Rose M. Welch points us to an interview with Cory Doctorow, where he discusses his decision to give away all of his books as free downloads (which, as you hopefully know, has been quite successful for him). As Rose notes, one of his quotes aptly sums up the basic position we've taken here at Techdirt for years:
As a practical matter, we live in the 21st century and anything anybody wants to copy they will be able to copy. If you are building a business model that says that people can only copy things with your permission, your business is going to fail because whether or not you like it, people will be able to copy your product without your permission. The question is: what are you going to do about that? Are you going call them thieves or are you going to find a way to make money from them?
This is what's been so frustrating about this debate for so long. The focus, by many in certain industries (especially the music and movie industry), has relied so much on the "calling them thieves" part, rather than figuring out better ways to make money. Sure, if there were a way to stop unauthorized copying, that would make lives easier for those companies. But that's a pipe dream. It's not possible. And while it may take more work, once they stop complaining about it, and start realizing that there are ways to leverage that copying as free or cheap creation, promotion and distribution, suddenly it becomes an opportunity, rather than a threat.
Recently, we've noted some similarities between Amanda Palmer and the band OK Go, in that both had been signed to major record label deals, both had built up an amazing (and amazingly loyal) group of fans through various means (different for each) using methods totally outside of their major label marketing effort (which was somewhat lacking in both cases)... and last month, both were officially dropped from their label deals.
In the past, getting dropped from a major record label deal was seen as a bad thing -- a sign of trouble for the band. But in both of these cases, the process of getting dropped was initiated by the musicians themselves, who realized they could do much more outside of the major label system, than within it. So it seemed like a bit of serendipity, that both acts had aspects of their ongoing tours overlap in San Francisco this week -- leading to an event put together by Creative Allies at the Ex'pression College for the Digital Arts, where both acts performed and did some chatting about music and the music business as part of a webcast. Thanks to Amanda, I was able to attend in person with a small group of folks in the studio, and it was a fun time -- as both acts basically celebrated their freedom from their record label deals.
You can see the webcast in two parts below (not sure why it's two parts, and it was not easy at all to find the second part):
It's yet another reminder of how the role of the major labels is totally changing. Historically, the only way to be successful in the music business was to get a major label deal. They were the gatekeepers, and without a deal, you were out of luck. Being dropped from a major was effectively the end of your career as a performer with a very small number of exceptions. But, these days, artists are realizing that there's so much more that can be done without major label help, and that actually being on a major can hinder or block those opportunities, that it's become a cause for celebration when you get "dropped" -- or, perhaps, more accurately, freed!
While there's plenty of music, there were two key points on the whole business model side of things that came up that are worth repeating (in case you don't feel like watching both videos -- though, you should, since they're pretty cool). The first is that during the interview session between acts, Amanda was asked about "direct to fan" stuff, and she made a point that I've been trying (perhaps unsuccessfully) to highlight for quite some time: and that's that each act needs to do something that fits with what works for them. Her fear is that there's so much talk about "direct-to-fan" offerings, that people are going to start just trying to all do exactly the same thing, rather than charting a course that's unique to them.
We've tried to point this out as well, in noting how different the various success stories are. Inevitably, of course, someone says that we're saying everyone should do what one of these artists are doing (a favorite of critics is the false idea that we've said everyone should go to Disneyland with some fans, like Josh Freese). But that's not the case at all. For Freese, it was a part of his personality (and his life, as he basically grew up at Disneyland, and performed there as a kid). The whole point of learning how to better connect with fans and giving them reasons to buy, is not that everyone has to use Twitter, or that everyone has to offer "tiered" offerings. Or that everyone has to tour, even. It's that there are many different ways that each artist can connect with fans and give them a reason to buy directly, and that each artist has to figure out the way to apply the concept in a way that fits with their own personality and sensibilities. It's great that Amanda was able to really drive home that point during her interview.
