Thursday, 17 November 2011

A manifesto for the content industry 4 – You can compete with Free

You can compete with free. Seriously, there are plenty of working business models out there, study them. You are better placed than anyone to make this work, failure to do so is not about not being able to compete with free, it’s a failure of your business acumen.

“You can’t compete with Free” is one of the most frequently quoted arguments that you’ll find on blog comments and discussion boards when discussing how to make money in an environment where digital copies are abundant and easily available for those who are willing to do a quick bit of looking.
It also frequently occurs in conjunction with someone complaining that they tried making their content available for free and didn’t make any money / didn’t see any increased traffic / didn’t immediately become rich and famous.

So let’s make one thing completely clear: ‘Give it away and hope’ is not a business model.
We’re going to come to adding value in section 5 and that will, hopefully, begin to set out how you might devise a working business model. This section links very closely to that and is about working out how you identify potential opportunities to compete.

Content basically comes in two flavours: legal and illegal. Essentially there is stuff that the owner of the material has put out into the world to be shared and that which has been shared without the permission or the rights holder. This then, is your first mechanism for competition. There are a lot of people who don’t like feeling like they’re breaking the law, even when they’re doing as eminently reasonable as copying the contents of a cd to an MP3 player. Give people a legal option, some folks will happily pay a fee to know that they are doing “the right thing”.

Content could be described in two other flavours: permanent and temporary. There’s the temporary stuff that sits on youtube / spotify etc that you can only access when you’re connected to the web, and there’s the permanent stuff that you download to your repository of choice (hard-drive, phone, MP3 player, kindle). Again, some people will happily pay a fee to own* a copy that they can play at any time or in any location.

Or you could split content into two camps another way: easy to access and difficult to access. For quite a while this has been the bane of the legacy industry’s life. Getting access to legal content was a complete pain whereas illegal content could be obtained with a search and a click of the download button. Then came I-tunes, suddenly here was a lot of content, easily available, reasonably(ish) priced and not bundled into unappealing packages. Unsurprisingly i-tunes has sold quite a bit of content. Amazon now offer a one-click alternative (assuming you’re signed in) that is as easy to use (if not easier) than the illegal alternatives, this also is doing quite nicely.

Funnily enough there are lots of other ways you can split the content on the web; trusted and risky is another way. If I buy something from Amazon, I-tunes or direct from an artist’s website there’s very little chance that I’m being sold malware or a virus masquerading as content. If I torrent something illegally I have no such feeling of comfort.

Here’s another way you can split it: that which rewards the creator and that which doesn’t. A lot of people will happily pay to support an artist they like, many will seek out the best way to support those artists from the available mechanisms. This might mean buying a CD at a live show rather than via a retailer, or just going to the show instead of buying the CD. One group have even discovered that since publishing a breakdown of how much they earn via different means they have not only increased their entire take but the sales have shifted to the items that they make the most return on. The swing side of this is that you are a rights holder who doesn’t pass on much money to the content creator you might find that this actively works against you.

Restricted and Un-restricted might be another way of looking at it. Once I’ve bought some content I want to be able to do what I choose with it, when I like and on the device that I prefer. Putting DRM on something is a sure-fire way to make your product less attractive than an illegal alternative. Perversely there are those in the industry who still view this as a “feature”.

There are almost certainly other ways you can cut it and other incentives that can be provided to persuade people to consider paying for content that is also available for free. I’m not for a minute suggesting that all of these will work for everyone or even that any of these will work for most people, but one thing I can guarantee is that you if you’re not making your paid-for content as easy to get hold of as free content then you will be losing sales.

* This becomes very important later on (see section 12 when it comes), have a look at the increasing number of cases of artists suing their labels over I-tunes royalties in the meantime.

Tuesday, 8 November 2011

A Manifesto for the content industry – 2. One shared file does not equal one sale lost

It appears that I have published chapters one and three but omitted chapter 2. My apologies, please accept this correction...

One shared file does not equal one sale lost. It really doesn’t. People will accept something for free that they won’t be prepared to pay for, don’t kid yourself otherwise. A shared file is equally likely to lead to more sales rather than fewer.

Whenever you hear or see stats being bandied around by the content industry, this is the principle on which they base their calculations; that each unlawfully shared file* represents one lost sale.

