When Your Intuition Lies to You: The Impact of Free/Open on Sales David Wiley (John Hilton and Justin Johansen) Department...
Download These Slides http://slideshare.net/opencontent/
If You Want to Complain @opencontent
I’m Committed Free / open since 1998
Originally for Moral Reasons If we can, we should
Expressions Are Different To give a book you must give it away
E.g., Online Book We can all read simultaneously
The Cathedral and the Bazaar Eric Raymond’s seminal work
Reputation Worth more than money  to some people
The Instructional Use  of Learning Objects My first book
Citations Worth more than money  when you’re new
“ Obscurity is a far greater threat to authors and creative  artists than piracy” Tim O’Reilly, 2007
Market Fundamentals When you buy one,  you expect to get one
Publicly-funded Research When you (pl.) buy a research article,  you should expect to get one
People Want to Profit For a wide variety of reasons
When Intuition Lies If you give away things for free, people will stop paying for them
“ Resilience to Data” Persisting in beliefs despite clear, empirical evidence to the contrary
Some Examples Where we can empirically confirm our intuition is lying to us
BYU ’ s Independent Study Program  <ul><li>University and High School Courses </li></ul><ul><li>(plus  “ Personal Enrichme...
Approximately 600 Courses <ul><li>Roughly 300 accredited HS courses and 300 university courses </li></ul>
150,000 Enrollments per Year <ul><li>Smaller than (but comparable to?)  the Open University UK </li></ul>
Would OCW Kill BYU IS? <ul><li>If people can access BYU IS content for free, will they stop registering for credit? </li><...
Preliminary Evidence Says  “ No ” <ul><li>E.g., open publishing of books drives sales (Lessig, Benkler, Doctorow,  Boyle, ...
Previous Research at OU/UK <ul><li>1.95% of enrollments through  “ click to enroll ”  conversions over 2 years </li></ul><...
Previous Research at OU/NL <ul><li>18% of OCW users were “ inspired to purchase an academic course ” </li></ul><ul><li>No ...
Previous Research at UC Irvine <ul><li>“ Click to Enroll ”  button =>  “ lead ”  form for more info, resulting in 84 stude...
Conduct a Controlled Experiment <ul><li>Measure costs, impacts on enrollment, and ROI / sustainability of open publishing ...
Six Courses <ul><li>Three university : Personal Finance, Cooking in the Home, and Public Speaking </li></ul><ul><li>Three ...
 
What Cost to Open a Course? <ul><li>First course is expensive since new XML transforms are written  Subsequent courses cos...
 
 
Measuring Lost Enrollments <ul><li>Two methods </li></ul>
Historical Data as Control <ul><li>Seasonal variations in enrollment </li></ul><ul><li>We compared May - July 09 with May ...
SFL 110
BUS M 418
TMA 150
Earth 41
GEOG 41
GOVT 45
Differences? Increases in four courses Decreases in two courses
Equivalent Course Enrollment Data as Control Control for external influences on enrollment trends like economy (Unstandard...
SFL 110 - HIST 322 (.94)
BUS M 418 - I SYS 101 (.76)
TMA 150 - SFL 100 (.79)
Earth 41 - ALG 41 (.89)
GEOG 41 - HUM 41 (.94)
GOVT 45 - GOLF 81 (.88)
Differences? Only one clear difference
No Significant Difference There is no clear impact  on enrollment trends
User Conversion Rates <ul><li>512 conversions on 20,148 visits -  2.5% </li></ul><ul><li>48 registered used  “ Click to En...
Average Monthly Attributable Enrollments Per OCW Course  Course Strong Weak University Courses 1.39 9.06 High School Cours...
Sustainability (Strong) Course Type Estimated Conversion Cost ROI Years Anticipated 4-Year Enrollment Typical Tuition Rate...
Sustainability (Weak) Course Type Estimated Conversion Cost ROI Years Anticipated 4-Year Enrollment Typical Tuition Rate E...
QUESTION: Does OCW publishing threaten BYU IS financial viability?
No At profit margins of 1% or higher  for university registrations At profit margins of 15% or higher  for HS registrations
QUESTION: Could OCW publishing be sustainable over the long-term for BYU IS?
Yes In fact, OCW publishing appears to be a money-making proposition for BYU IS
Future Work Replicate this study with  a larger number of courses Gather more data
Deseret Book Study Impact of free downloads  on print sales
Eight Books Typically low sellers (low risk)
Free PDFs Online No marketing, no link on the website (low risk)
Purchase Link On the page where the free download was available
Total Downloads
Visits to Product Page
Seasonal Effects?
Sales / Downloads
Correlation =  0.65 The more a book was downloaded, the more print copies it sold
 
“ Most people who download [a book I wrote] don’t end up buying it, but they wouldn’t have bought it in any event, so I ha...
Bookscan Study Impact of free downloads  on print sales
Nonfiction <ul><li>Blown to Bits (Hal Abelson, Ken Ledeen, and Harry Lewis) </li></ul><ul><li>Cultural Software (Jack Balk...
 