The second part is actually an amusing exchange between OK Go and Amanda after OK Go's second song. Lead singer Damian Kulash asks the audience for questions, and if you listen closely on the video, you can hear Amanda ask about how the band was able to not just get dropped by Capitol/EMI, but also to take the last record with them (something she was unable to do with Roadrunner/Warner Music). Kulash tries (not all that successfully) to dance around the legalities by setting up a hypothetical version of EMI -- but basically admits that with EMI more or less fighting every day to avoid defaulting on massive loans -- while at the same time fighting with the Beatles and other top acts, the label apparently found the fact that Kulash might occasionally pen
op eds for the NY Times that made the label look totally clueless on digital things, that it was better to just usher the band out the door as quickly as possible. And, as such, the band had a bit of leverage, which was used to not just get out of the contract, but to take the last record with them.
Of course, the business model stuff was a minor part of the overall evening, which really was very much about music, and a rather celebratory mood from both acts about their freedom to stretch out creatively -- as both demonstrate beautifully in their separate performances. Among the many highlights, there's Kulash forgetting lyrics and later getting a case of the giggles in the middle of the band's hit song "Here It Goes Again" -- plus a rendition of "What To Do" performed entirely by the band using a table full of hand bells... And Amanda playing a song from her upcoming EP of Radiohead covers played on the ukulele because, as she noted, she can.
Earlier this year, we wrote about how Lady Gaga had leveraged free music as a huge part of building up her popularity, and turned that into money via sellout tours and corporate sponsorship. However, most of that article focused on "legal" free music -- such as the songs her label had put up on MySpace and YouTube and elsewhere. But what about the unauthorized kinds? Well, in a wide-ranging (and really quite fascinating) interview that Lady Gaga did with the Times Online in the UK (check it out before they put up the paywall), Lady Gaga admits she's fine with people downloading her music in unauthorized forms because she makes it up in touring revenue:
She explains she doesn't mind about people downloading her music for free, "because you know how much you can earn off touring, right? Big artists can make anywhere from $40 million [£28 million] for one cycle of two years' touring. Giant artists make upwards of $100 million. Make music -- then tour. It's just the way it is today."
Similarly, she knocks bands that don't really try to work hard to please the fans, and who just expect them to automatically buy each album:
"I hate big acts that just throw an album out against the wall, like 'BUY IT! F*** YOU!' It's mean to fans. You should go out and tour it to your fans in India, Japan, the UK. I don't believe in how the music industry is today. I believe in how it was in 1982."
Like Mariah Carey, it looks like Lady Gaga has realized that this concept of Connect with Fans and giving them a Reason to Buy works at the superstar level just as much as it does down at the indie artist level. The specifics of implementing a business model around the concept are very, very different -- but the core concept remains the same. Treat your fans right, learn to leverage what's infinite to make something scarce more valuable, and then sell the scarcity.
BigKeithO writes in with some more followup, including some more results numbers from the Humble Indie Bundle experiment that we've written about a few times, involving some indie developers bundling up a bunch of PC games in a "pay what you want" pricing scheme. The program went on for two weeks, bringing in a grand total of $1,273,588. $833,630.69 went to the developers (or $166,726.14 to each), while the EFF got $183,601.47 and Child's Play got $188,578.04. I'm sure some will knock these numbers, suggesting that they're significantly lower than what some big name EA game would get, but you have to remember that these games were a bit older and weren't likely to get that many new purchases. On top of that, in two weeks, that's a pretty good sum of money for some indie developers on older games.
The other interesting tidbit, as many noted, is that despite suggestions from some that the "open source" world are folks who "just want stuff for free," the average amount paid by Linux users ($14.52) was significantly higher than those paid by Mac ($10.18) or Windows ($8.05) users. Obviously, averages are only so useful, given that they can be skewed by outliers (anyone got the medians? standard deviations?) but it's still information worth pointing out. All in all, a very interesting experiment, with some great results for those who participated.
We talk about the economics and new business models impacting all sorts of industries from software to music to movies to newspapers to video games, but haven't talked all that much about book publishing. Certainly, we've discussed some aspects of ebooks (and the bizarre pricing decisions there), but there's really been so little that has come across as truly innovative, that I haven't spent much time digging in. Yes, there are things like Google books and print-on-demand and other such things -- but all of those seem mostly focused on just taking the old business and "making it digital," rather than looking at ways to rethink what the digital world really means for book publishing. There have been some one off cases -- with examples of individual authors like Robin Sloan and JC Hutchins doing some interesting experiments as novelists, but nothing larger. And... many people point out that with fiction writers, they just don't see the same scarcities that we discuss in other industries.
