Why is everyone making physical products?
Lauren Leto, co-founder of Texts from Last Night and Banters raised this question in last week’s class of Entrepreneurial Design. Our final assignment is to make $1,000, and it became evident that all 14 of us seem to go in the direction of projects involving physical products.
I think the main reason is that the value of objects with a weight and feel is still much more apparent to most of us, which makes it easier to deal with. The way you earn money off of digital products is different. Reading a blog or using social networks is free, and we are moving in a direction where most content is open and people can participate on levels of an experience without being charged. Whereas the value of digital products is measured in currencies like clicks and time spent looking at something, you rarely use a physical object before you have paid for it. To figure out how much money you can make of a digital product, you need a strategy for how to monetize and convert these metric into potential revenue.
I’ve realized that there are other ways to make money than putting up banner ads on your website, as long as you have a big enough number of people using your product. But given the limited time frame, this road seems to be a more unpredictable one to reach the $1,000 goal, than the more traditional sale of physical products. It’s easier to sell umbrellas for one hour and estimate how many you have to sell in order to earn enough money.
But, a higher risk also means higher rewards if you succeed. And the organic way that digital products are spread, has advantages over products that require a cumbersome manufacturing process or hours of hand crafting. Of course there’s a lot of prosperous businesses where physical and digital products overlap. But the biggest takeaway I’ve gotten from entrepreneurs like Lauren Leto and swissmiss, is that building a sustainable framework for a digital product can sustain other side projects. This insight has made me rethink business models, and will become valuable for my further work.