Science Fiction / Fantasy <ul><li>Seaborn (Chris Howard) </li></ul><ul><li>Caught Stealing (Charlie Huston) </li></ul><ul>...
 
 
 
Lesson? Doing a half-way job may be the worst thing you can do
Flat World Knowledge Study Impact of free downloads  on alternative media sales
Flat World Knowledge Study Impact of free downloads  on alternative media sales
Flat World Knowledge Study Impact of free downloads  on alternative media sales
 
16,461 / $479,259 29% of students bought  a printed textbook (Another 5% bought something else)
 
Average Buyer 1.3 purchases Average purchase of $30.89
$48,000 / $150,000 Average annual revenue Average production cost (At 09-10 adoption levels)
Summary Our intuition lies to us about the impact free / open may have on sales
Summary People still want printed books (People still want university credit)
Summary If people ever become truly comfortable with e-readers,  things may change
Summary For the foreseeable future, you CAN have your cake and eat it, too
Thank You [email_address] http://davidwiley.org/
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When Your Intuition Lies to You

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This presentation describes a number of studies examining the impact of giving away ebooks and course content on the purchase of print books and course credits.

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  • When Your Intuition Lies to You

    1. 1. When Your Intuition Lies to You: The Impact of Free/Open on Sales David Wiley (John Hilton and Justin Johansen) Department of Instructional Psychology & Technology Brigham Young University
    2. 2. Download These Slides http://slideshare.net/opencontent/
    3. 3. If You Want to Complain @opencontent
    4. 4. I’m Committed Free / open since 1998
    5. 5. Originally for Moral Reasons If we can, we should
    6. 6. Expressions Are Different To give a book you must give it away
    7. 7. E.g., Online Book We can all read simultaneously
    8. 8. The Cathedral and the Bazaar Eric Raymond’s seminal work
    9. 9. Reputation Worth more than money to some people
    10. 10. The Instructional Use of Learning Objects My first book
    11. 11. Citations Worth more than money when you’re new
    12. 12. “ Obscurity is a far greater threat to authors and creative artists than piracy” Tim O’Reilly, 2007
    13. 13. Market Fundamentals When you buy one, you expect to get one
    14. 14. Publicly-funded Research When you (pl.) buy a research article, you should expect to get one
    15. 15. People Want to Profit For a wide variety of reasons
    16. 16. When Intuition Lies If you give away things for free, people will stop paying for them
    17. 17. “ Resilience to Data” Persisting in beliefs despite clear, empirical evidence to the contrary
    18. 18. Some Examples Where we can empirically confirm our intuition is lying to us
    19. 19. BYU ’ s Independent Study Program <ul><li>University and High School Courses </li></ul><ul><li>(plus “ Personal Enrichment ” ) </li></ul>
    20. 20. Approximately 600 Courses <ul><li>Roughly 300 accredited HS courses and 300 university courses </li></ul>
    21. 21. 150,000 Enrollments per Year <ul><li>Smaller than (but comparable to?) the Open University UK </li></ul>
    22. 22. Would OCW Kill BYU IS? <ul><li>If people can access BYU IS content for free, will they stop registering for credit? </li></ul>
    23. 23. Preliminary Evidence Says “ No ” <ul><li>E.g., open publishing of books drives sales (Lessig, Benkler, Doctorow, Boyle, Hilton & Wiley, etc.) </li></ul>
    24. 24. Previous Research at OU/UK <ul><li>1.95% of enrollments through “ click to enroll ” conversions over 2 years </li></ul><ul><li>No measurement of lost enrollments </li></ul><ul><li>No ROI or cost/benefit analysis </li></ul>
    25. 25. Previous Research at OU/NL <ul><li>18% of OCW users were “ inspired to purchase an academic course ” </li></ul><ul><li>No measurement of lost enrollments </li></ul><ul><li>No ROI or cost/benefit analysis </li></ul>
    26. 26. Previous Research at UC Irvine <ul><li>“ Click to Enroll ” button => “ lead ” form for more info, resulting in 84 students </li></ul><ul><li>No measurement of lost enrollments </li></ul><ul><li>No ROI or cost/benefit analysis </li></ul>
    27. 27. Conduct a Controlled Experiment <ul><li>Measure costs, impacts on enrollment, and ROI / sustainability of open publishing </li></ul>
    28. 28. Six Courses <ul><li>Three university : Personal Finance, Cooking in the Home, and Public Speaking </li></ul><ul><li>Three high school : US Government, World Geography, Earth Science </li></ul>
    29. 30. What Cost to Open a Course? <ul><li>First course is expensive since new XML transforms are written Subsequent courses cost less </li></ul>
    30. 33. Measuring Lost Enrollments <ul><li>Two methods </li></ul>
