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The Bookcase and the Laptop:
Monetizing Content in the Post-Industrial Era |
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5 April 2004 |
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With manufacturing comes excess and with excess comes
economics, telling us how to save ourselves from our all
too human tendency to reproduce things like crazy. But now
that the computer has introduced the ultimate manufacturing
machine, how can the content industry survive based on the
economics of finite supply and demand? Sources as diverse
as Reason
Magazine,
the artist formerly known as Prince and
OneSource point the way towards a post-industrial model
for building premium content value that moves away from
mass production and towards creating ever-larger presences
of unique information and experiences. |
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Almost equal
measures of courage and disgust overcame me this past weekend
as I finally took on a major rearrangement of our family room,
digging in to lug around furniture and equipment and wash away
dust bunnies for the better part of a day. The first step was
to stack up hundreds of books in another room for further
analysis, while an almost equal number of videotapes and DVDs
were slotted in to their very own bookcase for the first time,
having been squirreled away in any number of random niches as
they collected through the years. It was a rather impressive
sight, all of those smooth cases and interesting labels on
containers for movies that for the most part we've seen but
once or twice. How did we collect all of these films?
Manufacturing made it happen. Mass production of consumer goods
allowed us to build a massive collection of content that would
have been the envy of many princes and potentates before the
Industrial Revolution. Laws of supply and demand were
enshrined in economics to codify how to make money with
manufactured goods, making it possible for clever marketers to
cater to our thirst for consumer items cost-effectively -
including content.
But there on the other side of the family
room is my portable computer, a sleek little notebook-sized
gizmo that has stood content economics on its often-questioned
head. Through it I can access a virtually infinite supply of
content via a distribution technology with effectively
unlimited bandwidth. With cheap computers and the broadband
Internet content has been untethered from the economics of
goods manufacturing. I may own licensing rights to view content
and I may be willing to pay for quality control and production
values in what I experience via this device, but in this
environment physical ownership is for the most part rendered
moot. When there is no effective manufacturing limit - any
number of identical copies can be created at any time in
perfect original condition by any number of agents in any
number of locations - basic economics tells us that there's a
pricing problem to be addressed. Yet most publishers and media
producers still assume that the mass manufacturing-based
pricing model should rule their production operations. Their
solution: flood saturated markets with even more
mass-manufactured goods appealing to even broader
least-common-denominator audiences. Oops. Guess that
doesn't work very well.
Bill Gates recognized recently that even computer
hardware was moving towards almost free status in the
"post-industrial" era - as will most goods whose unique value
relies on easily managed reproduction processes.
How do content producers survive and thrive outside of
traditional manufacturing-based economic models? Here are a few
examples of how content value can be the basis for a solid and
growing industry using new models for supply and demand:
- Decrease content ubiquity by creating content
uniqueness. In an era of electronic reproduction,
"limited edition" is an almost meaningless concept in terms
of the traditional production process. This is why digital
rights management is largely disliked: it creates artificial
scarceness. Reason Magazine recently released a personalized
cover for each of its 40,000 magazine recipients,
according to The New York Times - including a satellite
photo of each of their homes. This version of "mass
personalization" is still based on mass production at a
central source, but with no difference in distribution costs
it's a model that can be expanded both in central services
and desktop services. Publishing to date in large part has
used technology to distance itself from individuals. Now it
must use technology to answer the question "What can you do
for me that no one else can" far more effectively.
- Allow customers to create and repackage content with
its own unique value. DRM will become the darling of
content purchasers when it allows them to create a true
ownership scenario that motivates them to apply true
personalization to their content goods. Nobody cares about
protecting someone else's near-zero cost goods; but allow the
consumer to do things with that content that makes it their
own and they will be able to create something that has true
personal value - "supply of one", if you will. Being able to
protect one's own goods in a marketplace will be respected by
consumers. In this scenario, consumers may come to PREFER
rights-protected versions of content, using DRM to define how
they want to relate to the world with it. As the artist
(formerly known as) Prince
demonstrated recently, rights-protected content can also
be used to engage in social experiences not easily replicated
without the rights afforded by club (licensing) membership.
- Concentrate on quality control appreciated by specific
clients and individuals. Quality assurance is a
manufacturing concept, but the ability of computer networks
to distribute processing virtually anywhere in the world
opens the opportunity to unlink the QA concept from any
specific manufacturing process. Premium content aggregators,
including news organizations, have achieved this to some
degree in their content collections, but since their revenues
are based largely on content licensing revenues the QA
process is largely ignored as a standalone revenue
opportunity. Suppliers such as OneSource are
focusing on quality control in specific market niches [WEBLOG],
but this model can be extended to leverage quality control
assets having unique perceptions and abilities to service
very narrow interests - down to an interest of one client or
individual. "We make it right for you, regardless of where it
came from" is a concept that quality assurance functions can
break out into a wide range of interesting business models.
All of this echoes back to Shore's
definition of content: information and experiences created by
individuals and institutions for audiences in venues that they
value. As much as I love the experience of books and movies
pressing down on the floor beams of my family room, it's the
experience of the content and not its mass-manufactured
container that I value most. Life is in short supply for the
experiences that we demand of it. Content producers: help us to
make the most out of life.
-
John Blossom
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