There Are Lots Of Ways To Fund Journalism

from the if-you-look-around dept

As various folks in the news business (and outside of it) continue to fret about how it could be possible to ever fund the production of news, some are taking more positive looks at the space. Jay Rosen has listed out 18 different sources of subsidies for funding journalism (or journalism-like) work. Some of them are better than others, but it's a useful list to get you a thinking. Full disclosure: a part of our own business model is on the list. Along those lines, since people have been saying nice stuff about our business model, Jesse Hirsh has a way-too-nice writeup about our CwF+RtB experiment, which I still think is a bit short of a full business model, but is getting closer. Based on our experiences with it, we're getting more and more ideas on how to fund not just journalism, but all sorts of content creation.

And, really, that's the idea. There are lots of different ideas and experiments going on -- and many of them are showing early signs of success, and I'm sure more will come along at a later date that are even more successful. Really, the only ones complaining and demanding changes to the law are those who represent the old way of doing things, and don't want to change. They talk up all sorts of horror stories and moral panics about how "journalism" or "music" or "movies" are going to go away -- despite the fact that we actually have more of all three of those things happening today than at any time in history. Based on that faulty reasoning, they demand special protection not for "journalism" "music" or "movies" but for the old business models and old institutions that produced all three.

Eventually, as these new business models and new institutions work themselves out, it'll suddenly seem "obvious" what the right answers were, and people will forget the hundreds if not thousands of different experiments -- both good and bad -- that went into developing the new model. It's a time of upheaval, for sure, but there's no indication that there's any real risk to the production of content. Just a few businesses that got big and don't want to change with the times.

15 Comments | Leave a Comment..

Nasty Old People, Give It Away And Pray And Releasing Movies For File Sharing

from the another-one dept

We were just talking about some indie filmmakers who were happy with the extra attention they've been getting from having their movie "leaked" on BitTorrent, and ChurchHatesTucker alerts us to another story of filmmakers embracing file sharing. This one is actually from a few weeks ago, but a Swedish filmmaker made a low budget indie film called Nasty Old People and released it under a Creative Commons license, along with a request for donations. The link is to Metafilter where there's an interesting discussion about whether or not the experiment is a "success" or a "failure." It's a bit of a mixed bag, as at the time of the discussion, the filmmaker had made back 20% of the film's budget and there were questions if it would get much higher. Thus, it was easy for some to quickly call it a clear failure.

Of course, it's not really that simple. First, I've said for years that I'm no fan of "give it away and pray" business models, which really aren't business models at all. While it works sometimes, it's pretty much a crapshoot, and never strikes me as a real business model. So, on the whole, I'm not too surprised that it didn't bring in much more than 20% of its budget in 2 weeks (though some compare it to blockbuster movies that can often make about the same % of their budgets in the early going.

However, if we compare this situation to what would have happened otherwise (i.e., if the movie were not released this way) the situation becomes a little more interesting. This was a very low budget indie film that likely would not have received any distribution at all. At best, the filmmaker perhaps could have self-printed DVDs, and would have been lucky to have sold a dozen or two. She could have tried to enter it into various film festivals, but that's quite difficult, and even then there's a pretty good chance that the movie doesn't end up actually making any money. Yet, in this case, she not only made money from donations, but the film is getting picked up and shown in theaters around the world. So, compared to that situation, things actually look better than the alternative.

On top of that, while this particular movie may have been a net loss, she could use it for marketing herself. She can go around and show the movie to others, and perhaps use that to get funding for a larger scale project or another film that's released with a bit more of a complete business model. Nasty Old People becomes marketing and a promotion for Hanna Skold. It has to be better resume filler for a filmmaker to talk about tens of thousands of people downloading and watching your film than just going in cold saying you want to make a film. And, in fact, she's already hard at work on a new film script, with many people who became fans of Nasty Old People following along and interested in seeing what the new script is like. So, as a marketing tool, it sure seems like giving this movie away has been quite useful.

9 Comments | Leave a Comment..

Mariah Carey Showing How The New Music Business Model Works For Megastars

from the reasons-to-buy-on-a-massive-scale dept

A couple people sent in this rather interesting story from the Times Online about how Mariah Carey is reinventing the music business model. Well, that's basically what the article suggests. What's more accurate is that she's more or less scaled up the "connecting with fans" and "reasons to buy" to mega-superstar levels. She's working closely with various brands to help fund the business model. She's selling other product lines such as makeup. But, she's also come up with some unique "reasons to buy." For example, she got the magazine Elle to produce an entire issue dedicated to her -- but the only way to get it is to buy her new CD. In other words, she's giving people a reason to buy the CD. And... even better, she (or, her people) sold the ads that are in the magazine and gets to keep all of that money. It's the superstar blend of recognizing that content and advertising have really become the same thing.

She's also connecting with fans more and more using the internet -- even with such a huge following. So, for example, her people are carefully "leaking" her schedule and appearances to very targeted groups of fans online, so when she shows up places, there's a good number of fans, who feel special, rather than tremendous mobs.