    31. 34. Historical Data as Control <ul><li>Seasonal variations in enrollment </li></ul><ul><li>We compared May - July 09 with May - July 08 for same course </li></ul>
    32. 35. SFL 110
    33. 36. BUS M 418
    34. 37. TMA 150
    35. 38. Earth 41
    36. 39. GEOG 41
    37. 40. GOVT 45
    38. 41. Differences? Increases in four courses Decreases in two courses
    39. 42. Equivalent Course Enrollment Data as Control Control for external influences on enrollment trends like economy (Unstandardized, so slope only)
    40. 43. SFL 110 - HIST 322 (.94)
    41. 44. BUS M 418 - I SYS 101 (.76)
    42. 45. TMA 150 - SFL 100 (.79)
    43. 46. Earth 41 - ALG 41 (.89)
    44. 47. GEOG 41 - HUM 41 (.94)
    45. 48. GOVT 45 - GOLF 81 (.88)
    46. 49. Differences? Only one clear difference
    47. 50. No Significant Difference There is no clear impact on enrollment trends
    48. 51. User Conversion Rates <ul><li>512 conversions on 20,148 visits - 2.5% </li></ul><ul><li>48 registered used “ Click to Enroll ” </li></ul>
    49. 52. Average Monthly Attributable Enrollments Per OCW Course Course Strong Weak University Courses 1.39 9.06 High School Course 1.28 16.72
    50. 53. Sustainability (Strong) Course Type Estimated Conversion Cost ROI Years Anticipated 4-Year Enrollment Typical Tuition Rate Estimated 4-Year Revenue Margin for Sustainability University $282 4 66 $444 $29,600 0.96% High School $1173 4 61 $124 $7605 15.50% All Courses $728 4 $18,434 3.95%
    51. 54. Sustainability (Weak) Course Type Estimated Conversion Cost ROI Years Anticipated 4-Year Enrollment Typical Tuition Rate Estimated 4-Year Revenue Margin for Sustainability University $282 4 435 $444 $193,140 0.15% High School $1173 4 803 $124 $99,572 1.18% All Courses $728 4 $146,356 0.50%
    52. 55. QUESTION: Does OCW publishing threaten BYU IS financial viability?
    53. 56. No At profit margins of 1% or higher for university registrations At profit margins of 15% or higher for HS registrations
    54. 57. QUESTION: Could OCW publishing be sustainable over the long-term for BYU IS?
    55. 58. Yes In fact, OCW publishing appears to be a money-making proposition for BYU IS
    56. 59. Future Work Replicate this study with a larger number of courses Gather more data
    57. 60. Deseret Book Study Impact of free downloads on print sales
    58. 61. Eight Books Typically low sellers (low risk)
    59. 62. Free PDFs Online No marketing, no link on the website (low risk)
    60. 63. Purchase Link On the page where the free download was available
    61. 64. Total Downloads
    62. 65. Visits to Product Page
    63. 66. Seasonal Effects?
    64. 67. Sales / Downloads
    65. 68. Correlation = 0.65 The more a book was downloaded, the more print copies it sold
    66. 70. “ Most people who download [a book I wrote] don’t end up buying it, but they wouldn’t have bought it in any event, so I haven’t lost any sales, I’ve just won an audience… After all, distributing nearly a million copies of my book has cost me nothing.” Cory Doctorow, 2008
    67. 71. Bookscan Study Impact of free downloads on print sales
    68. 72. Nonfiction <ul><li>Blown to Bits (Hal Abelson, Ken Ledeen, and Harry Lewis) </li></ul><ul><li>Cultural Software (Jack Balkin) </li></ul><ul><li>Cult of iPod (Leander Kahney) </li></ul><ul><li>Cult of Mac (Leander Kahney) </li></ul><ul><li>The Future of Ideas (Lawrence Lessig) </li></ul><ul><li>Trigger Happy (Steven Poole) </li></ul><ul><li>The Access Principle (John Willinsky) </li></ul>
    69. 74. Science Fiction / Fantasy <ul><li>Seaborn (Chris Howard) </li></ul><ul><li>Caught Stealing (Charlie Huston) </li></ul><ul><li>Magic for Beginners (Kelly Link) </li></ul><ul><li>Spaceman Blues (Brian Slattery) </li></ul><ul><li>The Crooked Letter (Sean Williams) </li></ul>
    70. 78. Lesson? Doing a half-way job may be the worst thing you can do
    71. 79. Flat World Knowledge Study Impact of free downloads on alternative media sales
    72. 80. Flat World Knowledge Study Impact of free downloads on alternative media sales
    73. 81. Flat World Knowledge Study Impact of free downloads on alternative media sales
    74. 83. 16,461 / $479,259 29% of students bought a printed textbook (Another 5% bought something else)
    75. 85. Average Buyer 1.3 purchases Average purchase of $30.89
    76. 86. $48,000 / $150,000 Average annual revenue Average production cost (At 09-10 adoption levels)
    77. 87. Summary Our intuition lies to us about the impact free / open may have on sales
    78. 88. Summary People still want printed books (People still want university credit)
    79. 89. Summary If people ever become truly comfortable with e-readers, things may change
    80. 90. Summary For the foreseeable future, you CAN have your cake and eat it, too
    81. 91. Thank You [email_address] http://davidwiley.org/

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