Monday, December 20, 2010

The Future of "Free" Media

Pay Per Use -- or Pay Per Content?

Will the current "everything is free" version of the Internet last? We've grown used to being able to hop about like gods, sampling almost everything out there, without having to pay a dime.  There are plenty of wise folks out there who predicted the collapse of this model, for a long time.  Sooner or later, they may prove to be right.

In a fascinating interview, Michael Whalen, award winning composer and new media observer, discusses the challenges facing those who create and delivering "content."  He correctly (I think) sees the monopolistic control model of content-delivering "pipes" collapsing into a vast lake, though this won't benefit the content owners, either.

Moreover, the makers of specific mobile hardware will matter less and less. Money will still be made by each year's best device maker, but it will remain a hardscrabble, highly competitive world. Device-making will not be a robust business model for steady and ongoing profit.

So far, so likely to be true. But what Whalen misses is the other shoe that must drop, and that is the inherent problem in re: advertising. We've grown used to viewing Adverts as the great monetizer, the prop that can convert raw numbers of "eyeball" attention-seconds into support for the vast lake of quasi-free content.  This model has worked far longer than I would have expected, supporting Hulu, YouTube, Facebook, Yahoo and so many other content delivery systems one can barely count them all.

Almost alone, I have long viewed this as a bubble, of sorts, perhaps even of the tulip variety. This vast house of cards may prove very hard to support, especially once companies get used to highly targeted AdSense-style ads delivering the actual information consumers need, in order to buy the actual products they want.

Will online advertising collapse like an over-inflated bubble?  I haven't heard anybody else say this, but I think it might be the next shoe to drop.

And if it does, what will happen to all that free content people are so used-to?

As I see it, there are a few models out there. One is pay as you use... either through fee-entry sites like the NY Times or through content aggregators like iTunes and the varied App stores.  The aggregators are likely to expand.  Indeed, this is one reason why I am clinging to my AAPL stock, because they are well placed to be leaders in this role.

I am less-sanguine about individual pay-for-content, like the NYTimes is trying to set up. I part with most critics over why it won't work, though.  Most say that the public is used to free content and hates to pay. Wrong. People are willing to pay.

The Inconvenience of Paying

What they hate is the current inconvenience of paying.  Having to type in name/email and password, or credit card info, or even using PayPal to do their rapid click-surfs for interesting content.

"I'd pay a nickel for that, but don't slow me down!" That is the attitude I am hearing.

  The problem is that PayPal is very badly set up to handle the kind of micro-payments that would enable Salon and the NYTimes to charge the reasonable (say) one-cent per view that people would be willing to pay. Seriously, a venture capitalist who invested in the next kind of PayPal... one that gets the micropayments wagon rolling... could make a ton, once ten million people are signed aboard.  A fantastic business opportunity, but it would take a fellow with patience and deep pockets.

(In fact, I know a few tricks that would make it easier and bypass some of the problems.  Daring investor out there? ;-)

Another model is Rhapsody... clubs and subscription services that let you pay monthly and access content without ever thinking twice, after that.  If advertising collapses, you'll see such services abound.  People will have the click-grab feel of free content, in daily use, but pay willingly a fair monthly rate, as in Netflix. It would work and bypass much of the "Net Neutrality" problems.  (I wrote about both of these methods in The Transparent Society (1997).

Then there's the notion that advertising will be an ever-growing subsidy, forever. I could be wrong.

A fourth system of content generation and delivery is the one Whalen speaks of: " I think we're going back to the 19th century in terms of the "status" of artists. They'll be figureheads. Imagine: like Paris or Vienna of the 1900s, we'll have wealthy patrons and small clutches of people who support the art of "real" artists. In this environment, the work we will try to sell is simply a loss leader and an inducement for us to perform or create a "custom" song, TV show or film..."

Yes, obviously this is where we are heading, in a society that is re-aristocratizing at a rapid clip, abandoning the post-WWII shape of a diamond, with a dominant middle class, and resuming the traditional pyramid structure, with a few thousand oligarch families up-top.  It is how things worked in every other culture... and you and I will hate it.  Even if we get to be lords, you and I will hate it.  But it may be where we wind up.  And so, creators (like me) may need to start looking for patrons.

The good news? I know a dozen billionaires on a first name basis. The bad news? That fact has never done me a scintilla of economic good in the past. But it may in-future, if Whalen is right.

Sometimes Whalen gets silly: "I think everyone is waiting for a GOOG - AAPL face off.  It's not going to happen... AAPL can BUY GOOG."