And, no, of course this isn't the model for everyone. None of these models are -- but they all follow the same framework. She's working hard to come up with reasons for people to buy stuff, all of which is made more valuable by her music and her celebrity. And she points out that the record label execs should have embraced the internet ages ago:

"A lot of big powerful music-industry executives made a giant mistake," she says. "They gave the music business away on the internet. If they had just sat back and said, 'Maybe let's figure this internet thing out, it could be something cool,' we could have found a way to distribute music online on our own terms, not somebody else's. Prince had already shown them the way. He was so far ahead of the curve, putting out his own records on the web. Everyone else was stupid."

Indeed. While Prince eventually stumbled, his early efforts were incredibly instructive for the industry, but every time folks like us mentioned them, we were told it could only work for Prince and that it was a terrible model. Except it worked -- and, to be honest, every model we see these days is really a more modern reflection of what Prince started doing years ago.

But, once again, despite the naysayers, we're seeing that this basic economic concept of using the infinite goods of music and celebrity to sell scarce goods can work no matter how big or small the artist may be.

44 Comments | Leave a Comment..

How The Constraints Of 'Traditional Journalism' Sometimes Lead To A Missed Opportunity To Better Inform

from the experiments-in-breaking-out-of-the-box dept

Recently, a NY Times article about the giant patch of floating garbage in the ocean got some attention, not so much for the contents of the article, but because it was the first time the NY Times had worked with Spot.us to fund some journalism. If you're not familiar with Spot.us, it's an innovative non-profit startup, that helps "crowdfund" certain journalism projects. I'm not convinced it's a great business model, but it is one that's interesting to watch, and a partnership with the NY Times is definitely a big win for the organization.

However, I think Mathew Ingram really highlighted the most interesting thing about the whole project. While the NY Times article that came from Spot.us was somewhat mundane and didn't add much to the half a dozen or so other articles that have been written about the garbage patch, the blog written by the reporter who did this project, Lindsey Hoshaw, was a lot more interesting and compelling than the NY Times article itself. But the blog wasn't a part of the NY Times at all.

What Mathew was really showing was how some traditional publications get locked into a certain way of doing things because "this is how we do things." And in that world "the article" is the ultimate goal. It's a "deliverable." The process and the journey seem less important -- even though they're quite often the most interesting parts, to a wider community that wants to feel more and more a part of the journalism process itself. The NY Times is pretty good about doing certain topic blogs, and even brought in the Freakonomics blog under its own brand, a while back. But Mathew makes a really good point that this sort of thing probably would have worked better if the entire blog was seen as a part of the NY Times process. It could have ended with a big "story" -- or not. It's not even clear that's needed here. In the end, the real point is that the old structures don't always make sense. And while it was already a big step for the NY Times to create this story using such a new and different process as Spot.us, the end result might have been even better if they'd gone even further and highlighted the journey of the story, rather than just the endpoint.

4 Comments | Leave a Comment..

Blink-182's Tom Delonge: Time To Adapt, Give Music Away For Free, Monetize Other Things

from the another-one dept

This one's from a couple months back, but I missed it at the time. Reader Amber Walker sends in this fantastic video interview with Tom Delonge of the band Blink-182 from the Guitar Center blog, where he makes many of the points that we discuss here, noting how technology has made it cheaper to make, promote and distribute music, and he thinks the big opportunity is in giving your music away for free, and recognizing that there are other things to sell, such as merchandise, but also subscriptions and other types of events.

Some quotes:

The one thing I've learned is that, like any other type of art, it evolves. So if you're a business that supports a type of art, you need to evolve with the art. Now, a lot of things have happened that have made creating art a lot easier with the computer. And it's also made the distribution of art a lot easier.... What I have chosen to believe is that if you look at your band with a modern filter, your band has so much potential to have all these different elements about it. You can create all this really cool merchandise and concert/live experiences. You can create a really cool portal on your website. You can mix all these elements together and I always believe that if the tools are available, you can monetize all these other elements, and not really worry about selling the record. In fact, I believe that, you should take down every barrier and put as much music out there for free...

In my mind, the way the music industry is changing is that music is easier to make and it's easier to give away for free. And that will enable the band and the music and the art and everything to be bigger than it's ever been. It's just how do you collect that and how do you build your business...

I think the internet's a funny thing, because anything... that cuts through the noise on the internet will get found. The beautiful thing about the Western world is that all good art will get found no matter what. It just might take a little bit more time for some than others.... To try to really make a presence known, a band needs to capitvate people online first, no matter what -- it can be with a video or a film. It can be a song or a live broadcast. It needs to be something that's really clever. To do that, you should study the campaigns that work....

Of course, he notes that at the core of this is still good music. He says that you don't remember a band years later just for the marketing, but you need that to get attention, and then you need the music to live for itself, which leads to an interesting mantra:

The true art is not just creating the music. The true art is seeing how many people that music can touch in various ways. That's the art. Because you can be as artistic as you want and no one hears it and no one likes it. The true art is trying to break through the noise and getting millions of people to notice.

Sounds quite a bit like the difference between invention and innovation that we talk about, doesn't it? Nice to see yet another artist who has this all figured out.

