On price and value

As this cartoon points out, the iPhone apps business isn’t all fame and fortune. Customers who don’t hesitate spending $5 on a quick, fancy cup of coffee think twice before paying less than a quarter of that for an app that may give them hours or days of enjoyment and productivity.

This highlights one of the challenges for entrepreneurs in the new economy: people still often equate value and cost with physical things. Creative works may require weeks or months of hard work by multiple people, yet consumers often feel these products should be free because no physical atoms are exchanged.

At the same time, consumers don’t always value their own intangibles. They are willing to give away tons of private information and let others monetize it. Companies like Facebook and Google are making billions taking advantage of this dynamic.

Success in the economy of intangibles requires a new mindset, along with a deep understanding of what drives and motivates people. The times are changing. Bob Dylan’s prophetic words of more than 45 years ago still ring true today. You better start swimming or you’ll sink like a stone.