Um... not.  Market cap is not everything.  I know Sergey.  Won't happen.  Heck, even if advertising collapses, that collapse won't touch Google.  In fact, frantic advertisers will run TO google.

But all that is quibbling.  A very interesting article.

= Misc add-ons! =

Another Smartypants Brin?: Cosmological Finiteness Properties of the Brin-Thompson-Higman Groups 2V and 3V

The Symphony of Science is a musical project headed by John Boswell, designed to deliver scientific knowledge and philosophy in musical form. Here you can watch music videos, download songs, read lyrics and find links relating to the messages conveyed by the music.

British artist Darryl Cunningham offers an insightful cartoon take on Global Warming and Conspiracies. “It's one thing to be skeptical, but it's another thing entirely to believe in a conspiracy.”  It really is very stimulating... or so said hundreds(!) of commenters on my blogs, alone.

= Which Brings Up My Final Thought: about SOA... =

Suspicion-of-authorityI have long held that Americans are especially enthralled by the mythos of Suspicion of Authority.   And deep underneath their bickering, republicans and democrats share a mental reflex - suspicion of authority (SOA) - that goes back generations, differing mostly over which elite they see looming as a potential Big Brother. (While making excuses for the elites they prefer). Seldom discussed is their agreement on a common theme - that Big Brother would be a really bad idea.

I had nursed a hope that there would come a time when both major wings would realize that - though wrong in many ways - the other side has a point about the elite it worries about.  That we should be guarding each others' backs. Alas, instead we see a rising tide of irrationality and conspiracy theories.

 Conspiracy theories happen when SOA metastacizes, like cancer.  Either by infecting everybody with unreasonableness... or by becoming true.


sociotard said...

You never did get around to that big commentary on wikileaks you hinted at.

I did like this though: the leaks just got reciprocal.

Julian Assange's Lawyers Decry Leak of Assange's Information

Tony Fisk said...

Cunningham's cartoon is a pretty good summary of climatechange politics.

... he who throws stones, Julian...
(mind you, I recall a tale wherein Elton John kept asking a tabloid to retract vitriolic reports on him. They'd retract in smallprint, only to release an even more outrageous front page article. The cycle only stopped when *another* tabloid started dishing out the same treatment to the editor of the first one)

The leaks aren't the news, the news is the government dog whistling and corporate reaction (account blockages and the like)

Of relevance to current post: Sen. Franken on net neutrality regulations: The Most Important Free Speech Issue of Our Time

Tim Bray once coined a phrase for ISP providers to follow: 'fat pipe, always on, get out of the way'

glutoin: "glut on internet?!!!"

Nicholas M said...

This matter is one I've been pondering a lot lately, as I'm now the editor of a line of business books at a publication firm. We're solidly in the black, but our profits have slipped in all but one division over the past year, and every journalist and writer I know has the same story:

"You can't make a living in this field anymore. There's just too much free content on the Web."

To which I respond:

"Yes, you can drink water from a firehose, too, but people still shell out cash to buy bottles of Evian."

Let's face it- 99% of everything is crap. While Google is a decent sorter, and Wikipedia is much better than it used to be, there's still something to be said for properly sorted, synthesized, edited and presented information. To some extent, today's editors and journalists need to start thinking of themselves as "concierges" of information, or "consultants"- people who sort through the data and make it coherent and meaningful. Whether it's being made into a conventional book, e-book, special PDF report, blog post, wiki, podcast, broadcast, ad copy, or what have you- the need is still there, and if conventional publishing collapses completely, something will have to emerge to take it's place- if only because drinking from the firehose is neither healthy or practical.

Tom Crowl said...

The Internet is a landscape... not a business.

Speech, association, politics, mutual assistance (charity), etc...
are transactions between humans that pre-date the commercial transaction.

The first ICT was perhaps a bird call constructed out of a leaf made by a hunter to notify his mates of where the prey was…

And the first journalism was Ooga running into camp and announcing she’d just seen the first spring sprout on a favorite berry bush.

And if the message was false, misleading or dangerous… the onus certainly didn’t fall upon the air through which the information was transmitted!

There was no gatekeeper, no intermediary…

ICT AND JOURNALISM were BOTH strictly peer-to-peer.

The same could be said for politics and charity within the hunter-gatherer world... peer-to-peer.

The commercial transaction (and the creation of money, trade tokens, etc) arose with the need for interaction within or between larger or multiple 'social organisms'... an important and needed development.

At its root, a civilization (or any social organism) is a product of individual and group decisions (ideas+actions) operating within the confines of the physical environment and natural law.
we then see culture as the expression of this "social energy".

