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Update from PM Class

February 18, 2010

It’s time for my weekly update from the Project Management class, for want of anything better to talk about.  Which, this week, is a pretty big want.  In other words, there wasn’t much interesting about the most recent PM class.  This class we had a guest speaker who talked a lot about Microsoft’s Project Portfolio Server program.  I wasn’t really inspired by it.  Certainly, it made organizing large numbers of projects into a single view easier, and easier to do some cursory analysis on them.  But, with the analytics essentially obscured to the user, I didn’t feel confident that it was a good platform for decision analysis when considering multiple projects against constrained resources.  What I’m learning in my Decision Modeling class is much better for that, I think – and there, defining the parameters becomes a much more transparent process.

We also were given our group assignments, and I’m still waiting on feedback from my boss about whether there’s a project here at work that we can use.  If not, one of the other group members may have a project.

Tangentially related, as I was thinking about projects – both for this class and for the Decision Modeling class – I came up with what I think may be a great project idea for Decision Modeling.  In that class, we’ll need to model a complex and non-trivial decision with lots of constraints and uncertainties.  I don’t know all the details of the project’s requirements, but I was reflecting on the A & M Kerfuffle when this idea struck me.  I left a comment on John Scalzi’s blog a few days ago (scroll down to comments #43 and #44) about one of the factors that I thought was entering into the psychology of consumers regarding e-book prices (one which I hadn’t seen really brought up much, that being that physical books, even having the same content as e-books, can be valued higher simply because they have physical, concrete, and tactile existence).  Later, I thought about my comment, and thought: “Stephen, you’re smarter than that.  There’s more that enters into pricing, and perception of price, than any one factor.  It’s a complex interplay of Supply, Demand, Break-even, Equilibrium, and Consumer Psychology, all in one package.  Heck, it’s a complex, non-trivial nut to crack.”  That’s when I thought: “Complex!  Non-trivial!  Nuts-to-crack!  These are the features of the sorts of problems that I’d want to use my new decision modeling ninja skills on.”  Besides that, the prof had mentioned finding a project about which we were interested.

I’ve already reached out at work on that project, too, to see if there was a complex decision problem requiring ninja-level-analysis there.  And that will take precedence if I find one.  But I’d be much more interested in exploring the complex problem of e-Book pricing, if nothing at work pans out.  If I proceed with it, I’ll next have to consider how I’d frame the question, and what, precisely, I’m trying to “decide” and from who’s perspective.  Probably, I’d think that both Amazon’s and Macmillan’s positions on the issue are well vetted within their organizations, so the tack I’d have to take would be: from an author’s perspective, what is the ideal e-Book price?

If this goes forward…

STAND BACK!  I’ll be doing SCIENCE!

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4 Comments leave one →
  1. February 18, 2010 9:21 am

    I agree, there is a lot more to the e-book pricing wars than meets the eye. I have been reading some articles on consumer backlash on e-books price increases and I chalk a lot of the outcry to ignorance. First, people don’t realize that Amazon.com was able to offer their e-books at a lower price because they were subsidizing the cost from the publishers, selling at a loss to the consumers. The reason for this is that Amazon.com wanted Kindle to be the most widely used platform for reading books; therefore, they took a loss on each book to get consumers hooked on their platform, which then consumers would be unlikely to switch from and Amazon.com could reap profits for years to come. (pretty much the whole Amazon.com business model)

    The other complaint consumers had was that e-books didn’t cost publishers anything, unlike a physical book, so they should be even more cheap than they currently are. However, the average consumer is ignoring the other cost in marketing, editing, and writing a book. The real value (and cost) in books is the thoughts and ideas written, which are copyrighted and “owned” by publishers to sell at whatever price they value these rights.

    The rights to a book is an asset; consumers don’t have a right to pay less for this service no matter what form it is presented in.

    • February 18, 2010 9:48 am

      You’re absolutely right, Chris, on all these issues. I’ve been reading a lot of discussion about them in the past few weeks, thanks to what happened when Amazon turned off all Macmillian (and subsidiaries) titles in their store. The reason people keep writing and putting out books (or making movies, or music, or any other form of intellectual property) is because we have a system that protects IP and allows the creators of it to profit from it.

      I do think, though, that an ideal economic equilibrium price will need to take into consideration consumer psychology and price sensitivity. Because of Amazon’s e-book-subsidizing antics, consumers now expect a much lower price than is realistically reasonable for e-books, given their other non-printing-related development costs. I particularly find Macmillan’s push for variable pricing, though, interesting. The idea there apparently being to price e-books higher on first release and bring the price down over time. This would allow e-book purchases to follow the technology curve: early adopters who simply must read the book now pay more, those who can wait pay less (and should probably be getting the later editions with errors found in earlier editions corrected).

      In a tangential topic, I’m happy to see that my WordPress to Twitter to Facebook workflow worked!

  2. February 19, 2010 8:33 am

    Interesting stuff, Stephen. I have a word of caution, based on my years of experience as a decision analyst. You might analyze “…the ideal e-book price” from an author’s perspective, but that has the fatal flaw that it’s not the author who sets the price. The author has certain objectives that he wishes to satisfy, and those are (or at least might be) different from those of the folks who determine the price. So the author is doomed to be dissatisfied.

    • February 19, 2010 9:18 am

      Thanks, you’re right, of course. I ought to be smart enough to realize that creating a decision model for something only makes sense if I’m modeling decision variables over which we actually have control. Thanks for the clarity!

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