How information sharing uproots conservative business models
(and why this is not necessarily a bad thing)
UPDATE: heartfelt thanks to Carlos Solís for the Spanish translation. ¡Gracias!
With each day we seem to acquire new – faster, better, more convenient – ways of sharing information; and today almost anything can be information: from software operating the fastest supercomputers, through terabyte-sized datasets craved by science, to digitised works of art. All available in byte-form, ready for copying and sharing.
This digital revolution is not compatible with business models of old, and their benefactors fight back vehemently.
Is this the best strategy? New, emerging business models that take these vast sharing opportunities into account seem to suggest otherwise.
When the Licensing of the Press Act of 1662 expired in 1695, the Worshipful Company of Stationers and Newspaper Makers – remembered in history in short as the Stationers’ Company – found itself without the state-guaranteed monopoly on printing that fueled their flourishing during previous decades. Knowing full well that authors themselves would not be able to publish their works on their own, as that would require significant investment into printing infrastructure, Stationers’ Company invented (then quite a revolutionary) notion that is ringing in every copyright debate to this day: authors’ inherent right to their works.
This argument was so potent that it led directly to enacting in 1710 of the Statute of Anne and creation of the copyright law in form we are familiar with today.
Just as at that time, today this argument is still used as an instrument of protecting the livelihood not of the authors, but of publishers. The middlemen.
Cornerstones of Human Knowledge¶
Arguably the ability that had the biggest influence on human history is the ability to communicate. During millenia human race perfected it, with few inventions bringing real, qualitative change in its speed and accuracy. Each such invention was followed by great intellectual, cultural and social leaps – and political backlash.
Inventing speech allowed our ancestors to transfer knowledge directly, co-operate better in a group, exchange ideas – from very rudimentary at the dawn of men, to great intellectual constructs that were all but lost in time. It also sparked our ability to think in abstracto and operate with logic.
Next great leap was the invention of writing. Immensely important, it catered to the need of preserving the intellectual constructs made possible by speech. This led to the golden age of philosophy, first historical records, literature and poetry. In a way, it enabled communicating through time – great thoughts could be sent across years, decades and further, simply by conserving them in writing.
Printing press brought the written word to the masses, and in effect uprooted the social and economic structure of feudal Europe, leading finally to modern-day democracies. By lowering the costs of creating multiple copies and decimating the time needed for creation of a single copy, ideas could be spread faster and more accurately than ever before – more people could afford to have their thoughts written down and disseminated, more people could afford to own a book. Written word ceased to be the domain of the ruling elite.
Today, the Internet and digital technology lowered those costs even further, dramatically; it enabled almost cost-less transfer of information around the world and instant creation of perfect copies. What was a hard, complicated, arduous and prone to errors process just a couple of decades ago is now a click of a button away.
We do not know about speech, but all the remaining inventions were seen as disruptive and met with resistance at the time of introduction.
Socrates refused to write down his concepts claiming that writing is harmful to author’s memory, and to the concepts themselves. Printing press was opposed and curtailed by Church and the crowned heads, for it was seen (quite aptly, as Luther’s example shows) as a tool of great revolutionary potential.
Today, no one disputes the importance and value of those inventions, and how instrumental they were to scientific, social and economic development of humanity. Early attempts to curb their use, to exert control over whom can use them and to what ends – like the infamous Index Librorum Prohibitorum – are rightly called censorship and seen as detrimental.
Nevertheless, even with such historical lessons, we find ourselves engulfed in debates on how dangerous Internet is and about ways of curtailing it by the gatekeepers of old.
Devil in the Net¶
Arguments brought about against uncensored Internet are many and can be roughly categorized into:
- moral objections to some content (e.g. pornography; anti-religion content),
- alleged dangers to society stemming from certain kinds of content (e.g. critiques of the ruling; dissent groups; nazizm; hate-speech),
- perceived infringement upon rights of those hitherto privileged (this argument, for obvious reasons, is not usually publicly stated).