So I'm quite happy to learn about a company that really is experimenting in this space, and doing so in interesting ways. Ross Pruden clued me in to a project called Cursor, started by Richard Nash, that appears to be doing some rather interesting things. The key point is that, rather than just focusing on publishing books, it's really a community driven platform that produces books as one aspect of the overall experience -- and uses a tiered support model, similar to those we've discussed in so many other areas:
My business plan is now out with investors--I will spare you the P&L numbers and just offer the broad strokes. Cursor will establish a portfolio of self-reinforcing online membership communities. To start, this includes Red Lemonade, a pop-lit-alt-cult operation, and charmQuark, a sci-fi/fantasy community.
The business will focus on developing the value of the reading and writing ecosystem, including the growth of markets for established authors, as well as engaging readers and supporting emerging writers. Each community will have a publishing imprint, which will make money from authors' books, sold as digital downloads, conventional print and limited artisanal editions--and will offer authors all the benefits of a digital platform: faster time to market, faster accounting cycles, faster payments to authors. But the greatest opportunity is in the community itself. Each will have tiers of membership, including paid memberships that will offer exclusive access to tools and services, such as rich text editors for members to upload their own writing, peer-to-peer writing groups, recommendation engines, access to established authors online and in person, and editorial or marketing assistance. Members can get both peer-based feedback and professional feedback.
Other revenue opportunities include the provision of electronic distribution services to other publishers; fee-based or revenue-share software modules, especially for online writing workshops or seminars for publishers, literary journals, teaching programs; fee-based linking of writers to suppliers of publishing services, including traditional publishers and agents; corporate sponsorships and site advertising; and events and speaking fees.
Now there are some things in this description that I think are great, and others that I'm not sure will work, but it definitely is a big and interesting vision, that really does seem to get the basic concept of both connecting with fans and giving them a reason to buy, while also looking to build out complementary scarcities. My main concern are (as usual) the attempts to use infinite goods as if they were scarce, but given so many other smart aspects to this program, I get the feeling that after some experimentation, things will shake out in a way that works well.
But, fundamentally, the fact that this whole thing isn't even set up as a "publishing house with some community features," but rather as "communities that also publish," is a very, very smart way of going about things. It's a recognition of the power of community, enabled by modern communication technology, that gets so incredibly ignored by so many legacy business lines.
Beyond that, Nash is doing some other interesting things that many in the publishing world will consider horrifying -- but which really are extremely forward-looking. The reason Ross pointed this out to me is because Nash has decided that, unlike pretty much every other publisher in the world, to purposely limit the length of the contract away from "life-of-copyright." As he notes, traditionally, when you sign a publishing deal, the publishing house controls the rights until the work hits the public domain (long after you're dead). Instead? His deals are three years:
No more life-of-the-copyright contracts.
Instead: three year contracts.
Yup, from a contract that locks you in till seventy years after you're dead, to a three year contract. Renewable annually thereafter. Which means after three years you can walk. Or stay, but stick it to us for better royalties because there's gonna be a movie. Or stay with us because with all the additional formats and revenue opportunities we're creating above and beyond what any publisher has to offer, you're making more money than ever before.
You see, most publishers have accepted they're not going to make money publishing your book. They're publishing your book and a bunch of other books like it so they can have exclusive rights over as much intellectual property as possible. Such that if, three or five or nine years down the road, you win the NBA, or the Orange, or there's a movie, or an Oprah pick, your whole backlist starts to sell but they don't have to pay you one single extra red percent in royalties.
That's where their profits come from, from being able to NOT have to renegotiate royalties when your books start selling better than they expected.
I have no idea if Cursor is "the answer." In fact, I'd bet that it's not. But it is one answer that's experimenting in some very interesting and compelling ways. And that's the key point. There no longer is just one answer to the business model for any particular industry. Each of these industries is learning that business models change rapidly, and the way to succeed is in smart, focused experimentation that is most focused on providing greater value (rather than looking to limit participants). Who knows if Cursor, as an individual experiment, will work. But succeed or fail, it's an experiment worth watching closely.