19 Comments | Leave a Comment..

Is Google Going Better Than Free On Navigation? Will That Set Off Antitrust Alarms?

from the should-it? dept

A few friends have passed along Bill Gurley's excellent (as usual) analysis of how Google is disrupting the navigation market by ditching the two big players in the space (Tele Atlas and Navteq), going it alone and also (the big news) offering its navigation info for free. Gurley points out that the truly disruptive part is that Google is actually offering mobile operators a deal that is better than free, in that they get to share in some of the ad revenue associated with anyone using the services. The point is pretty clear: those who are relying on the old business model of getting paid for navigation info are likely in serious trouble.

Of course, there are some perception issues. Plenty of companies who have tried a "we'll pay you" approach to marketing often find that it actually breeds some level of mistrust, as partners/users start wondering why, and if there's some sort of nasty catch. Google, of course, has a pretty good reputation, and ought to be able to overcome that issue. However, it does make me wonder if this will set off the Justice Department (and Google's enemies) on some silly witchhunt, claiming that this is somehow "predatory pricing." That, of course, is ridiculous if you actually think it through. The only real problem with predatory pricing is if it's used purposely to drive others out of business to then jack up prices. But Google's idea is to just give it more opportunity to make ad revenue. It's not predatory, it's just smart from a business sense. However, with so much scrutiny on Google these days, you could certainly see this backfiring.

30 Comments | Leave a Comment..

Debunking The Idea Of A Music Tax For The Creation Of New Music

from the just-slightly-better,-but-not-much dept

SteelWolf writes in to let us know about a blog post rehashing the idea of setting up a "music tax" to support musicians through a flat fee charged to everyone's ISP account:

Music is important. It is ubiquitous today with good reason: we just can't get enough of it, and its life-enhancing effect is ever-changing and ongoing.

If it had been possible for the past ten years to download nails, most of us would long ago have acquired all the nails we could possibly need, nail factories would have closed down, their workers and bosses found new jobs for themselves, and it would be a dead issue. But music-making is such an important act that millions do it even though they receive nothing for it. They always have done, even back in the heyday of the recorded music industry, when students bankrupted themselves to get it (I know I did) and bands scrambled to play gigs for next to nothing (guilty, again). So in the scheme of things music is at least as worthy of state subsidy than, say, the automobile industry. Music isn't any less precious than it used to be, it's just that its commodity status has eroded: unlike car workers the customary method of getting (some) artists paid is failing.

I am in favour of a flat fee on each internet connection, collected by ISPs, to encourage musicians to keep producing new work.

Now, I've gone into great detail on why a music tax is a terrible idea in the past -- but that was addressing ideas like Jim Griffin's Choruss plan (which, by the way, we're still waiting to find out who the tens of thousands of students who are supposedly already using it are, but we'll leave that aside for now). This idea, from Chris Ovenden, is slightly different. It is not a "download license" or a "download tax" as it's really a fund to pay for the creation of new music:

I would use such a fund to commission new works directly from up-and-coming and established artists. I certainly wouldn't try to monitor all downloads or anything hyper-impossible like that. If the problem of trying to monetize or prevent private copying goes away, so does the threat of monitoring all communications which is being suggested as a "solution" to the "problem" of filesharing... Keep the amount each person has to pay low, and spread the collected funds widely and evenly among as many working artists as is feasible. The more successful acts will most likely have other income streams and won't need a massive top-up; smaller artists will be grateful to have their next recording project funded. And everyone will benefit from an influx of lots of new work (released under CC license or similar).

This is, obviously a bit different than the usual suggestions for a music tax, but that doesn't make it much better. First as is noted in the comments on his post, if you open the door (even slightly) for this to happen in music, then you have to do it in pretty much every other content industry as well: movies will want their own tax, as will software, photography, newspapers, quilt making, painting, blogging and so forth. Where do you draw the line?

Second, this will still leave people who file share open to lawsuits. While he claims that the "threat" goes away, there's no way that the record labels say that they'll allow all past infringement in hopes of getting a few dimes sent its way from some bureaucracy.

Which, of course, brings up the third problem: you still have a bureaucracy, and how does it determine who to distribute the funds to? How is it possibly fair for someone -- rather than the fans themselves -- to determine who gets the money.

And that brings up the biggest point of all: this isn't needed. At all. There are plenty of ways for artists to set up a smart business model that allows fans to support them directly and to fund their future works. Why make it more inefficient by adding unnecessary and market-distorting middlemen? The only situation where this makes some sense is if there weren't ways for artists to go direct to fans with their own models. But there are -- and it's getting easier every day. So, instead of a "tax" give fans a "reason to buy" and it becomes a better situation for everyone involved.

49 Comments | Leave a Comment..

Why Do Some Politicians Want To Ban You From Putting New Software On A Prepaid Mobile Phone?

from the protecting-business-models? dept

The EFF points out that some prepaid mobile providers have apparently convinced some politicians to introduce a bill, The Wireless Prepaid Access Device Enforcement Act of 2009, that would ban buyers of prepaid mobile phones from installing their own software for the purpose of working on another network. Basically, this is a bill specifically to protect the business model of Tracfone, which sells subsidized phones assuming that the buyers will keep buying prepaid minutes from them. The problem is that this might just be a bad business model -- and once someone has bought a device, it should be theirs, and they should be free to do with it what they want. Congress shouldn't be protecting anyone's business model.