Money was developed originally as a technology for the allocation of excess social energy where complexity (and loss of various forms of proximity) required conventions beyond the less formalized methods of a hunter-gatherer group.

I believe this suggest some re-thinking about the nature of money and capital (and capital creation) but that's another story...

The point here is that the nature of this "social energy" in a scaled organism requires that the exchange of this energy NOT be bound by transaction costs or other complications IN AREAS RELATED TO COMMONS-DEDICATED FUNCTIONS ESPECIALLY...

These particular areas of exchange actually pre-date the need for or existence of the commercial transaction and require special attention.

This problem (which extends also into the political participation sphere especially) is directly linked to neglected scaling issues in this new landscape... and the capabilities required for Commons-oriented transactions in that space... and why that requires a viable, simple and secure MICRO-transaction.

The Commons-dedicated Account Network:

A self-supporting , Commons-owned neutral network of accounts for both political and charitable monetary contribution... which for fundamental reasons of scale must allow a viable micro-transaction (think x-box points for action in the Commons).

(I note that journalism is often a for-profit enterprise and that this presents a complicating factor. I believe this is an addressable issue.)

Re-Igniting the Enlightenment: On Building Landscapes for Decision


(I feel like Ignaz Semmelweis trying to get attention for what will eventually be seen as a simple, essential innovation... )

P.S. Just to keep the crackpot theme going... I also am convinced that this account network should own and maintain its own cloud and bank(s)... a certain independence.

From google's blog:
Governments shouldn’t have a monopoly on Internet governance

Stefan Jones said...

My Master's thesis was on a contribution to a long-forgotten micropayment system called NetBill. It worked fine, but went nowhere. Many others met the same fate. I had a few dollars in my Bitpass account and used it buy views of some web comics.

TomC said...

I've been saying, off and on, pretty much since the beginning of the internet, that the way to make micropayments work is to let people "run a tab".

This wouldn't require a huge up front investment - it's all imaginary money until people pay up, so the content providers don't get (or invest) a penny beyond their usual expenses until that happens. Then they get paid in proportion to hits by paying subscribers.

DED said...

TinTin via Lovecraft: Great! Thanks for sharing.

Acacia H. said...

After reading (and abstracting) an article in the January 2011 issue of Harper's Magazine, I have to say that I think efforts to "wake ostriches" is destined to fail, and we need to shift our efforts to be more akin to the martial arts of Judo; in short, we need to redirect beliefs and emotions from a hatred of Liberals to a hatred of Big Business and the banking industry (as two targets that primarily back Republicans, and thus would be an effective method of reducing the stranglehold of the neocon movement). Part of the problem lies with the "tell, don't show" method of teaching; this is, of course, akin to the belief in fiction writing that effective fiction shows events rather than telling people about them.

You see, telling is much akin to teaching. After twelve years (plus any college afterward) of forced education, people don't want to be told what to do. You start lecturing someone on something like climate change or on how the Republican Party doesn't care about its voters, only its financial masters... or even how the banks are screwing people over left and right to gain massive profits, and people's eyes glaze over and they ignore what you're saying. It's the leftover teenager from the high school years, and it's something we need to take into account when trying to wake people up from blindly following leaders who don't have their best interests at heart.

Part of this requires us to repossess some words. For instance, "elite." We hear of the "liberal elite" and the "Hollywood elite" all the time. Let's start talking about the "rich elite" and the "banking elite." On how these people make more in a yearly bonus than most people make in several years of hard labor... even when times are rough. Hell, especially when times are rough. How CEOs get million dollar bonuses after laying off several hundred people, even though their wages and benefits only cost around that million dollars... so there's absolutely no savings at all. Compare these people to the "Hollywood Elite" and "Professional Sports Elite" and the like. Especially to professional sports, where people run around throwing balls or hitting pucks at each other and make millions of dollars.


Acacia H. said...

There is an undercurrent of anger at the banking industry, especially for the robosigning and repossession of houses... with a number of illegal thefts of houses and the like (for instance, one person had his house threatened with repossession... despite the fact he paid cash upfront for his house and never had a mortgage with the company). Point out that Republicans did everything in their power to ensure banks wouldn't be regulated so that policies like this could run rampant.

The important thing on this is that we don't tell people how to feel about this. We don't lecture them on how this is wrong. We show how this is happening... and let them make up their own mind.


