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Many people ask me how content can be monetized when the copies are available ‘for free’ i.e. distribution (downloading) or access (streaming) is uncontrollable. This question – and how we answer it – is a key issue across the board, whether it’s in music, eBooks, news, publishing, TV or films and video. In my view, the thinking that the distribution of content must be controlled – at all cost – to achieve any kind of reasonable payment is fundamentally flawed because of this not-so-futuristic realization: in an open, digitally networked economy, content publishers need to offer their goods in a way that no longer centers on mere distribution being the key factor. It should n ot (only) be the content that is sold (i.e. the mere 0s and 1s) but the context, the community, the added values and the many other valuable items around the content. Sell what can’t be copied – if copies are ubiquitous sell what is scarce: attention, packaging, timing. Look for those New Generatives.

The irrefutable trend is that the window of opportunity of ‘selling digital copies’ (e.g. iTunes, Kindle etc) is rapidly closing, at least in most developed countries. The next, and very much already-present opportunity is to sell access to the ‘cloud of content’ and to provide added-value services i.e. content-related experiences.

Once we embrace that the users – the people formerly known as consumers – can no longer be relegated to just being passive ‘buyers of copies’ we can investigate how they may want to pay for everything else, as well. For example, when buying an eBook users shouldn’t merely pay for the authorized distribution i.e. the legitimate ‘copy of the words’ but they could also gain access to highly curated commentary, their peers and friends that may also read this book, ratings, explanations, slide-shows, images, links, videos, cross-references, direct connections with the author or the publisher and so on. Yes, indeed: Connect with Fans + Give Reasons to Buy (as Mike Masnick of Techdirt has succinctly summarized before).

In these scenarios, if I am a legitimate user, I would also gain valuable context because I pay for access (whether with cash or with attention). I would gain engagement, conversation, relevance, personalization, meaning… i.e. really valuable benefits to me as an individual, not just as a dumb, anonymous recipient of free zeros and ones. I won’t get these benefits from Rapidshare, BitTorrent or some drop-box on the Net, because it is stripped bare of everything that really matters to me. This is the key to the future of monetizing content, and it will take many different shapes and forms depending on the content, and the culture that surrounds it. Sell and package access to everyone – don’t focus on selling copies to those very few that still want them.

In music, it is very likely that streaming-on-demand (including the temporary buffering i.e. offline playing of those streams) will be ‘feels like free‘ i.e. bundled and packaged by 3rd parties, while the context and those many added values and upselling options will not. If I want a high-definition version of my favorite opera or that David Sanborn concert at the Blue Note from last night I should be able to buy an irresistible premium package that provides it. If I want to share my personal play-lists, ratings and comments with my Facebook friends, and get access to their content, I should be able to add the ‘social network option’ to my package, for a no-brainer price (see iPhone apps!). If the price is right and the perceived value is high, I’ll buy. Just ask the games industry how that works.

Now imagine if a download of a song would cost only $ 0.10 – would anyone still bother to scour the web to find badly ripped, virus-laced tracks for free? Yes, I know, that price point sounds ridiculous if you used to sell CDs for 18 Euros a piece but the argument for much cheaper access to digital content that is offered in open (i.e. copy-able) formats is really quite simple: if you can get 95% of the users to buy at a much lower price (or better yet – and much more addictive – a bundle or flat-rate), and if you can get them so excited they will do the marketing for you (i.e. share links;) – instead of getting 5% of the market to buy an expensive product that they can’t really share with anyone – then you should be doing just fine. This has been my chief argument for proposing the music flat rate during the past 10+ years, and I think it still holds water (in fact, it seems to be proving itself with the recent developments at Spotify, MOG etc). Monetize access not (just) copies. Give up control to be in-command. Engage don’t enrage.

If you agree that the sharing of content cannot really be stopped (if you haven’t gotten around to that yet, just consider the 100s of unauthorized streaming-on-demand services), and that therefore the value of a mere digital copy of content will invariably decline, we must urgently re-think how we address the issue of monetizing access and sharing, and what we can do to create and nurture those new values – the New Generatives – that will replenish those that used to be derived from being able to control distribution. As part of this, the metrics of the music industry need to shift from getting a copy to rewarding engagement. Engagement, interactivity, conversation and a constant stream of added values that can be produced at very low cost is what will give content owners ‘protection’ from rampant free-loading – not DRM, region-coding or HADOPI or 3-strikes laws. Protect by value not by law or technology.

Lower the price of legal access to the point of unanimous excitement, use open standards that work for everyone, everywhere; bundle and package as attractively as you can (then: repeat). Remove all reasons that your users may have to avoid the toll-booth, and thereby side-step the conversion to ‘paid’. The lower the hurdle for legitimate usage and paid engagement, the less you will have to worry about ‘competing with free free’.


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2 Comments

  1. The people going out of business are the producers of copies and the distributors. There is no business model to save them when the Internet performs their function at a thousandth of the cost.
    However, the function that they served which people remain worried about is that they purchased or commissioned work from intellectual workers (musicians, authors, film makers, software engineers, etc.). So with their demise the intellectual worker is wondering who’s going to pay them in the future.
    It’s pretty obvious that the people who once purchased copies of their work will gradually take over the publisher’s role of purchasing and commissioning the intellectual work. This disintermediation is already beginning to happen and has already earned itself names such as ‘crowdfunding’ and ‘micropatronage’.

  2. Agree wholeheartedly with Gerd’s comments. Curated collections are becoming important. I agree with Crosbie that the gap between old and new ways of doing things has come at a time of huge cuts to the creative sector in general, so some great talent will be lost because they are not web 2.0 savvy. But there are examples of companies that get it – look at Magnatune for instance which shared more than Spotify with its talent in 2010.

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