Angry in the Great White North

Booksellers are rolling their eyes at the discounting that is planned for the next (and final) book in the Harry Potter series, Harry Potter and the Deathly Hallows (Book 7):

Millions of people will descend on stores for a copy of Harry Potter and the Deathly Hallows in July, but deep discounts mean many will struggle to turn a profit from the jamboree.

"Everywhere you go there is huge, ridiculous discounting by the chains," said Graham Marks, children's editor at the British-based trade magazine Publishing News.

"They are literally not going to make one penny out of the book. It is stupid -- just throwing money away ... The world has gone mad."

This is classic role reversal. When the internet began to become a vehicle for commerce, companies created virtual versions of themselves to selll their wares online. Instead of bricks-and-mortar, they were known as clicks-and-mortar. But independent of these established entities, the internet developed a unique approach to content and to revenue.

The realization was that there were ways to make money without selling anything, or at least not by selling content. But "giving it away" was the core of the new business models out there. You don't need to pay Google to use their search engine. Getting a Flickr account is free. All the New York Times wants is some demographic information to set up an account for you.

Professor Michael Rappa has put together a full list of these models.

So when we see bricks-and-mortar sites essentially giving away products, we have to wonder if some of these other internet-based business models are seeing expression in the real world. The surge of interest in the Harry Potter finale will bring in thousands of customers that can be tapped for other purchases and loyalty cards and so on. For a large bookseller, for example, the margins on Harry Potter are virtually zero. But the markup on less popular books is larger. If one person buys a Harry Potter video collection in addition to the novel itself, the markup might make up for ten novel sales. But the novel sales drive the sales of these marked up secondary products, which closes the loop, and which is why the original content is still king, no matter how little you sell it for.

In my title, I said I would reveal the end of the Harry Potter story. Sorry, but I don't know the end of the story itself. But the bigger story of how content is bought and sold, or just given away, is moving rapidly to a conclusion. Though not everyone will like it, we might see at the end of all this a world in which the most popular and in-demand items are also the most affordable, if not actually free.

Now that's muggle magic!