What economic model do you think is better: paying to be an audience or to have an audience?

I suppose it depends on whether you want to make money or give it away. Obviously, if you want to make money, the audience pays, and if you want to give it away, you pay the audience. Perhaps I’m not understanding the question.

I think the way it works is that the person who wants the good consumed by the public lays out money initially (“start-up costs”) and, hopefully, the consumers will pay enough for the good so that over time he gets this money back and then makes profits on top of it.

Money is what people pay for what they want.

The model where people pay for what they want to see is found at the movies.

The model where people pay for what they want other people to watch is called advertising.

Would you rather watch ads, or movies?

@cwilbur – I wouldn’t call that advertising. Many artists invest loads of time and money into projects that don’t get paid off by an audience. In Canada, many artists rely on government grants to get their projects done.

Also, do people really know which movies they want to see? Big-budget advertising by Hollywood companies heavily influences box-office sales. So many great movies get ignored by the public because the advertising wasn’t there.

I don’t really know which model I’m for, but I feel a lot more comfortable just worrying about producing quality work and building whatever audience I can. As an audience member, I’d love to be able to walk into any movie or play or concert, free of charge, and I think that the cream of the crop would really emerge more naturally. I don’t see this ever becoming possible, though.

It depends on whether the product is of limited supply, or limitless.

Limited – Consumer pays
Limitless – Company pays

@shadling: When an artist needs a government grant, that’s still people paying for what they want to see. It’s just people acting collectively through the government.

This really comes down to demand.

Typically if nobody has ever heard of the product, then there is little demand and the cost to bring the good or service to market is much higher. If the product contains something that is in demand then the cost is lower or can be assigned to the audience.

However, unless there is already a following from which the production cost can be acquired, the producer will have to lay out the money to create the product.

What type of good did you have in mind for this question?

I don’t know, but I think that you may be referring to the polarity of supply-driven economic model vs a demand driven one. The supply driven model states that if you supply the good, it will automatically bootstrap demand. Whereas it’s opposite, the demand driven model says that only those goods are produced which already have a demand in the market. Demand indicating both the will and ability to pay the good’s price.

Basically these are two economic schools of thought at opposite ends of the spectrum and most probably, the truth lies in the middle somewhere.

I think the argument can go both ways. If I am an environmentalist, I can say that if producers start producing solar powered cars and stop producing the cars they used to make, everyone will have no choice but to buy solar powered cars. Supply-driven economics, in other words.

There can be similar arguments for demand-driven products, issues.

But in my personal opinion, it’s really a circle. To me it’s a question of whether the chicken came before the egg.

I do not consider paying the audience to listen to me to be more that false pride. So I will say that having the audience pay and offering something back to them that they might have paid that much for is the better model.

@fireseide I don’t have a particular product in mind, I’ve just been thinking about economics and production in general

@fireside I think that for business to function a seller can not have fewer customers than he has sellers. I just can’t even think about that. For a business to work the money has to come to the business from the customers. I am confused.

Let’s take a couple of examples:
For the purposes of discussion, let’s take iPod as an entirely separate division of Apple that needed to be wholly funded through investment dollars. Some of those funds came from the parent company and some came from outside investors or venture capitalists. The development of the iPod technology was something that was not in demand at the time because customers had not heard of or used the product before.

iPod Touch, however, was something that was probably funded primarily by customers of the already popular iPod. This technology needed to be researched and developed but the cost of that could be apportioned out to the many customers of the iPod products.

Similarly, the first Harry Potter books were produced and distributed due to an output of money by the printer based on the conjecture that people might like and purchase them. But by the time the latest movie was made, the capital derived from the first movies was able to be put back into production costs, thereby demanding less of an outside investment and, in essence, being paid for by the consumers.

Thus, the need for marketing and advertising or a new to market product is higher than the need for an already in demand product since the customers actually become sellers of the product.

I don’t know what this question is about. You simply can’t do business like that. You are talking about a charitable organization and a business and they do not have the same purpose so which is better is moot.

@judyprays Are you going to clarify your question?