Shifting to a science-front, there's a new theory out that dinosaurs didn't die from a comet strike, but rather from sudden climate change. The theory basically suggests that the planet went from a greenhouse climate similar to what we have now and then suffered a drop in sea temperatures that caused a significant die-out of dinosaurs living in warm shallow seas, swamps, and landmasses. It's thought that this was precipitated by rises in global temperatures, resulting in polar ice caps melting.

Personally I doubt it. If greenhouse-related climate change was responsible, then some dinosaurs in the equatorial regions would have survived. The fact none did is suggestive that something more significant than planetary cooling due to changes in the Atlantic Gulf Stream... though it's entirely likely it contributed to their decline in some way.

Robert A. Howard, Tangents Reviews

David Brin said...

Robert you are right that redirecting ire at the bankers and oligarch would be a good idea. But the fox machine is already on co-opting all that. Beck rails that "democrats are the party of Wall Street". He claims that George Soros:

"...bankrolls dogmatic think tanks, has created a media propaganda empire, donated heavily to one party, has toppled foreign governments, and has an agenda to change politics in America forever."

Um... doesn't all that describe Rupert Murdoch, only ten times as much in every category? (Beck also fails to mention that the four governments that Soros helped to topple (by boosting local ground-swell movements) were all either COMMUNIST tyrannies or quasi-communist kleptocracies, replaced by democratically elected leaders.)

But the key point. You CO-OPT the anti-fat cat rage by re-labeling it and aiming it where YOU choose. And above all, keep em tuned in, getting their news from only FOx.

Look, I have tried redirecting. I point out that every major traitor in the last 50 years, who sold out America for cash, resulting in real harm and the death of US agents overseas... the Walkers, Aldrich Ames, Hanssen, and others... every single one was a republican.
Maybe I don't have a big enough pulpit. If Obama would actually FIGHT...

Dinosaurs might have been WEAKENED by secular effects, but something pretty sudden done them all in.

Acacia H. said...

Ah. But do you tell these intransigent ostriches, or do you show them? If you're telling them and telling them where to look for proof, they're going to ignore you. Instead, you need to show them what's going on.

In a way, science fiction (and regular fiction) are the perfect instruments for doing just this. Recreate the Republican Party in everything but name, and show their corruption and decadence in the stories. Modify Fox News and Murdoch so they're thinly-veiled proxies and show their own efforts (and have their actions be explained through either greed or treason, whichever makes for a more interesting story).

Indulge in the storyteller within to warn of what is going on, and let people draw conclusions after enjoying the story... and how it influences their real-life beliefs.

Rob H.

David Brin said...

Just got this from the Guys at the Colbert Report:

"I wanted you to know that the air date for our piece has moved -looks like at the earliest, it'll air Thursday January 7th, but I won't know for sure until we're back in the office on January 3rd.
I'll be in touch once we're back, with more information. "

Ah well... show biz...

sociotard said...

Redirection does not work. Pure and simple. If you point out corruption or the threat of the elites, they acknowledge that. They recognize that.

They just know it doesn't matter.

Generally what they say in reply is "yeah, but the other guy is worse" What they mean is that it doesn't matter who you vote into office, because they either cannot or will not effect changes. It doesn't matter what policies you put in place, because some elite somewhere will find a way to corruptly game the system.

Obama actually managed to persuade a lot of people that they could have hope. He persuaded them that change was possible. He has not done enough to make people think that hope was warranted. That isn't all his fault, but that doesn't make the feeling of betrayal go away.

No, if you say that "banker elites are out to get us" they'll just say "yes, but government and intellectual elites are worse, and there is no way to win when you sail between scylla and charybdis."

rewinn said...

I don't think anyone will ever ACCEPT redirection directly working on THEM. In any given conversation, those who are be-fooled will do anything to avoid admitting to your face that they were be-fooled.

But that's o.k.

Just join them in a good laugh at the way OTHER PEOPLE are fooled by the bankers ... without insisting that they admit they were one of those fooled ... and let nature take its course.

Tony Fisk said...

Net neutrality laws backed (mostly): the FCC ruling was 3-2... along party lines (*sigh!* Is there a such a thing as a non-partisan topic any more?)

Speaking of dinosaurs...

It's thought that [extinction] was precipitated by rises in global temperatures, resulting in polar ice caps melting.

Sudden rises due to a sudden influx of energy... possibly from an 11km comet travelling at 30 km/sec?

I think the real mystery is why some orders survived and some didn't. Was it just that orders with smaller sized fast breeding species were better positioned to bounce back post K-T?

Interesting NS snippets:
Infra-red solar panels (interesting idea, with accompanying critiques concerning thermodynamic issues.)

Could we see the alien woods for the trees?
I have a little shadow who goes everywhere with me,
and what may be the use of him is more than I can see!