33 Comments | Leave a Comment..

Lawyers Discussing Business Models

from the dancing-about-architecture dept

Doug Lichtman's latest "IP Colloquium" podcast is on the question of whether or not "content can survive online." Specifically, it's a discussion about "online content business models." Oddly, though, rather than having business model experts, it's a conversation with four lawyers, starting with Doug, and including Brad Smith, General Counsel, Microsoft; Scott Martin, Executive Vice President, Intellectual Property, Paramount Pictures; and Dan Cooper, Vice President, Legal & Business Affairs, MySpace. Lichtman starts it off, oddly, by stating -- as if fact -- that talking about business models online is depressing because there's just not much in the way of business models online for content. I think that's damning things a bit early in the process -- something that comes up again later.

While I realize that the podcast is a legal podcast, it still strikes me as odd to bring together four lawyers to have them discuss business models, when their expertise is not in business at all, but in the law.

The podcast starts out with a discussion on the Google Book search and settlement, but oddly no one even seems to give any credit to the fair use question. But, again, since these are lawyers we're talking about, there really isn't much of a discussion on business models around Google Book Search, but on legal questions -- including a hope that Congress steps in to solve it. Amusingly, Microsoft's Smith early on suggests that it's a question Congress could solve "if the industry got behind it; if copyright holders got behind it." Striking, huh? He basically admits how copyright law works in this country. It's not about what's best for the overall society or economy. It's not about the politicians fixing things where they see a problem. It's not about consumers. It'll happen if the industry gets behind it. Welcome to the way things work in DC. The rest of this part of the discussion is interesting -- and it's one (rare) case where I mostly agree with Lichtman, that as a resource, Google's Book search is incredibly useful, and we should figure out some way for it to happen.

From there, the discussion moves on to other business models, and quickly seems to head off in directions that I don't think are accurate from a business model standpoint. It starts off with two premises set forth by Lichtman, each of which I think is suspect. First, he claims that piracy is a problem because "you can't compete with free." Frankly, I'm sick of this argument because it makes no sense economically or from a business standpoint. Economically, saying that you "can't compete with free" is the same thing as saying you can't compete -- period. It assumes, falsely, that the only way to compete is on price, but the history of the economy shows that's not true. You compete on price or you compete on benefits, and competing on price is often a losing battle anyway. Saying "you can't compete with free" just means you only know how to compete on price. If that's the case, you shouldn't be in business.

And, to make that point clear, tons of companies compete on benefits, and allow other companies to offer lower priced offerings. The popular example, of course, is "water," whereby it's free (or near free) to drink out of the tap, but the bottled water business is a multi-billion dollar business. Why? It tries to compete on other factors -- such as convenience, quality or safety (though, there are arguments that many of these benefits are perceived rather than real). But it's true in just about any other business as well. In the automobile business, a BMW costs more than an entry level Ford, and that's because BMW is seen to have a lot more scarce value. Ford could "copy" BMW, but BMW has its reputation and some amount of prestige that Ford simply can't copy.

Anyone who's in business recognizes that you don't just compete on price. So why is it that so many seem to assume that the only way to compete in the content market is on price?

Lichtman's second premise is that online business models don't work. He says that Hulu hasn't been a success because it doesn't make as much as TV, and that if Hulu displaces TV we "won't have the money to pay for" expensive TV show production. He claims that even if Hulu is really successful, it'll never make enough money to pay for the production of a show like Battlestar Galactica. First off, huh? How does he know that? If Hulu is successful, it absolutely could pay for such production. Already, we're seeing that some of the online ad rates are higher than TV ad rates. Hulu's barely been around for two years at this point. I'd be willing to bet that Hulu's revenue today greatly exceeds the revenue of television two years after it was invented. Give it time, Doug!

He then jumps on Redbox -- sarcastically saying "we're renting movies at a dollar per day?" Suggesting that this will never sustain the development of movies. Really? I always find it amusing when people insist that problems in the DVD market will mean the death of Hollywood. It really was just 25 years ago that Hollywood insisted that the VCR would kill the industry (Boston Strangler, anyone?). Now they finally get their "original" wish, and find that putting movies on recordable media is going away, and it's the worst thing in the world?

Either way, the economic fallacy that Doug seems to be relying on here is twofold. First, he assumes that early business model experiments are set in place and no further innovation will occur that allows them to flourish. He assumes that the markets won't grow, and some of these experiments won't click and get much bigger. Second, he seems to assume that the old revenue numbers for these industries need to be sustained. He doesn't consider that the old revenue numbers may have been a result of monopoly rents, limited competition or technological limits. Markets change all the time, and usually what comes out in the end is much better (subjective, I know, but I'm a believer that the world is a better place today than it was 25 years ago -- and that it will be even better 25 years from now).