Captain Kibble was the first of a whole lot of you to send in actor/comedian/writer/etc. Peter Serafinowicz's explanation for why he downloads unauthorized copies of things... including his own movies. The basic answer is convenience, but also a shifting view on media consumption. He does pay for some stuff, but only when it's equally convenient or, as many have called it, "better than free." It's worth reading the whole thing, but there are a few key snippets. He notes that there is definitely promotion value in having the content up on file sharing networks -- and notes that with his own show, obscurity is a much bigger threat than "piracy":
The visibility argument certainly makes sense for my short-lived BBC show. I'm revamping my website right now and my web team asked me if I would like them to hunt down and put and end to the torrents and RapidShare links to The Peter Serafinowicz Show, which was recently released in the UK on DVD. I said no because the show is still relatively unknown and I'd like as many people to see it as possible. In fact, I've used the torrents myself when I haven't had a copy to hand.
Much of it is already up on YouTube. If people like it enough they'll want to buy, to own, the DVD, which has lots of great extra stuff, but the DVD isn't even sold in the USA. The freely available content serves as a calling card for me, and for the other cast members and writers, hopefully enabling us to produce more hilarious stuff for the world's discerning comedy fans.
Another point he makes is that it's often the content providers own fault in making it so ridiculous difficult to legally get the content he wants to watch. He lives in the UK and is frustrated about TV shows getting to the UK much later, or other content that he can't legally reach at all from the UK. And sometimes, it makes no sense at all to him, so he just fires up BitTorrent instead:
I recently wanted to show my son Disney's classic Jungle Book and intended to get it on iTunes. Unfortunately, it is currently incarcerated within The Disney Vault. So I'm afraid I simply DL'ed a pixel-clear pirate copy which arrived in seconds. My moral justification for this? I once bought the VHS. It's your own vault, Disney!
He also sees how annoying the legally purchased versions of things can be:
"Ownership" is starting to change its meaning. If you buy a movie from iTunes you "own" the right to watch it on certain devices within certain constraints. When you "own" a DVD, you have the right to watch it whenever and wherever you want. However: you must watch ten minutes of promos, trailers and anti-piracy threats. I'll take the download, please.
Along those lines, he gets frustrated at ridiculous and unnecessary restrictions when he does by content -- restrictions that unauthorized copies don't have:
I own a physical copy of Anthony Lane's brilliant collection of New Yorker reviews, Nobody's Perfect. It's a heavy read (around 3 lbs.) and I wanted to get a copy for my iPad. I tracked down an ePub version of the book at the Barnes & Noble site, assuming, since iBooks also uses the format, that I could tranfer it to my iPad. Only the iPad doesn't read Adobe-encoded ebooks, not now at least. With the help of some sympathetic Twitter followers I then spent around ten futile hours installing Xcode and obscure Python scripts (not the funny ones) on two different computers in what seems to be the only method one can use to illegally decrypt Adobe ebooks. My moral justification for this? I've paid for the book twice.
Finally, he also has run into the ridiculousness of the recording industry. Earlier this year, we noted how insanely short-sighted it was of EMI to prevent embedding of the band Ok Go's viral music videos. Serafinowicz came across the same issue on a video he made for EMI, which he solved by releasing it in an unauthorized manner:
I recently directed the music video for Hot Chip's "I Feel Better." Contractually, the video had to be hosted on EMI's official YouTube channel, which disabled non-UK users from viewing it, limiting its audience by around 80%. Frustrated, I put it up on my own YouTube channel with no region restrictions, and at time of writing is just shy of a million views. EMI then remotely disabled embedding on my version, thereby limiting its audience again. If you're in the business of promoting a band, why would you want to stop people watching their promotional video?
It's basically the same story over and over and over again. People understand what's possible and what they can do with technology, and the industry keeps wanting to restrict what they can do, because the industry doesn't know how to deal with it. But that's never going to stop people. Once you understand what technology enables, why would you ever purposely limit yourself? The various content industries have so many chances to get this right, and every time they get it wrong -- to the point that even the folks who make their living from these industries are beginning to question the strategic aptitude of those in charge.
