Business Model

A Business Model for the Digital Age – Part I

I buy the computer, I pay the electricity bill, I pay for my broadband connection, I pay for the ink in my printer, et al.

How is any of the stuff I get online free?

The existing physical distribution channels have been bought and paid for – it’s time to move on. Think Tramp Steamer Vs Air Freight Vs Digital Delivery.

Now, if my participation on the network becomes my participation in the network then I am either compensated with a monetary reward or a reduced price to access the content. Simple economics- you scratch my back, I scratch yours.

A Business Model for the Digital Age – Part II

The worst thing the Entertainment industry can do is hand over the keys
to their content to the IT industry through DRM.

BT in the UK are going completely IP on their network infrastructure. So you get a double whammy when the Entertainment industry then has to have that content delivered by the Telecoms industry.

Telecoms and IT massively outweigh the Entertainment industry economically. Add in the fact that users are creating their own Digital Online Content and seeking their own methods of distribution – YouTube, Video.Google, WordPress, Blogger, FlickrPhotobucket, etc. . Triple whammy.

And then you have the likes of Craigslist and Google looking to grab the advertising revenue – the oxygen of most of the commercial Entertainment industry – then Whamomania!

What I lack is time not content. Locking the content down with DRM makes you beholden to the software industry and if it gets cracked, it’s your service that has to come off the air, not theirs. And if the consumer has to patch their playout platform then it’s you they blame, not the IT industry, if that patch breaks their platform or their content. A lose-lose scenario.

What I need is Pathfinders not Gatekeepers. Get your content out there and add value on your own site.

Make me come to you and then give me a reason to spend my money. Just because I have the content doesn’t mean I won’t want to buy a physical reproduction of it – either as a present or because I want to.

Give me a reason to come to your site and then add to my knowledge – I’ll keep coming back – cash in hand!

A Business Model for the Digital Age – Part III

The question facing the Entertainment industry is quite simple –  lock down content through DRM and punish everyone by default or keep content free from a technical restriction and punish those infringing on a corporate scale.

Just because you technologically can doesn’t necessarily mean you should. Technically you can seek to enforce proper speed limits  – and save lives – by getting into the engine in every car, but just try it! People accept a certain element of control, with speed limits and speed cameras, but it would be considered an assault on personal freedom to take the ultimate decision from the person behind the wheel. And this is with real lives and real consequences.

You have to have a massive mistrust of the consumer to not believe that ultimately they know the difference between right and wrong. In the 1980s you could get a copy of Microsoft Office with viral ease. Today all the same people happily hand over their cash to Microsoft by the truck load. Nobody ended up inherently believing that they had a right to free Microsoft Office products for life.

Why the Entertainment industry thinks that current crop of digitally-savvy, computer-literate consumers will end up believing that they will have a right to free content forever baffles me.

The way to approach this area is to follow Nolan’s Stages of Growth model: Initiation – Contagion – Control – Integration – Data Administration(read commercialisation) – Maturity

We are at the beginning of a new age and people just want to play and see how far they can stretch their creative muscles.

The time for moving further along the growth model comes when people start to realise that the tools they are playing with are more than just mere toys but commercially applicable components and outputs.

Relax people – when the time comes everyone will make lots of money. The real smart move now is to get your stuff out there for people to play with. There a whole new generation who just want to see where they can go with this digital idea – and most of them are doing it just for the sake of doing it. There is no point in trying to map your existing business models on to their behaviour. They’re just having fun!

A Business Model for the Digital Age – Part IV

Digital technologies have lowered the barriers to entry, and barriers of access, to content. Consumer is Content Creator is Distributor is Medium. A new opportunity has been born.

The market to produce and also to consume has been reshaped. People are becoming more used to having the opportunity to have an input, both into the community around and the feedback loop surrounding the content.

All Entertainment industry output is scatter gun – but only a percentage of it gets watched/read and then it becomes disposable – but now with a digital format, digital distribution, digital platform and digital cognoscenti the content can have a new lifespan/shelflife.

With this comes a new business model, new approach to rights, new approach to commissioning and new approach to royalties. This will not make a silk purse from a sow’s ear – in the end the market will still decide what works – it just means there will be more room for more voices and more tastes.

The key to enabling any of this is to open a two-way channel between the content creator and the customer. The customer can become part of the creative process as well and being able to reward them for this input is important.

Locking your content down and treating the consumer as a passive object to be handed the final product is anathema to the digital age. Be brave and build alliances with the consumer – the rewards are there for those who embrace this new approach.

A Business Model for the Digital Age – Part V

Show me the money!

Okay – so the question is – how to do this?

Strategy  – DRM content – but DRM with a difference – the user creates the DRM, which is tied to their account, which automatically verifies any Digital Online Content they contribute as well as any content they purchase from you. You get buy in from you consumer/content creator. They have a vested interest in DRM as it assigns rights to their content both ways. It is also DRM lite – the content is encrypted end-to-end to ensure data integrity – but that’s it.

Pricing
– Delivering content: Digital only costs less than digital+physical which costs less than digital+physical+backup. Receiving content: Rights only is paid less for than rights+distribution which is paid less for than rights+distribution+media.

Market
– Let the market decide for itself. Don’t prejudge or target. Just get your content out there and get a community involved.

Implementation – Add value. If your not adding value then you will fail. Insist on quality and enable expert involvement. Get buy in from the community and they will become both self-enforcing and protective of your product/service.

Execution – Treat your marketplace with respect and acknowledge that it’s their money, time and effort that makes your business a success. Let them know that they are the ultimate owners of the content and the responsibility is as much theirs as yours to make it a success. You will have an army of evangelists.

Regulation – Get the community on your side and they will regulate for you. Give them buy in and they will feel a sense of ownership. Then give them ownership.

Enforcement – Leave it up to the community. Just as the Free/Libre/Open Source Software community have more eyeballs looking for bugs, you will have more eyeballs then you could ever dream of looking to enforce and protect your investment in them and their investment in you.

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