But, of course, no one challenges him on this. Scott Martin at Paramount, of course, worries quite a bit about piracy of movies. While he admits (finally!) that he's just the lawyer, rather than the business guy, he discusses it in the terms of adding more windows to movie releases, rather than any discussion of adding more value to the product, or giving people reasons to buy beyond just the content. Then Martin repeats the myth that you can't compete with free, but leads in with a different myth -- claiming that the "copyleft" people say that piracy would go away if they just priced their movies better. That's a strawman argument. Perhaps someone out there made that argument, but it's hardly common. Then he says that "the idea that if we charged $2 a download instead of $10 a download, we'd get rid of piracy is a myth." Sure, it's a myth, but no one said that. You can't get rid of piracy. No one thinks you can get rid of piracy. No one suggested anything you do would "get rid of piracy." What many of us are suggesting is that you can build business models where that piracy isn't a problem. Even the people suggesting you just charge $2 instead of $10 aren't saying it would "get rid of piracy," but that at $2, enough people would pay for it that it would increase profits beyond what the $10 DRM'd version gets you.

Anyway, the discussion goes on from there, including a discussion of the DMCA that again doesn't make much sense to me, but the business/economic analysis throughout doesn't strike me as accurate at all. It's still an interesting discussion, but frustrating because I wish there were at least someone on the panel who would challenge a lot of the "accepted wisdom," put forth by everyone, that doesn't seem to be accurate. Brad Smith, at one point, does point out that this is all a "revenue" problem, and does a pretty good job describing the revenue problem... but then falls into the trap of saying the law needs to "fix the piracy problem" because without that, business models can't be built up.

The last analysis I'll talk about that is again faulty from an economics standpoint again comes from Scott Martin at Paramount, where he tries to defend the importance of DRM, noting that if he flies into JFK he has various price options on transportation: he can buy a car, rent a car, take a cab or take a train. So there are price differentials. He says that without DRM, content is like saying his only option is to buy a car. That is, if he had DRM, they could offer different "rental options" for content, with "one day pricing or one week pricing." But that's totally wrong again. There's a reason for the differential pricing in the transportation options: it's related to the marginal cost of each option and the competitiveness of the market. That's what sets the prices. But with content, the marginal costs are zero, so what he's doing is trying to set up an artificial barrier to pretend the markets are the same.

While I like listening to these discussions, I just find the economic fallacies frustrating.

46 Comments | Leave a Comment..

Media Watchers Beginning To Ask Why People Would Pay For Online Journalism

from the about-time dept

Ever since the latest round of newspaper paywall/micropayment suggestions have come up, we've been asking why none of the newspapers/reporters pushing these plans can explain what added value will make people buy. And that's because almost none of them are actually thinking about this. They just keep thinking that if they add a mechanism to get people to pay, that people will magically pay, rather than go elsewhere. The problem, of course, is that readers have made it clear: if their local paper charges for online access, they'll just go elsewhere.

The newspapers, like the recording industry, seem to be under the delusion that they're somehow owed money from consumers, rather than needing to actually give them a reason to buy. Mathew Ingram points us to a Columbia Journalism Review article by Jan Schaffer that finally makes this point by saying it's time to look at the demand side of these newspaper business models, while noting that the problem isn't a lack of paywalls, but a lack of interest in what is called "journalism" these days:

In looking to reconstruct journalism, I'd start not by asking how do we get money for what we've always done. I'd ask instead: How do we provide something worth paying for? As a long-time news consumer, I have recoiled at much of what we are rendering as "journalism."

What if it's not just the business model of journalism that is broken? What if the way we are doing our journalism is broken, too? How are some of the new media makers trying to fix that?

None of this is particularly new, but it's great to see CJR finally realize that's the issue, rather than how to best structure the paywall.

9 Comments | Leave a Comment..

If Your Business Model Requires An Overly Restrictive Contracts... You Have No Real Business Model

from the that's-not-satisfying-customers dept

We've discussed in the past how consumers are gaining more power over companies these days (and how that's a good thing), and that leads to a separate, but also interesting observation: if your business model relies on denying customers what they want -- such as through the use of overly restrictive contracts -- your business model is in trouble. Thomas O'Toole has a good discussion about some recent lawsuits involving overly restrictive contracts that try (and usually fail) to prevent customers from doing what they really want to do. First, it discusses the recent attempt by MediaFire to stop the distribution of a Firefox extension that routes around MediaFire's ad-driven business model. Second, it discusses a legal fight between Virgin Mobile and MetroPCS over whether or not MetroPCS can legally reprogram Virgin Mobile phones to work on its network.

The thing that shines through in both instances, however, is that they involved companies who didn't rely on providing the best product for consumers, enabling them to do what they wanted -- but instead, relied on contracts with overly restrictive terms designed to prevent customers from doing what they want. As far as I'm concerned, in most cases, business models like that won't be long for this world. Consumers are increasingly fed up with bogus legal restrictions that try to prevent what the technology clearly allows. If you're trying to create a business model, the second you consider putting in ideas that inherently limit your consumers from doing what they want, you're asking for trouble. A smart business model enables more customers to do what they want, and does so in a way that makes everyone better off. While there are still companies who can get away with anti-consumer business models enforced by overly restrict contracts, it's not a long term strategy for success.

