a "share-ware" box.  Many just
put a box of diskettes next to the computer, you buy the "blank disk"
at normal price, he just forgets to erase it.  Frequently this is
a "perk" given to customers who buy their machine from them.

There are other outlets such as users groups, Compuserve, and dozens of
bulletin boards where you can get "Shareware" or "Public Domain"
programs for free.  If you like a product, send the "publisher" a check
(Many request anywhere for $5 to $100) and you will get "goodies"
including things like Upgrades, Printed documentation, even source
code.  Some shareware companies run the same source code through two
different compilers, the slow one (frequently smaller) goes "on the
boards", while the fast one "gets mailed".  Some of the commercial
bulletin boards actually "sell" software on-line.

It's possible that with CD-ROM going into the market, you will be able
to buy disks containing "This months share-ware" produced by one of
the bulletin boards.  By making large collections, volume can be
high enough to provide "a little cash for the little guys".  Just
split the revenue out as "royalties".  Magizines often provide "token
payments" of $25 to $100 to free-lance writers for articles, a BBS
could do the same with software.  For that matter, support questions
and answers could be "published" right along with the software.

How many megabytes would a months worth of Net.news take.  Would you
be willing to pay say, $50 a year for a subscription to it?  How
about if net.sources came out in binary, runnable form (no need to
run binhex or uudecode, just run).  Suppose you got $1/page for
articles, would you post more, or less than you do now?  Suppose
you knew that you could sell 1 million copies, sound interesting?

As long as we're at it, add a simple data base that could be read
by all of the computers (ascii text?), and were able to look at
specific subjects.  This would eliminate some of the need to "browse"
through 500 megabytes of articles wouldn't it?


Back when Video-Cassettes were $100/movie, some bright lad thought up
the idea of the "Video Club".  I remember when it was illegal to
rent those movies out, but eventually, the Film Industry got wise
and started asking for a "cut" of the rentals.  The result is that
Video is a thriving business.  Now you can buy the movie for $30 or
"rent" it for $5 (or whatever).  Many movies are "sold" simply because
the renter keeps it too long.  This was an imaginitive solution to the
distribution/profit problem.  The computer industry (home and business)
needs to find an imaginative solution to this problem.  When they
do, you will see 1-2-3 look-alikes or whatever, for $10-$50 each, and
you will buy 3 or 4 of them because each has "special features" you
like.  You will pay "full retail" for frequent upgrades, because
they have "new features" and problems are fixed.  Until then, you can
pay $300 for 1-2-3, or "search for a PD clone" on some obscure bulletin
board in someones "spare bedroom".


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