Getting Paid for What You Know: Knowledge Products
June 1, 2010 by Mary Adams
We talk about intangible capital a lot. We even wrote a book on it. But we know that a lot of people think that IC is a very abstract concept. It’s not. It’s at the very heart of how you create value for your customers and get paid for it.
Your company already has extensive knowledge. The question is how you package this knowledge in a tangible form that has economic value. In order to understand your business as a knowledge business the best place to start is with your revenue line. What does it say there? What do the bills to your customers or clients say? Are you selling them a knowledge product, a physical product, a service, or the time of your employees?
In the coming days, I’ll be reviewing the different ways that your company can get paid for knowledge in greater detail. Hopefully, the discussion will help you think about how you do things today, how you could improve it, and maybe even new ways that you could get paid in the future.
Selling Knowledge Products
The first way of getting paid for what you know is to get paid directly through knowledge products. The simplest form of this kind of product is a written or spoken recording of knowledge. This includes books, articles, reports and white papers—all of which can be delivered in physical or electronic form. Speaking can be delivered directly as a one-time experience or recorded as a reusable product. Video is a more and more common delivery form for knowledge products. Many informational products are also bundled: providing a book, workbook and CD in one package.
In these forms, knowledge is very much a commodity. The competition for it is often free content. The amount of free content is increasing every day thanks to the Internet. So to get paid for knowledge, your product needs to provide some kind of synthesis of a body of knowledge. Sometimes the knowledge is unique. Most of the time, the synthesis and the approach are the unique aspect. Take our book Intangible Capital for example. Much of what we are writing here is known. We didn’t identify the shift to the knowledge economy. But we have experienced together with our clients the implications of that shift to the challenges of running a business today. And we have come up with a series of steps that help companies “see” and manage this side of their business in a way that helps them grow and improve performance. Our contribution is to tie it all together and package the knowledge in a way that businesspeople can apply it to improve their own operations.
The same knowledge in our book can (and will) be delivered in different forms. Before taking on the project of this book, Mary took a course from Dianna Booher. Dianna has written 44 books in total in her two areas of interest: Christianity and business communications. A couple of years ago, Mary heard Dianna speak and was convinced to take her class when she heard Dianna explain the two dozen product offshoots she had sold for a single book including foreign language editions, electronic editions, workbooks, training manuals, laminated “tips” sheets sold at office supply stores, and recordings of programs, to name a few. Of course, that does not count the number of speeches and training sessions based on the book where she and her employees delivered a “live” version of the content.
People like Dianna make a very good living selling synthesized knowledge. But selling a book is far from a guarantee of income. Each year in the U.S., over 150,000 new books are published by major U.S. publishers. Many more are published privately through on-demand vendors. Yet, the average book will sell just 500 copies. Most of them will not make a profit. These kind of figures makes it tough on authors that want to make a living from their writing. It is not too different from the star system that dominates in the music business, although the Internet may change these dynamics over time.
Of course, many people write books as an adjunct to another business. Consultants write books to make their expertise tangible. Academics write books because publishing supports their career development. They are not alone. It is pretty common for businesses to give away knowledge products on the one hand to support their overall value and revenue creation model. Next up: Licensing and Secondary Sales