18 Comments | Leave a Comment..

Dungeons And Dragons Online Highlights How Free Can Work As A Part Of A Business Model

from the nice-job dept

Pretty much everyone who reads Techdirt seems to be sending over the story of how Turbine has changed the business model for Dungeons and Dragons Online, going away from charging people $50 for the game and then $15/month to play, to a model where you can play for free and there are additional benefits to actually paying. And, so far, it seems like a massive success. Many more people are playing than before... and many of those who would never have paid (or played!) at all are realizing that there are good reasons to pay for some things within the game. While these sorts of situations can be a fine balancing act (if the company gets too focused on trying to convince people to pay, it could make the free stuff annoying), it appears that Turbine has done a good job finding a sweet spot -- making sure that if you just want to play the game for free, you can absolutely do that and it's perfectly enjoyable all the way through. Putting money into it just gives players certain additional benefits that they feel is worth it. Suddenly, paying the company money becomes a reasonable per transaction situation, rather than an ongoing chore. While it's still early, it should be worth watching to see how well this particular business model experiment goes -- but the early indications suggest that it's yet another example of how "free" can work as a part of a business model.

27 Comments | Leave a Comment..

Carly Simon Sues Starbucks For Not Promoting Her Album Enough

from the hello-old-way-of-thinking... dept

Starbucks got plenty of attention a few years back for trying to start its own music label. We had hoped that maybe the company would try to do something unique and different with it, but, instead, it basically just tried to set up a conventional music label that was going to rely on selling CDs via Starbucks. Doing things the conventional way at a time when an industry is in upheaval makes little sense, and it didn't take long for Starbucks to dump the label. However, one of the last CDs it put out was by well known singer Carly Simon -- and Simon is now suing Starbucks for $5 to $10 million, using famed power lawyer David Boies.

While it does seem pretty clear that Starbucks didn't do all that much to promote the album after deciding to get out of the music label business, it's hard to feel particularly sympathetic to Simon. The same thing could have happened with any record label -- and given how many are struggling these days, it certainly could have happened. Furthermore, nothing in the article above suggests that Simon did anything to help promote the album herself or work on any aspect of the business model. It sounds like she just sat back and expected Starbucks to do everything and just start sending her checks. On top of that, the deal still included a huge advance (while she says not all of it was paid, the official advance was $575,000 -- hardly a small sum). And, again, her complaints of losing some money in the stock market, and owing money on one house in fancy Martha's Vineyard while being unable to sell her apartment in Greenwich Village (not exactly the low rent district) doesn't make her the most sympathetic of characters.

On top of all this she still sold 124,000 copies of the album.

Considering that only about 100 albums last year were able to sell more than 250,000 CDs, it seems like Simon should be thankful she was able to sell as many as she did -- especially given the fact that she seems to think Starbucks had the total responsibility for selling the album. This whole lawsuit seems to be a very old school recording industry artist mindset -- where the artist isn't expected to get involved at all, but just expects to sit back and get handed millions of dollars. Sorry, the market doesn't work that way any more, even if Starbucks is involved.

24 Comments | Leave a Comment..

The AP and News Corp DEMAND To Be Paid For Their Content

from the taking-aim-at-your-own-foot dept

At a media summit in Beijing this week, Associated Press CEO Tom Curley and News Corp CEO Rupert Murdoch declared that "It's time to demand payment for online use of content." This combative language rings ironic, considering the fact that without its content being published on "kleptomaniac" sites like Google News, not many people would even hear about this very article. As Weston Kosova at Newsweek astutely points out, if Rupert Murdoch truly wanted Google to stop "stealing" content, they could very easily stop that today with a simple robots.txt exclusion.

News organizations that are contemplating charging for access to their content might also want to stop calling their potential customers criminals -- that's really not great customer service. And after all, many sites, including Google, are already paying to license some of their content. So, instead of accusing customers of not paying enough, offering better reasons to buy would probably get more sites to pay up. But, that's hard, so jumping up and down and demanding payment in a juvenile manner is much easier.

However, perhaps this is all merely negotiation brinksmanship -- threatening to charge for access to their free content to see if anyone cares enough to pay. The problem is, if the search engines call their bluff and remove their content from their services, then the news organizations actually risk losing much more. As we've pointed out time and time again, news organizations like the AP have been continuing down this road of implosion, where they clearly don't seem to understand the nature of their own business. For example, the AP's obsession with creating a "news registry" that would enable the AP to track down "unlicensed" uses of its content hints at this fundamental misunderstanding. In his speech to the summit, Tom Curley said:

"Crowd-sourcing web services such as Wikipedia, YouTube and Facebook have become preferred consumer destinations for breaking news, displacing Web sites of traditional news publishers.

To turn the tide, AP is creating a News Registry -- a rights management and tracking system."

Really? The AP's response to people linking to and discussing AP articles is to go after sites for money? I am waiting to see which news organization will be the first to go after Twitter for payment for news tweets. Instead of focusing on how to demand payment for the distribution of an infinite good, news organizations should recognize the new opportunities afforded by the free distribution of their content and focus on how to build a business off their scarce goods.