We've been making this point for years (and living it with our Insight Community offering), but it appears that other media providers are finally recognizing that there really are other business models than "advertising" or "subscriptions." There's been this theory out there for the longest time that those were the only possible ways to make money in the publication space. Thankfully, it looks like more and more publications are recognizing there are other options as well. A few folks sent over news that Forbes appears to be making the same point, noting that advertising is a commodity, but services are not. Thus, they're launching a "reputation tracker" for companies.
While Jay Rosen was kind enough to compare Forbes' new offering to our Insight Community, I'm not sure it's quite there yet. It looks like Forbes' offering is more just about getting feedback from people, rather than really leveraging the strengths of the community. Frankly, it still amazes me that more media publications don't do more for their community (and in some cases, actively fight their own community). The whole reason media works as a business is because it brings together a community, and then does something with that community. The traditional model was to just sell their eyeballs -- which only gets you so far. I think models that focus on actually using the intelligence in that community to do something useful seems a lot more powerful. Hopefully, Forbes' step in that direction is an indicator that more media publications are realizing there's more to a business model than advertising and subscriptions.
We were just talking about how the Humble Indie Bundle of video games continued to exceed expectations by doing things to make fans like them even more -- such as adding more games to the bundle after people had already bought -- and comparing that to EA's strategy of limiting the resale market with coded content. One strategy involves exceeding expectations and giving people reason to be excited (and reasons to be happy to spend) and the other... does not.
As the official "one week" Humble Indie Bundle offer comes to a close (though, they'll still keep offering it afterwards), it's nice to see that the effort easily soared past the $1 million mark (including over $300,000 going to charities -- including the EFF). But, beyond that, Wolfire continues to make things even cooler for people. First, it open sourced one of the games, and followed that up by announcing that three others are also going open source (World of Goo is remaining closed, as is the late addition of Samorost 2). Once again, the focus is on doing things that excite the community, build loyalty and give people a reason to want to buy, rather than making people feel guilty or annoyed about buying.
There really are tremendous lessons here for anyone building a business today: focus on ways to delight your customers, rather than pissing them off; and focus on giving people real reasons to buy, rather than just feeling entitled to define the terms under which they buy and looking for ways to limit those who want to interact with you in a different manner.
Last week, we wrote about Wolfire Game's Humble Indie Bundle offering (though, amusingly, since then, it's been submitted over and over again -- with some people saying they're amazed we hadn't written about it yet), where five four indie games were offered up in a "pay what you want" bundle. I was among those who paid up and downloaded the games (though, for some reason the "big draw" game World of Goo refuses to work on my computer). Over the weekend, I was surprised to get an email telling me that another game was now available as a part of the bundle. It appears that some other indie developers wanted to join in on the fun, and so everyone who already paid now also gets access to that other game, Samorost 2, from Amanita Design. This was pretty cool on a number of levels. At a time when so many video game developers are freaking out about people getting anything for free, these game developers are rewarding people who did pay by giving them more for free.
Think about the basic conceptual differences in approach here. You can spend all your time trying to punish negative behavior, or you can focus on rewarding positive behavior. Which strategy is likely to win more loyal fans in the long run?
Along those lines, a bunch of folks have also sent over Wolfire's blog post revealing some back-of-the-envelope states on "piracy" of the game, suggesting that some folks were clearly sharing the download links and downloading more than single copies of the games. The discussion is pretty matter of fact, and basically recognizes there are a whole bunch of reasons why people might do this. But the really important part of the post is the fact that Wolfire doesn't seem particularly bothered by this, and knows that the focus should be providing more value for those who want to pay and want to support the games:
What are we going to do about it?
Not much.
Shouldn't we use a percentage of the proceeds to send our indie-lawyers after them? Perhaps trace their IP addresses?
No -- we will just focus on making cool games, having great customer service, and hope for the best. It sure seems to be working right now!
....
Making the download experience worse for generous contributors in the name of punishing pirates doesn't really fit with the spirit of the bundle. When considering any kind of DRM, we have to ask ourselves, "How many legitimate users is it ok to inconvenience in order to reduce piracy?" The answer should be none.
