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If you’re a creator i.e. if you create anything at all, then it’s worth considering a few laws. Let’s call them the ‘Laws of Creation & Value’.

1. Products you create, create Value for Users. That value cannot be destroyed.
2. The Value your Products create cannot be Destroyed – but it can be Stolen.

Hand in hand are a few corollaries.

1. If there are middlemen between Creators and Users, they will almost always try to steal value. The more ‘intelligent’ or ‘noble’ or ‘creator-focused’ the middleman – the more likely that value will be stolen. These middlemen will also try to steal from users. Basically, they steal from both sides if given the opportunity.
2. If Creators and Users have a direct channel to each other, then neither can be taken advantage of.
3. There will always be a small portion of users who will pretend that no Value is created. They will try to steal value. Part of their justification/strategy for stealing will be to convince other users that no value is created. These bad users will often try to steal from both sides. Think of bad users as ‘middlemen with less ambition’.
4. The majority of users see the Value created and value it. However, they are all susceptible to the bad agents in the ecosystem i.e. middlemen stealing value and bad users pretending no value is created. Perception becomes reality.
5. Value you create for good users will always come back to you. Unless you let middlemen steal that value. Unless you let bad users create the illusion that the value does not exist.

The following is a simplified explanation of the laws and a very basic model. However, it should help illustrate the laws.

The Ecosystem of Value Creation and Delivery

1. We have a creator John who creates a product that will create solid value for users. The product can be anything (a chair, a book, a movie, a sandwich) and the value can be anything (utility, entertainment, date night, food). The crux is that John is creating value and then delivering it to users via some means.
2. We have a middleman, Company X, that delivers the product to users. Note that due to its position as the company delivering the product to users, it is in position to create the illusion that it is also creating the value. If it can trick John and customers, then it can create the illusion that all the value creation is due to Company X.
3. We have good customers. These are customers who recognize that value is being created and are willing to pay for it (to reciprocate).
4. We have bad customers. These are customers who either are not willing to pay for the value they get OR they are willing to trick themselves into thinking that no value is being created.

In a perfect world, John would sell directly to good customers and get back value for the value he provides. He would probably avoid bad customers.

Alas, we live in a rather imperfect world.

Why creators and users should be wary of Company X

There are two things that benefit Company X greatly:

1. If John and other creators start believing that Company X delivers most of the value OR if they start believing that their product has little value. 
2. If customers start believing that Company X delivers most of the value.

The Kings of stealing value are technology companies that work hard to create the illusion that movies and music and books and content of all sorts is worthless. That everything is due to the device or the platform or due to some algorithm.

Aggregators, file-sharers, p2p networks – these are all great examples of companies trying to push the notion that ‘content’ is worthless.

The perfect world for middlemen companies is a world where all the products are free and customers are paying only Company X for the value they get.

Imagine if your neighbourhood BestBuy started expecting Apple and Microsoft and Samsung to produce phones and computers and hardware for free. It then charged you the same money for these products and claimed that all the value creation was being done by it.

That’s exactly what Internet companies are doing. Because content creators don’t understand technology, and because it benefits users to imagine that content creators might not want to get paid for their products, it becomes easy to detach digital content from reality. To start believing that unlike a physical chair, it costs nothing to make a digital game or to produce a digital movie. It just grows on trees in writers’ and directors’ and engineers’ back yards

Company X constantly works to create the illusion that content is worthless and abundant and that creators are a dime a dozen. Why? Because they want to take credit for all the value customers get from the creations of creators. They want to get 100% of the value that customers give back.

Company X = Pretty much every technology company.

There’s no way to avoid this stealing of value other than to lock Company X out of the ecosystem.

Why creators and users should be wary of Bad Customers

Far more dangerous than Company X are Bad Customers. Company X is just a channel to users. You can always find another means to get to your customers.

The real danger is bad customers who infect good customers with their thievery-justifying ideas.

Bad customers have two great gifts:

1. They have an inability to acknowledge the value they get. Or, to be more precise – They have the ability to rationalize the value stealing they do.
2. They have a great hunger to spread their attitude to others. It’s not enough for them that they didn’t pay the Creator for Value – they insist that other people don’t pay either.