49 Comments | Leave a Comment..

Rupert Murdoch's Latest Foray Into Online News Business Models... Not So Ridiculous

from the hold-on-here... dept

We've chronicled Rupert Murdoch's flip-flopping on charging for news online (he originally claimed that free news made sense, and he wanted to free up the WSJ, but now says all of his news sites should have paywalls). And a bunch of folks have sent in Michael Wolff's Vanity Fair profile of Murdoch as a clueless luddite on the internet, and someone who doesn't seem to care about the important nuances of why or how charging for news might not make much sense. Wolff paints Murdoch as the type of guy who just thinks he can bully the entire market into agreeing that people should pay for news online. In that article, Wolff discusses the tension between the Times of London and The Sunday Times, which are separate operations owned by Murdoch, but share a web site. However, apparently that's changing, and Wolff presents it as an opportunity to start charging for The Sunday Times online, since it won't be "losing" anyone via putting up a paywall (the question remains if it would gain anyone).

And yet... the recent revelation of a new business model experiment by the two papers suggests an approach that is a bit more nuanced -- even if the (competing) Guardian's explanation of it isn't particularly enlightening. The plan appears to be not to charge for news but to charge for some kind of membership club which provides additional benefits, along with the paper. So, becoming a member gives you the ability to add certain "packs" of information to your paper. I'm not sure how compelling that is. However, it's also going to involve access to events and discounts on other goods and services (including Murdoch-owned satellite TV service, Sky+).

While it may depend on what's really included in this offer, initially it makes quite a bit of sense. It's not based on locking up the web content or limiting how it can be used, but in providing additional scarce value that people will buy. Who knows if this is an indicator of what Murdoch is planning -- but it's significantly different than a paywall, and a lot more reasonable, economically speaking.

14 Comments | Leave a Comment..

AP Wants To Charge For Scoops

from the not-quite-the-crystal-ball dept

The Associated Press is considering charging an extra fee for early access to its stories. The AP's Tom Curley believes that news organizations like Yahoo, Google and Microsoft, would be willing to pay a premium for a 20-30 minute head start on scoops. Now, lest some of you compare this product with Techdirt's own Crystal Ball offering, there is a key difference. AP's product depends on the timeliness of its stories, whereas Techdirt's stories are more focused on analysis -- we do not focus on breaking stories, but when we do, we do not hold them back for the Crystal Ball subscribers to view them. In any case, while this may sound like an enlightened idea for the AP, I'm not really sure it makes much sense. Currently, all of AP's licensees get all of the scoops at the same time, off the same wire. With this system, what the AP is doing is effectively weakening that existing product, and then creating a "new" product that, when the dust settles, is really what most of the customers were getting in the first place. It's not that the scoops are released 20-30 minutes sooner, but rather, if you don't pay the premium, you get the stories you would normally get later. Now, there's nothing wrong with this model, for example, stock quote services have long been able to charge more for real-time information, but for the AP to market this as a premium service seems like disingenuous marketing. Furthermore, given the AP's track record for trying to claim ownership over the news that it reports (like creating a DRM system for news), what happens when the now-hamstrung AP wire is scooped by a reporter who was tipped off by AP's own product?

18 Comments | Leave a Comment..

What To Do When Artists Who Otherwise 'Get It' Freak Out Over 'Piracy'

from the wait-it-out dept

A few weeks ago, reader cofiem sent over a blog post from musician Darren Hayes complaining about recording studios shutting down and blaming "piracy" for it. This morning, our submissions engine is getting overwhelmed with submissions about Wil Wheaton's rant against someone who posted a copy of Wheaton's audiobook, saying the guy is "stealing" from him.

Of course, we see content creators complaining about "piracy" or falsely claiming that it's "stealing" all the time -- but these two cases are slightly different. They're both cases where the content creators seem to be folks who otherwise actually do seem to "get it." They both do an amazing job connecting with fans, and setting up smart "reasons to buy." Hayes, for example, created a DVD "collectors' item" to go with his latest album. And he has a fan club setup, that encourages fans to pay a small fee to get all sorts of valuable (scarce) extras, beyond just the music. Wil Wheaton, of course, has been online for ages, and really interacts with lots of fans, and when he released his audiobook he made it cheap and didn't put DRM on it at all.

In other words, these are both the sort of content creators who are doing all the kinds of "right moves" that we talk about all the time, and seem to be getting rewarded for it. So, of course, it's disappointing to see them overreact and go a bit on the ballistic side when they see people sharing their works in some format -- but it's not that surprising. It's a perfectly natural reaction if you're not immersed that deeply in thinking through the long term implications of these things to simply not like it when people treat your works in a way other than you intended. There's nothing really wrong with that.

However, the question then comes up about what should be done about it. How do you respond to such people? It seems the smartest thing to do is to openly explain the other side of the coin: how these efforts can be embraced to further all of the really smart things that these content creators have already done. It's about getting them to realize that as scary as "the new world" is, one of the things they have to come to accept is that they can't necessarily control what others end up doing with their works. They can't dictate the terms by which fans will be fans. But, what they can do is try to put in place systems and models that benefit them when such things happen. Use that free sharing to encourage people to become stronger, more committed fans, and open up new places and opportunities to potentially offer them a reason to buy -- on their terms -- down the road.

