Digital Content and Value Creation

This post was catalysed by a recent meet of the Creative Farm by The Untitled Studio : Creative Farm

As creators of digital content we are often beset with the issue of no one (including ourselves) understanding the real value of what we produce.

The first big issue

I believe that part of the problem comes from the fact that digital content can be created anywhere in the world. So those of us in certain nations who have to pay 20 times the rent than those in other nations, are often competing for the same jobs. Thus some of us can undercut the others by a huge amount.

I believe outsourcing work to another country only works if you can specify to an incredible degree what needs to be made, and for many projects that is dangerous or impossible.
I also think its really dangerous to outsource something that is part of your core business, since the other party won’t a) share your risk or b) be incentivised to make the product great.
I think the implementor of a design needs to be part of the design too.

However I don’t believe this cost issue is the only issue.

The main problem

A main problem is that people can’t grasp literally the value of a digital product. They understand they need a big capital investment for a machine in a factory (which creates the value), but for some reason when digital content is required for an operation, digital content which creates equivalent value, somehow people believe that the initial capital investment can be only a few dollars.

You see this miss match in reward for value creation in other ways too. For example when some creative offices have 5 directors for every person creating the content (be it designer or developer). The designer or developer creates 90% of the value of the product, but are paid 10% of the cost of development (the directors and producers getting the other 90%).

The question to ask is:

What is the percentage of value that I am creating?

..its pretty much 90% right?

And the answer often is:

Its my idea- that 90% of the value – and I can get it made it India or Romania or similar!

If I ignore the fact that their idea has been attempted a hundred times before, my next answer should be (although usually the conversation has ended at this point):

I understand that I am competing against people who work at much lower rates, but you should not only understand the hidden risks and costs of outsourcing, but understand that YOU are also competing .. competing with people with way better digital content. Your product will likely fail against that competition, because your investment in the main value creation part of your business is inadequate.

If someone thinks they can pay bottom dollar for the most valuable part of their business, then its more than likely, that they are creating a commodity product/service, not a differentiated competitive product.

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