The percentage of Bad Customers is low. The real problem is that Bad Customers need so desperately to compensate for their stealing that they put a ton of effort into trying to get Good Customers to become like them.

It’s some sort of human need to ‘appear good and justified to yourself’. Even if you are the bad guy.

Instead of the simple reality i.e. ’I'm a thief and I stole this product’, they want the fantasy of ’I'm the Grand King of Generosity and I deserve a Medal for Using the Product these Creators Made – They should send me gifts of gold and silver to thank me for Using their Products’.

The simple solution would be to pay for products and thus reciprocate the value they get. Or to not pay and then not use the product. However, Bad Customers want to use the product and get the value and then not pay for it.

Thus they start believing that content creators should share everything for free and live on free air and sunshine.

What can Creators do?

Creators have to take responsibility for both delivering value to customers and getting value from customers.

1. Build direct channels to customers and avoid middlemen – especially the ones that are very powerful and the ones that are very noble. In Particular: The less someone seems to be acting in self-interest, the more likely it is that there’s a BIG hidden agenda.
2. Reward Good Customers. Make it easy for good customers to get the products they pay for. It’s absolutely critical to reward good behavior. If you can identify good customers, then go out of your way to provide them additional value and treat them super well.
3. Ignore Bad Customers. It’s a waste of time to do anything with them. At the same time, make it difficult for Bad Customers to spread their beliefs. Note: You can never ‘attack’ bad customers (what the music industry seems not to realize) – because then you provide a rationalization for stealing. Instead, go after the ‘enablers’ that make stealing possible.

Your approach should revolve almost completely around reaching good customers directly, getting value from them without middlemen, and keeping them safe from bad customers.

1. You cannot make it too easy to steal. So that good customers aren’t tempted to become bad customers.
2. You have to make it easy to get the product and to get value from the product once users have paid. Keep rewarding good customers.
3. Avoid middlemen. If middlemen are necessary then start building your own channels in parallel. Can’t stress this enough. Look at what happened to newspapers. What is happening to other content creators. If you don’t have your own channel then you’re just a serf.
4. Avoid middlemen like the plague – especially if they seem too good to be true. There is no free lunch.
5. Don’t let bad customers influence good customers. This is easy if you have direct communication with good customers and if you make it easy for them to get the value they paid for (and perhaps a bit more). Hand in hand with this is establishing a connection so that your good customers understand that it costs you money and time and effort to create products.
6. You can never eliminate bad customers. There’s absolutely no way to get them to become good customers. So just ignore them.
7. Be wary of perceptions. Good Customers should have a very clear idea of the value they are getting and that you, the Creator, are providing 99% of the value.

That last point is basically the crux. It also ties in with the two main Laws of Creation & Value i.e.

• Products you create, create Value for Users. That value cannot be destroyed.
• The Value your Products create cannot be Destroyed but it can be Stolen.

Whether you write a book or grow apples or make a movie or harvest wheat or create a song or bake bread or make chairs or write software – there will always be middle-men trying to steal value from you, there will always be bad customers trying to pay you less than you deserve.

It always starts with noble intentions. It always ends with the apple farmer getting 5 cents per apple and middlemen making 25 cents.

Creators today have to ensure they deliver value to good customers while avoiding all the potential pitfalls. The reality is that with a digital product it’s very easy to create the wrong perception that ‘it should be free’ or ‘it’s not stealing since making a copy costs nothing’.

You have to make it clear that it costs time and money and effort to create products. You have to make it impossible for customers to steal easily and you have to make it hard for them to fall for the fallacy that it isn’t stealing. You have to do it while bad customers and middlemen are trying their best to pretend that no value exists or that all value is attributable to someone other than you, the creator.

The biggest help you have is that you can now connect directly to customers and build direct channels and thus create two critical reality-perceptions -

1. You are the content creator and you are providing the value.
2. It costs you time and money and effort to provide that value and you expect a fair reciprocation of value.

Basically, it’s become much easier to fool content creators into giving away their products for free and it’s also become much easier for content creators to establish a win-win value exchange with good customers that is free of both middlemen and bad customers.

Filed under: thoughts Tagged: | laws of creation and value, value over technology