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    « The Long Tail... | Main | Bits or Atoms? »

    August 30, 2006

    An Abundance of Downloads

    I heard recently that some reprographers are allowing free downloads of drawings.  I'm sorry, but I don't get it.  What if Apple made downloads from iTunes free so they could sell more CD's?  The explanation I got was reprographers were giving away downloads to get the printing business.  Okay, but that is not where the value is.  If you are in the business of aggregating, preparing and distribution "construction media" how you deliver it is simply a preference of the customer. All of the hard work is before it is printed or downloaded.  That is ultimately what you are getting paid for.

    Downloads are an abundance-based model where printing is a scarcity-based business model.  There are only so many prints that you can make on a printer, but the amount of downloads you can sell is infinite.

    I know of a midsize international reprographics company that had an intense internal debate whether they should allow downloads on their site.  The argument was it would affect their printing business.  In the end the download proponents won the battle they allowed downloads for roughly one euro a sheet (about $1 at the time).  At the end of the year someone asked how much money they made on this.  The answer was about one million euros ($1M).  Did this affect their printing business?  No one was sure.  It didn't appear to.  But here's the real kicker.  Their margin on downloads were close to 100%.  The marginal cost of a download is zero.

    If you were to print a 36" by 42" sheet at a price of $.05 a sqft and a cost of $.03 a sqft.  Your gross profit per sheet is $.21 (excluding labor, rent, etc.).  You would have to print 4,761,905 sqft per year to make the same profit as $1M in downloads.  That is a printer printing 396,825 sqft per month every month for 12 months.

    It’s much easier to grow your business by promoting more downloads than adding more printers.  You may loose some printing, but gain some profits and gain some customers.  I'm certainly not promoting getting rid of printers, but there is a lot of money to be made outside the printing.

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