What are words worth - an AP Analysis.

So, the AP has now riposted to The Brouhaha with a re-post of its pricing for quoting its words (see here for the price tabs):

There are 3 rates - For Profits, Educationals, and Registered not for profits. The Educationals and Not for Profits have the same pricing. I will now perform my own value-added analysis, which last time I looked qualifies as Fair Usage. If you graph the rates, it looks like this:



As you can see, there are a few interesting points of inflection:

- The pricings are the same, no matter what the profits, for 51 to 250 words - clearly this is the desired sweet spot
- There is an arbitrage at each of the breakpoints, typically of c 2x the following word valuation

Reflecting on this inflection, we note that the end-point converged value per word is c $0.20 (the graph tends to this over and over), and it takes c 400 not-for-profit or 500 profit words to get there as a larger than 250 word buy, which we submit is the lower bound of the assumed "Fair Use" envelope

This leads to some interesting conclusions:

- the average page in a book is c 300 words, or $60 at $0.2 per word. Assuming the average book is 300 pages, that values the latest schlockbuster novel as c $18,000. Now, given that we want to pay about $9 or so, that implies a c 50,000% discount for a bulk buy of these novel words.

- assuming the average Sunday newspaper is (say) 500,000 words, and sells for £2.50 (say $5.00) that implies a price of $100,000, or a discount of 0.5 million % to reach the price of the papers in the shops. The photography of course is free in this calculation, but assume thats half the cost and its a mere 0.25 million % discount.

- assuming the average newspaper article is c 500 words, thats' $100 an article. Assuming the average Journo makes $60,000 per annum, thats c 600 articles a year, or c 2.5 each working day before you are cheaper than buying straight off AP. And thats c 5 a day if they get a 50% discount at your paper, bub, so stop reading this blog and get writing .

Anyway, as we can see, AP is clearly selling its words at substantial discount in bulk within the trade compared to the Fair Usage options.

(Afterhought) I don't think I know of another market where these sorts of pricings apply, especially one for digital goods which have low intrinsic distribution costs.