Notably, all those categories were present in the European anti-printing-press narrative centuries ago. The Index was created as a measure to enforce official moral and social norms of the times, its creation argued necessary to prevent break-up of societies exposed to “subversive” writings, while at the same time acting as a tool of continually exerting control by the Church – control that was to date exercised through a de facto monopoly on truth, impossible to maintain in the era of print.
In this paper I would like to focus on the last category of arguments against a censorship-free Internet.
Technology versus law¶
Current copyright law descends directly from the Statute of Anne; this is apparent even in its very name: it lays down the rules under which copies of works can be made and who has the right to make them. Created in times when printing was a difficult process, requiring resources and manpower, aimed (as it still is today) to protect publishers’ – and other middlemen – investment.
Publishers’, not authors’: copyright law was created only when the business of publishing emerged; before the advent of printing press and the need for printing workshops there was no need for copyright law, and thus none existed. Without any fast and exact method of copying a work of art (including a book), there was no need to protect the rights to it – books and other artforms were treated just like regular objects: sold, traded, etc., without any discussion of “authors’ rights”.
Complicated printing process also meant that it was in fact possible to efficiently exert control over printing workshops – printing presses had to be purchased, skilled personnel was needed, all this could be controlled to great extent.
Today copyright law is still being used to defend business of middlemen. However, what centuries ago was envisioned as protection of an emerging and useful industry, today is stifling innovation by needlessly defending outdated business models. This stems from a few crucial changes digital technology brought about:
- copying is nigh effortless and cost-less, requires almost no technical prowess, and produces exact, perfect copies, indistinguishable from the “original”;
- distribution across the globe, once the work is in digital form, is also almost effortless and cost-less;
- tools needed to be able to copy and distribute are in abundance and easy to use.
Copyright law is based on assumptions (copying being resource-intensive; distribution being troublesome; censorship being workable) that no longer hold. Traditional business models based on it are, thus, also outdated and ever harder to maintain. Middlemen are gradually becoming obsolete, as each and every author is able to self-publish and reach their fans directly.
However, instead of looking for new models that do work within this new technological framework, the middlemen of old – conventional print, media and entertainment companies – are pushing for ever sterner copyright, ever more enforcement.
This goes against both technology and society, already treating the culture of sharing as the norm, at the same time jeopardising emerging models of financing production of cultural works and endangering works already published.
Of “pirates” and fans¶
Please note: the term “pirate” in this particular context is an act of language abuse; downloading content from the Internet, even without copyright holders’ permission, is legal in some jurisdictions (e.g. Poland), even if publishing it might not be.
As studies around the world have shown, the greatest fans also tend to download the most content from the Internet. A correlation between rising amounts of so-called “illegal content” downloaded via new electronic distribution channels (like peer-to-peer networks) and purported dwindling profits of media companies has not been, however, proven.
On the contrary: yearly revenue reports from biggest entertainment companies seem to suggest otherwise – their revenues evidently rise along with the amount of downloaded “illegal content” worldwide.
There is even a visible correlation between the amount of downloaded illegal content of a particular artist and the artist’s revenue from sales – although it is unclear whether there is any causation present, and in which direction. This might, however, mean that peer to peer networks, besides being allegedly detrimental to sales figures, might be actually a good marketing venue.
This is already being used as a foundation of emerging business models. Notorious torrenting website The Pirate Bay has decided to work with artists willing to take part in an experiment – and launched The Promo Bay: instead of site’s logo, visible to millions of visitors each day, a new artist and album is being promoted.
It is a new venture and it is hard to assess its long-term viability, but already many participating artists report a surge in interest – and revenue.
The “marketing through sharing” strategy is itself verified, though – the Brazilian Tecno Brega music genre strives on treating CDs recorded in local studios as advertising material, sold for symbolic price or simply given away for free. Sharing on the Internet is not being discouraged as money is being made on live sound system parties with thousands in attendance, by charging entrance fees and selling recordings of the live performance after the party.