It's never a huge surprise when someone who hasn't thought through this stuff carefully starts ranting about pirates and "stealing." But when it's someone who otherwise seems to get it, the situation is more one of disappointment. However, in most cases, those folks are at least open to listening to reason, and listening to their community, who can explain back to them ways in which they can benefit, rather than complain or blame. And, in fact, with Hayes, it looks like he took some of his community's words to heart and noted that there can be future models where "piracy" isn't necessarily a huge problem (though he's still unsure of how it works). Hopefully Wil Wheaton will listen to his community as well -- and let them point out how many other authors who have put their works online for free have seen that it tends to increase their fan community and increase sales over time.

61 Comments | Leave a Comment..

Steve Ballmer Declares 'Free Is Not A Business Model' -- Apparently Unfamiliar With Microsoft's Free Products

from the check-'em-out,-steve dept

Josh W points us to an article about Microsoft new mobile phone software that contains an odd quote from Steve Ballmer, responding to a question concerning Microsoft's plans to compete with Google's free Android mobile operating system:

"Free is not a business model," he said. "We are a commercial company, we will look to gain revenue and profit from our activities. You'll have to ask our competitors if they'll make money on free things."

Internet explorer. Bing. Microsoft's new security software. All free. All offered by Microsoft. Is Steve Ballmer admitting that he doesn't know about any of these things... or is he just expecting that the reporter and the readers of the article are flat-out stupid? Clearly, Microsoft seems to recognize that free is a part of lots of smart business models, so why is its CEO apparently acting clueless on this front? As clearly anyone who thought this through knows, free by itself is not a business model, but free, in combination with a larger business model often makes a lot of sense. That's what Google is doing, and it's what Microsoft is doing as well. So why is Steve Ballmer pretending otherwise?

60 Comments | Leave a Comment..

Another Author Notes That Giving Away His Book Increased Sales

from the piracy? dept

Dave points us to a recent interview with Lester Brown, who's been pushing for alternative energy for years. I'd actually heard about his book, Plan B 4.0: Mobilizing to Save Civilization a few months ago when someone pointed out that he was giving away his book for free, but I hadn't heard much more about it. Yet, in the interview, he mentions that the book can be downloaded, which appears to surprise the interviewer, who seems to assume that this means the guy is willing to give up revenue to get his ideas out there by noting "you do feel strongly about this." But then Brown points out that it's not hurting sales at all, but quite the opposite:

Dr. BROWN: No problem. Incidentally, "Plan B 4.0" is online at earthpolicy.org. It can be downloaded free of charge.

FLATOW: No kidding.

Dr. BROWN: Yeah.

FLATOW: Wow. You do feel strongly about this.

Dr. BROWN: Yeah. And it's interesting, people think this must reduce sales. In fact, it increases sales.

(Soundbite of laughter)

Dr. BROWN: Just between the two of us

Of course, this is hardly the first author to recognize this, but add another one to the pile. It's about recognizing that obscurity is a bigger risk that piracy, and then figuring out how to get more attention and then giving people a real reason to buy on top of that attention.

10 Comments | Leave a Comment..

Could Doonesbury Learn Anything From XKCD?

from the help,-I'm-trapped-in-a-newspaper-factory-with-no-business-model dept

Via Poynter Online, there's a recent interview with Doonesbury creator Garry Trudeau where he talks about his post-newspaper media plans and what he sees as his future options while newspapers face significant declines in their circulation numbers.

"Doonesbury" has been on the Web for 15 years, and the site actually makes a little money -- unheard-of for media sites. But it's not really a plan, just a presence. I don't believe there's anything I can do personally to prepare for a post-newspaper future, other than hope that the large media companies will come to their senses and form a gated Web collective along the lines of cable TV. They need to form a news utility, financed by subscription or micropayments because going it alone has been disastrous for all of them.

Trudeau continues on, saying that he believes that e-readers are promising because so many people are happy to pay for iPhone apps and Kindle content. He also says that his livelihood doesn't seem to be threatened in the short-term because only "big newspapers" with loads of debt are really going under -- and most small newspapers are still getting by and can support his line of work for the foreseeable future. But, essentially, Trudeau sounds like he's given up on his own plans for making Doonesbury into a business outside of syndication. (Or he's being much too modest about the "little money" he earns from his website, and he doesn't want to offend his current newspaper benefactors.) In any case, he seems to envision a giant news consortium that will be able to retain subscribers due to a form of monopoly advantage. And if that's really the future of journalism, that doesn't sound too promising.

Additionally, though, Trudeau asserts that the "Web is a lost cause" because everyone thinks content on the web should be free. But that statement directly contradicts the work of online cartoonists such as Randall Munroe and his xkcd webcomic (which just happens to be one of my favorite examples of a "free" online comic strip). Munroe has a significant following for xkcd and has proven that "free" can be a sustainable way to promote and publish his work. So can we help enlighten Trudeau? Munroe sells prints, t-shirts, a book, and even sponsored comics. Is there a path to becoming the "Trent Reznor of webcomics" for Trudeau? Or is there something unique about Doonesbury that makes it impossible for it to take advantage of "free" distribution?

48 Comments | Leave a Comment..