Of e-books, business models and Eliot Spitzer’s hookers

image Could a few details of the Eliot Spitzer hooker scandal be of interest to e-bookers? Actually yes, and in a very staid way---in terms of business models.

"What does someone like Spitzer get when he pays a prostitute $5,000, as opposed to $500 or $50?" the Washington Post's Shankar Vedantam asks. "Could sex with one prostitute really be 10 times better or 100 times better than sex with another?"

The e-book angle

So here's the e-book angle. Based on what Vedantam writes, could some people in certain situations enjoy e-books more because they paid for them---and maybe even appreciate higher-priced books more than others? Does the following from Vedantam apply to e-books and reading?

"Spitzer's poor moral, political and legal judgment is beyond question, but on the delicate question of whether Kristen might have been 'worth it,' a host of unusual studies suggest the governor probably would have gotten his money's worth. The question, as it turns out, has little to do with either Kristen or prostitution, and nearly everything to do with Spitzer himself.

"Specifically, an area of Spitzer's brain known as the medial orbitofrontal cortex [link added].

"This part of the brain makes judgments about pleasure, and intriguing new research has found that the price people pay for something can subtly and unconsciously change how much pleasure they derive from it.

The medial orbitofrontal cortex research suggests that, contrary to conventional wisdom, people who buy something at a discount may unconsciously derive less satisfaction than people who pay full price, or a premium, for the very same thing.”

Backing up his earlier statements, Vedantam cites “Baba Shiv, a Stanford University behavioral economist, who was part of a team of researchers who studied the medial orbitofrontal cortex. The study was published in the Proceedings of the National Academy of Sciences.

“Shiv and his colleagues studied not prostitution but another domain where the pleasure that people derive from their purchases is subjective and prone to personal expectations: wine drinking…

“Along with California Institute of Technology neuro-economist Antonio Rangel and others, Shiv had people evaluate two bottles of wine, priced at $10 and $90. What the volunteers did not realize was that the wine in the expensive and cheap bottles was the same.”

In the experiment, “the subjects were not reporting that the expensive wine was better merely because they figured it ought to be better. Rather, they were actually experiencing more pleasure when they drank a bottle of wine priced at $90, compared with when they drank the same wine from a $10 bottle.”

Your thoughts

OK, gang, is the research valid, does a “price-placebo effect” exist for e-books and others, and if so,  how might this apply to reading fare? Extrapolating, could we say that you’ll enjoy a free book less than one for which you paid $5?  And that a $10 price tag would make you love the book even more? And what about a $50 book—or does the effect stop and maybe even reverse itself after a certain point? If the research applies to books, then what kinds, and how about E vs. P? And what varieties of readers? Would a regular reader of public domain texts be less vulnerable to p-p effect? And how about library books, for which you pay, but just indirectly through taxes?

I myself will withhold judgment here, other than to go slightly off topic and remind you of Richard Herley’s experiment with voluntary donations for reasonably priced copies of his work. Please pay if you’ve read and liked his books. You just might enjoy his work more that way.

Detail: I don’t know if the $5,000 figure in the Post article is accurate. Wikipedia says: “After the assignation on February 13, Spitzer paid her $4,300 in cash. The payment included $1,100 as a deposit with the agency toward future services.”

About the photo: The TeleBlog normally is not the New York Post, and I hesitated about running the picture, but it did seem relevant, given some of the wares under discussion here. Anyone have problems?

Related: The technology that topped Eliot Spitzer, in Technology Review.

2 Comments on Of e-books, business models and Eliot Spitzer’s hookers

  1. Well, clearly people do derive *some* pleasure from spending thousands of dollars on book. People do, for example, collect rare first edition books even though the text of the book may be the same as the $5.95 mass paperback version you can run out and buy at Borders (or even free through PG).

    I suspect, however, that people reading e-books are more interested in the text itself rather than the book as object and are likely to derive more pleasure from having lots of cheap books than a handful of more expensive books.

  2. >>> >>>The medial orbitofrontal cortex research
    suggests

    that, contrary to conventional wisdom, people who buy
    something at a discount may unconsciously derive less
    satisfaction than people who pay full price, or a
    premium, for the very same thing.”

    So that’s it, huh?

    Back in the 80s, reading up on Japan, specifically a
    book about Americans *marketing to* the Japanese, the
    writer recounted the story of a well-known imported
    drink (whiskey, maybe) that decided to lower its price
    to become more competitive. Sales tanked. Part of
    the allure was its *price*. Sales rebounded when the
    price was put back up. Japan is also the land that
    coined, “A melon is wasted on a foreigner.” (It’s just
    fruit to us; at the price they *pay* for it, it’s
    almost a sacred offering as a gift!).

    Also in the 80s, someone in a nice-market online
    startup told me, “You better charge as much as you can
    because no matter what the price, people will still
    think you’re cheating them.” (Perhaps that is a
    uniquely American thing…)

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