My brother sent me an email tonight after he heard, Peter Fader speak. Fader is a professor at Wharton School of business at UPenn “doing datamining - they call it marketing.” Apparently, my brother found this talk inspiring, ending his first email in our resulting exchange with:
…he made some damn good points about the subscription model. b2c already is doing ok (campfire, github, etc.), it's time for consumers to pony up. His bottom line: if facebook decided to charge you $10/month, you'd pay it. No questions asked.
If you’re a regular reader of this blog, or know me, or have listened to some of the top minds in this ‘new media’ business, you’ll be pretty easily pick out how totally my brother has drunk the kool-aid of the bass-akwards mind fuck that the ‘old media’ folks try to sell you.
First there was the stone age
Deep breath.
Let’s try to break this down: We are now in the information age. Where once the pinacle of technology was an iron sword, the new tech is information. Our economy is based on the trade of Intellectual Property. Yet paradoxically, the internet has made information practically infinite. Attempting to make money by controlling the amount of information is therefore doomed to fail. Put another way: controlling the scarcity of something that isn't scarce can't work.
History is not a good guide here: The internet is a fundamental shift from anything we’ve experienced before. It’s as revolutionary as the printing press and as radical as the written word. It’s both asynchronous and instant two-way communication.
There are however, fundamental laws. We just don't know them all yet. **The idea that you can delay, or should delay the transition to an internet based economy is just stupid. **We're here. Welcome to the future.
We depend on competition in our economy [fundamental law], which means that the first person to figure this out is going to make a boat load of money. Delaying will guarantee you're not that person.
There are two camps out there: folks (who seem to be similar to Fader), who think that there is some way that we can charge users for content just because we've always done it (we haven’t). And folks (like myself), who are convinced that the internet is such a fundamental shift to the economy and information management, that charging for basic content is just asinine.
Napster
During our exchange, my brother offered this tidbit from Fader’s speach.
He was also an expert witness for Napster in '03: "If the music industry had the option of turning back the clock, they'd just make Napster charge folks $15/month for crappy mp3's and roll in the dough."
That got me going. The music industry is a classic case-in point of the shear stupidity of trying to charge for content. But, on top of that, he has the gaul to suggest that charging for shitty service is a winning business model!?
I’ll take that challenge on!
People used to pay for CDs. They did this because it was a) the only way to get music, and b) fairly cost effective. Then then the internet came. It allowed a) instant access to any music you wanted – no going to a store, b) only the music you wanted, you didn't need all the other crappy tracks you'd never listen to, c) your music on your terms – making a mix tape was simple, d) way-the-fuck more cost effective because it was free, e) permanency that scratched or lost CDs didn’t offer. Even if you lost your harddrive, you could just go re-download what you wanted; if you didn't have it all backed up on your iPod anyway.
Summary: the web was a better user experience, and it was free.
What did the RIAA try to do? Tried to make abundancy scarce.
Yeah… that worke
What the RIAA should have done, instead of suing all of the people that were saying, "we like your product so much, that we want to share it with everyone we know," is figure out away to manage that abundance. If they had come up with a user friendly way that ensured high quality music that was easy to find (the two flaws of Napster) they could charge for that.
…oh wait, I just described iTunes – which is insanely successful on that model.
UI or Content. You can charge for one. (Journos need not apply)
The lesson: controlling access to content behind a paywall is not user friendly. In a world where users can be picky about … everything, it’s critical that you treat them right. This means both high quality content and a good UI to back it up. You need a minimum level of both, and then you can charge for one of the other.
iTunes put a great UI on the music downloading scene. Because of that, they can charge for access to content. Newspapers have neither a great UI or unique content. Fundamentally, journalism isn’t about creating unique information, it’s about compiling pre-existing information. This is a value-add that is important, but not so important that people will pay for it without a great UI attached.
Furthermore, “information wants to be free.” Or, the essential duty fulfilled by journalism dooms it to the realm of the necessary. The same realm of data that will find a way out to “be free.”
The only way that I can see out for journalism: have an amazing UI. Technology that is just becoming practical like geo-enabled data, the semantic web, crowdsourcing, rapid application development, unified user profiles, and machine readable data will enable journalists to present their craft in a user friendly, engaging, and informative way. We can charge for a great user experience. We can’t charge for information that they can get for free elsewhere.