(Has the idea been tested on a world with known boreal coverage?)

Tony Fisk said...

Oops! Infra red panel link is here

doteexpe: Inca detoxification ritual, involving chocolate.

gwern said...

> Will online advertising collapse like an over-inflated bubble? I haven't heard anybody else say this, but I think it might be the next shoe to drop. And if it does, what will happen to all that free content people are so used-to?

Paul Graham says that Yahoo used to charge and get away with obscene rates for banner ads, and avoided AdSense-like mechanisms because it would lead to a truer and lower price:

And of course that disappeared along with other skyhigh Internet advertising rates once the bubble popped in 1999/2000.

So perhaps the bubble came and went a long time ago; most prognosticators focus on purchase prices of 2.0 properties.

(And there is one subsidy that modern websites are reaping that can continue to grow almost indefinitely: user-contributions. This is your own idea - remember the Age of the Amateur?)

Also, micropayments? Laplace's Law of Succession tells me to short anyone stupid enough to invest in that old chestnut... As well push cryptocash. It was an idea worth trying the first few dozen times.

Tony Fisk said...

User contributions is interesting: speaking personally (a highly scientific sample of one!), I find I'm more willing to pay something if asked, rather than ordered.

Tim H. said...

Worthy of your attention, another plot to loot taxpayers. Seems to me that conservatism as practiced by Barry Goldwater and what we see now has the same relationship as a Peruvian chewing a coca leaf and a cokehead snorting a line.

JuhnDonn said...

Funny bit from Orwell on cognitive dissonance (courtesy of Paul Krugman blog):

In private life most people are fairly realistic. When one is making out one's weekly budget, two and two invariably make four. Politics, on the other hand, is a sort of sub-atomic or non-Euclidean word where it is quite easy for the part to be greater than the whole or for two objects to be in the same place simultaneously. Hence the contradictions and absurdities I have chronicled above, all finally traceable to a secret belief that one's political opinions, unlike the weekly budget, will not have to be tested against solid reality.

In Front of Your Nose - George Orwell

Woozle said...

micropayments: One model that may not have been tried before is the one used by Kachingle: subscribers scatter money as they visit client sites, but subscription is not required for access to content. Hence there is no annoyance-factor if you somehow get logged out of Kachingle, and no delay accessing the content while the database verifies that you have access.

(That said, I just took Kachingle off Issuepedia because nobody was using it and it wasn't worth the aesthetic hit-points. Kachingle needs to promote their service more heavily.)

dinosaurs: I thought that Death by Climate Change was the old theory, before the meteorite theory. I also thought I understood that the evidence for the meteorite theory is pretty compelling/conclusive, but I Am Not a Geologist/Paleobiologist.

Woozle said...

redirecting/co-opting: I'm not sure if the following theory is at odds with Dr.B's contention on the matter (i.e. that we should avoid disparaging those on the other end of the cultural divide as ignorant, stupid, etc. -- if I've got that right) or more orthogonal to it, but it seems to me that there's some pretty clear evidence in support of the following assertions:

1. A large chunk of America have a mentality that basically believes what they are told by their authorities, without question or analysis or caring the slightest about internal consistency, and will defend those beliefs with violence if encouraged to do so.

2. A significant portion of humanity (I think it was at least 30%) is incapable of abstract reasoning. I don't know if there is any information about the degree of overlap with the first group.

The conclusion I draw from this is that as long as the media -- especially Fox News, which gives aid and comfort to the kind of thinking described in #1, and thus is the dominant "authority" for a large percentage of Americans -- is heavily influenced (to say the least) by people whose interests are not very much in line with those of an enlightened civilization, we will not be able to get through to that portion of America.

...unless we can think of some game-changing tactic other than regaining public* control of the media.

(*by which I don't necessarily mean government control; just some means by which the vox populi will have a voice in the Fox populi.)

Dave Baker said...

Good post, as always, but your diagnosis of Europe's "mania" for leisure falls pretty flat. The typical American work week has grown almost to the point of a humanitarian crisis. I think it's reached the point where it has serious negative impacts on families and on individual mental health. At least that's my guess -- backed by anecdotal evidence only, but I'd still call it a good guess.

At any rate, their social contract encodes a different decision from ours about how to spread the benefits of a modern economy. Instead of making more money, they decided to work less. For most people in most lines of work, that strikes me as a much more rational choice than the one Americans have made.

To call it a "mania" or a sense of entitlement is a bit funny. They're entitled to what they can get, if they can make their system work, and so far they have (mostly).