And that, right there, is an encapsulation of the different mindsets in the market today: do you spend all your time setting up reasons for people to buy, encouraging positive incentives... or do you focus just on punishing those doing things you don't like (even if they would never buy?). Oddly, some are focusing on the fact that the games were still pirated as some sort of condemnation of "pirates," but that doesn't make sense. If anything it shows that there are reasons other than money that people download unauthorized copies (i.e., contrary to certain claims, it's not just about "free stuff.") Sure, anything you put out digitally is going to get pirated. Who cares? The focus should be on key metrics: how much money did you actually make (and as of this posting the numbers are already pushing $750,000) and how many more loyal fans did you bring into the fold? Who cares that some people are still sharing the games for free? Those people are not the ones who matter.
There's a music industry lawyer named Chris Castle who we've mentioned a few times on this site in the past. He's the guy who used to (don't know why he took it down) have a blurb on his website that referred to Creative Commons supporters as "self-serving shilling for the self-absorbed on the short con." He once complained that next time he wrote a contract for licensing music to a website, there would be a clause that once the contract was over, the website wouldn't be allowed to tell anyone why, because just having the music disappear and pissing off all the users is such a good solution. He's also, on multiple occasions predicted that "free culture" was dead. Lately he's been focused on running a bizarre and hilarious series of black-helicopter-type conspiracy theories about people pushing for copyright law that actually takes consumers into account. And I won't even get into the nicknames he has for everyone. He's a really fun read.
And, it should be noted, he's no fan of the record labels. From what I can tell, he's a lawyer who represents musicians and songwriters for the most part -- and seems to think that the business models that got them paid back when he was a child should somehow be forced by law into never changing and staying that way forever. But since he's so focused on getting musicians paid (and has been known to pat himself on the back when he wins lawsuits for certain musicians) you would think that reports showing new business models that work and help get musicians paid -- while doing so in ways that allow musicians to rely less on the hated labels would be a good thing.
Why is it bad? Well, something about the purity of music the old way. You know, where instead of taking money from corporations to make commercial music they... took money from corporations (record labels) to make commercial music. Oh wait...
We've seen this argument before. A few months ago, someone insisted that Jimi Hendrix never would have chatted with fans on MySpace. In Castle's world, he sees something similar. Would Bob Dylan ever take sponsorship money, he wonders?
It doesn't take a lot of prescience to see where this leads. Ask yourself this--is an advertising-driven model likely to produce the next Leonard Cohen or Bob Dylan? If presented with this reality, what would the next Bob Dylan do? Would he still be attracted to the music business or would he write it off as yet one more corporatization, more McMusic? Would popular music become like the jingles in Demolition Man? (Not to mention the cross-cultural issues.)
Really? First of all... last I checked, Dylan himself had no problem with an ad driven model:
But, more to the point, the myth that those musicians became successful in an anti-corporate way is a joke. Dylan signed to Columbia Records very early in his career, and they didn't do it "for the music." They signed him because they thought he'd make them money -- and, famously, when his first album didn't sell well, almost resulted in him being dropped from the label and caused trouble for John Hammond, who had signed him. Hammond, by the way, also signed Cohen to his first major label contract... also at Columbia. I'm sure in both cases, it was purely out of the kindness of his heart and the love of music... and the commercial prospects had nothing to do with it. Hell, wasn't Columbia Records run as a charity back in the 60s?
What this comes down to, in the end, is the absolutely worst kind of revisionist history. It's people who pretend that "back in the old days" the industry was about something other than money, and that anyone who talks about money now is creating a problem. And, then, at the same time, they'll turn around and bitch about how musicians won't make music any more because they won't get paid. Contradiction much?
If Mr. Castle really wants to move away from musicians scared away from music because of "more corporatization, more McMusic," you would think he would actually be a huge fan of many of the business models we've written about, because they allow those musicians to go direct to fans and make money in ways that get away from the corporatization -- including the exact corporatization of music that Dylan and Cohen needed back in their day -- but which musicians today no longer need if they want to avoid it.
