Last time, I talked about the trust dividend and mentioned that it was important to those who want to design or remake business models in the face of digitization. Think of the amazing changes that turning content into ones and zeroes has brought to songwriters, authors and journalists.
On the one hand, creative people have never had more opportunities to make their work available. Once upon a time, musicians struggled to get a “demo” record made, now every local band seems to be selling its CDs whenever they perform. Short story writers, who saw their market opportunities fall as printing costs and postal rates soared, now can find hundreds of paying markets online. For most of these, they don’t even need to invest in a stamp. Blogs, which are available for free for anyone, have become a massive marketplace of news reports and opinions.
On the other hand, these people usually need to connect up with a traditional media company if they want to make a living from the content they create. In many ways, this is becoming harder and this is where trust comes in. That brings us back to context, authorization, risk and authentication.
Before content became digital, trust was based on risk. For those who owned content, the chances of someone pirating and distributing copies was low. Pressing vinyl, printing books and publishing newspapers, and then getting these tangible goods into the publics hands, was expensive and complex. This immediately eliminated any casual theft at a large scale.
Those who could counterfeit these products made big targets for lawsuits because records, books and newspapers were all protected by copyright laws. These laws created a context that allowed both creative people and their producers/distributors to secure the benefits from their work in terms of money, opportunity and reputation. They trusted the system (as did, by the way, consumers, who generally accepted that producers and editors were acting as gatekeepers for quality).
Digitization has threatened all this. High quality copies can be distributed worldwide with minimal investment. Respect for copyright has deteriorated, and its enforcement — in a context of widespread violations is impossible. (This is, in a way, the reverse of security through obscurity. Hiding in the crowd doesn’t keep you safe from hackers, but it actually works against media producers.) Music sales have crashed. Book publishers are wrestling with Amazon on pricing and distribution of electronic versions of books. Newspapers are failing. Digitization has disrupted the business models of content creators and those who have brought their work to the public.
The scramble to respond to the disruption hasn’t demonstrated a lot of creative thinking in business models. Newspapers tried to sell subscriptions online and mostly failed at that. Tried to sell advertising and found that aggregators skimmed that market. Blogging has become a good hobby for some people, but it seems to pay off for provocative views rather thoughtful ones and has not demonstrated that it can provide the sustained financial and legal support needed for investigative journalism.
Some authors have already moved toward making their money through talks and courses, but this puts them at odd with authors provide talks and courses for free to promote book sales. Many musicians piece together a living through performances and ancillary sales (T-shirts, mugs and soundtracks for advertisements).
Rather than develop business models by imitation, borrowing or pretending that the Web works the same way as previous channels, it might be valuable to take a fresh look at trust and ownership. If the old bases for trust are gone, can we try something else? Look at two successes.
Apple’s i-Tunes sells the full experience, not just the songs. It sells convenience. In effect, it has taken a fresh look at the context for listening and in particular explored mobility as a component. Even with Digital Rights Management (DRM secures music, which manipulates authorization), people pirate the songs Apple sells, but the convenience Apple offers has created a large, paying market. There is a partnership of trust between enough people to make i-Tunes work.
The Wall Street Journal stands out as a success for online journalism. Again, there is a partnership between the publisher and its generally well-heeled readers. But there is also a need created by time. Getting to investment information rapidly is more important to readers than the cost of subscribing.
Effectively, these two successes are tied to context. As stated above, authorization, in the form of DRM, has been tried, but workarounds for the electronic keys seem to be generated quickly and consumers object to the limits they create. Authorization might make sense if it is turned upside-down. If a password protects my content collection that is kept safe in a cloud (on host systems that I can access from any of my devices), I am renting convenience for something I see myself as having ownership rights to. I’m not being prevented from doing anything. Content creators could then be compensated by how often people access their work (much the way composers get paid for each play on the radio, even though new records are not purchased).
Authentication — knowing who uses content — may also have a use in business models. Creative content often becomes part of a person’s identity. T-shirt sales identify allegiance to bands and sports teams, for instance. As our online identities become more important, badging or tagging those identities could become a means to recover money for content creators. Either people might pay for a badge (including the elite badges of “biggest fans”) or, by identifying them, they might be profiled for other sales. In some ways, this is already happening (though it is not always transparent or for the benefit of content creators).
Context, risk, authorization and authentication provide new perspectives on building business models from a deeper understanding of trust and ownership. These four are not the whole story. There are dozens of characteristics left to explore, and these may become the bases for dealing with the disruption caused by digitization.