Instead of fighting against technology and social norms, Tecno Brega industry takes advantage of technical possibilities of easy copying and distribution to sell something that cannot be readily copied: thrill of live concert, and memories from it.
Sell what cannot be copied¶
While not musically related to Tecno Brega, Polish Przystanek Woodstock festival organizers follow a similar path. This biggest in Europe open-air music and culture festival (catering to over 400 000 music fans each year) does not collect admission fees at all – however, one can buy professionally made recordings and merchendise each year.
Merchendise and concert admission fees are great examples of a business model compatible with culture of digital sharing, but there is even more to make money on than that. Turns out, fans will pay good money for the sheer thrill of knowing they helped make their favourite show or album possible.
This is the idea behind crowdfunding – asking regular people, not big media, for cash up front, so that production could commence. That’s how Pioneer One got founded. That’s where open-source social network software Diaspora got a kick-start. Fans and people that simply liked the idea gladly chipped-in a few dollars to make those – and many more – projects possible. Both were released under open licenses (Creative Commons-based, and AGPL license, respectively).
In fact, this method of receiving pay for work supports many libre/open-source software and libre culture projects. The key here is to make donations as easy, and the resulting product as useful and pleasant to experience or use, as possible – this, in fact, encourages such projects to use libre licensing terms. Terms that are entirely compatible with culture of sharing.
An interesting twist on that particular idea is the Humble Indie Bundle. Mixing the trait of easy donations and maximum freedom of use after purchase with funding drives known from political rallies, NGOs or lately Wikipedia (an interesting example by itself), and with an honourable cause, HIB operators gather independent games in a “bundle” and do a two-week funding drive.
Each client can set their own amount to pay for it, and can set how the money is shared between game developers, HIB operators and two notable NGOs. In return, each client receives games that work on all major operating systems (including the open-source Linux-based ones), not boggled-down with unweildy DRM used by big game publishers to “protect” their games from illegal sharing.
This model is already being copied, for example by Polish start-up Music Rage, doing similar promotional drives for independent music bands.
More inclusive models¶
Also worth noting, and not usually noticed by pundits, is the fact that with many of the above models (specifically: those in which the buyer/founder sets their own price/amount), artists and authors are able to receive payments from income groups that would be excluded in traditional models.
With a CD costing a fixed amount many will not decide to buy: the potential client will not receive the work, nor author the money, even if the client would, in fact, be willing to pay just a little less.
And conversely – should the client decide they would like to reward the author more than the fixed price, this too is impossible (short of buying a second album).
This is not the case with those flexible models. Because copying and distribution is pretty much cost-less, authors can let clients set their prices, and hence cater to both of the above groups.
They can, in fact, incentivise the wealthier clients to make more generous payments by additional services, like inclusion of the name in ending credits in case of a film (again, Pioneer One is an example here).
Middlemen stifle business innovation¶
Traditional middlemen – publishers, big media conglomerates, collection agencies – are trying to roll back technological progress to save old, failing and unsustainable business models, built upon assumptions that no longer hold. By doing so they are actively hurting emerging business models that are both compatible with the technology and social norms aready in place.
A century ago it was not deemed proper to enact laws that would defend horse buggy makers from competition from car makers. Technology moved forward, and so did the affected industry – it was seen as a natural process.
In this paper I hope I have demonstrated the viability of a few examples of emerging business models that take advantage of available technology. I do not believe these are the only models possible, nor that these are the best models conceivable.
I do, indeed, hold that there probably are other and better models for the future. However, unless we stop hampering and hindering technological and business progress in the name of outdated assumptions, we might never be able to find them.
This article has appeared in a peer-reviewed publication “Innovating innovation. Essays on the intersection of information science and innovation” (Warsaw 2013, ISBN:978-83-925759-8-6) edited by dr Bruno Jacobfeuerborn and published by the MOST Foundation.