This is the biggie for the music industry but it’s increasingly being misunderstood by the movie business as well so let’s look at various reasons why this might be the case.
Firstly you have your hard-core never-pay-a-penny file-sharers. These are the ones who think that the labels have been sticking it to them so long that they somehow owe someone something so try to stick it back by never buying anything that they can get for free. These are your lost sales. But arguably, since they wouldn’t buy your product anyway (so they claim), which sale has been lost?
Anyway, assuming that the die-hards above are all bluff and would really be out there buying records if that pesky internet would just go away, why else would one shared file not equal one lost sale?
Here’s a few reasons:
  1.  I’ve heard the single but I like this band and I’m going to buy the album when it comes out anyway, why would I pay twice for the single?
  2.  I already own the song on an earlier format, I could go through the hassle of rigging up my record deck and copying it across but that’s illegal too and more hassle than just downloading a copy.
  3. would happily buy a copy of this but because it's an old song / movie you no longer sell it. How can I buy something you're not selling?
  4. I’m not sure if I like it. I’ve heard it on the radio but I need a couple more listens to determine if I want to buy it. Try before buy marketing
  5. It’s not worth the cash. Now that cash might only 79p**, but when you’re talking about something with a unit cost of zero, that’s still a value judgement. I have a copy of William Shatner’s Rocket Man on cassette, I think it’s a pretty funny listen, but I’d never pay money for it, it’s just not worth it. Similarly I have old mix-tapes from the radio with various chart tunes on, if they turn up as a free download or magazine-cover cd then I’ll take a copy, but it’s not worth paying to replace them.
  6. Because it’s not being offered in the format that the consumer wants. Some bands / labels are rejecting the MP3 format altogether and only releasing things on hard copy. An increasing number of people are ditching hard copies altogether and moving everything to a digital file. If you’re not selling what I want to buy it’s not a lost sale.

And that’s not even considering the fact that some of the Industry numbers are counting shared playlists on social media sites (like Spotify) as shared files.
But in summary yes, some of those shared files are lost sales, but it’s not even close to all of them. Using statistics based on this premise undermines the argument and the public’s trust in the content industry.

* Including Format Shifting.
** On a separate note, can anyone justify the increase in cost of downloads when the technology and storage costs are only coming down?

Thursday, 3 November 2011

A Manifesto for the content industry – 3. Content will always be produced and consumed with or without you.

Continuing from my previous blogs on this subject.

Content will always be produced and consumed with or without you. You are just a facilitator. If your entire industry disappeared overnight, people will still create and they will find other ways to share and appreciate it. Never lose sight of this.

At this point it’s probably worth my iterating exactly who this manifesto is aimed at; content creators and major Intellectual Property (IP) rights holders are rarely one and the same. It varies greatly by media type but at one end you have the publishing industry (where a lot of authors maintain the copyright on their text) and at the other you have the music industry (where hardly any artists signed to major labels (or their subsidiaries) have any rights on their creation).
This manifesto is aimed at the rights holders; this entry in particular is aimed at those towards the music industry end of the continuum.
A common argument proposed by copyright supporters is that without our ever-increasing copyright terms (and ever-increasing lawsuits) there would be no incentive to create. Who, they argue, would go to all the trouble of taking an idea all the way through to a product if there was no return at the end of it? Surely no-one will go through all that effort and expense if there was no guarantee or a return?
It has been famously said that the business of the music business is business not music (by Billy Joel I believe) and the idea that people create something for a return on that is plainly a business-led idea not a creativity-led idea.
As has been pointed out previously, for hundreds of years artists have starved in obscurity, then, for a brief period in the last 50-years or so, some artists became very, very rich. The bit that tends to be forgotten is just how small a percentage of artists (particularly in the music business) actually become successful. On average, thanks to some interesting record label accounting*, fewer than 1 in 10 albums ever recoups (i.e. makes a profit for the recording artist). And bear in mind, that’s the figure for signed acts, it takes no account of all the people playing on the amateur scene.
So, extending the argument that people create for the return on copyright, in the period before the last fifty years and in the internet years there should have been very little content creation at all.
I have no idea of there was less content creation in the first half of the twentieth century or the second but it only takes a few minutes on Bandcamp, Facebook, Blogger, Youtube, Soundcloud, The Huffington Post (or any one of a myriad of other platforms out there) to see that there is a huge, huge amount of content being produced, the vast majority of which is never expected to make a financial return.
People will always create, frequently they will do so for nothing more than their own personal pleasure with no intent to share, sometimes they will want to share it with as many people as possible. What’s changed in the last decade is that this ability to share it widely has become available to everyone with a decent internet connection.
Couple that ability to share with ever decreasing costs for consumer electronics and what it means is that if you’re a content creator then your tools of the trade are getting cheaper and you’re closer than ever to the people who might want to consume your work.
If you’re a middleman, be it an aggregator, publisher, record label, movie studio, collection agency or any other part of the chain, then you are going to have to work ever harder to add value into the product lifecycle because creating has got easier and sharing has got easier.
Alternatively you could try lobbying, sadly that’s got easier too.

* See also Hollywood Accounting