Surprise: Paywalls Cause Massive Falls In Number Of Visitors - And Boost Competitors

As Techdirt has been pointing out for years, newspaper paywalls make no sense. By stopping people from reading your stories unless they have a subscription, you diminish your influence in the media world, drastically reduce the number of readers and thus make it much harder to generate revenue from them. Paywalls are also a gift to your competitors, as this story in the Guardian indicates: 

On Techdirt.

Publishers Show Yet Again How To Make Money By Reducing The Price To Zero

One of the slogans of the copyright industries is that you can't make money from giving things away. Unfortunately for them, examples just keep coming up showing that's simply not true. Techdirt wrote about the interesting case of the London Evening Standard back in 2009, shortly after its new owner decided to turn it from a (loss-making) paid-for newspaper, into one that was given away. So, three years later, how did that work out?: 

On Techdirt.

Another Billion-Dollar Open Source Company: Instagram

Earlier this week I wrote about the first company based on open source to reach a turnover of one billion dollars. But of course, there are lots of multi-billion dollar turnover companies that are based on open source - Google, Facebook, Twitter etc. - it's just that they don't make money off it directly.

On Open Enterprise blog.

How Do We Know That Piracy Isn't Really A Big Issue? Because Media Companies Still Haven't Needed To Change As A Result Of It

One of the positive outcomes of the debate that has raged around SOPA/PIPA is that more people have looked at the facts, rather than listened to the rhetoric, surrounding piracy. In particular, the copyright industries' hitherto unchallenged claim that piracy is destroying their business is finally being challenged – not least by reports like "The Sky is Rising" that consolidate industry figures to show that things are really looking pretty good across the board. 

On Techdirt.

Getting It: In A World Of Digital Abundance, Sell The Scarcities

A recurrent refrain from the copyright industries is that you can't make money from digital goods if they are freely available online. To which Techdirt has been pointing out for years that not only are there many ways of doing precisely that, but lots of people are already coining it as a result. One of the Guardian's columnists has noticed one of them - that in a world of digital abundance, you can make money by selling associated scarcities: 

On Techdirt.

EU Commissioner Kroes: Copyright Is 'A Tool To Punish And Withhold'; New Business Models, Not More Enforcement Needed

Neelie Kroes is that rare thing: a politician who actually seems to understand digital technologies. Before she became the European Commissioner for Digital Agenda, her current post, she was European Commissioner for Competition, and in that capacity made a speech about open standards in 2008 that included the following interesting statements: 

On Techdirt.

E-Publishing The Chinese Way: Very Fast And Very Cheap

Increasingly, publishers are joining the music and film industries in bemoaning the effects of piracy on the sales of digital products – and some are even starting to sue people for alleged copyright infringement (because that has worked so well elsewhere.) Perhaps they should take a look at what is happening in China: instead of whining about e-book sales "lost" to piracy, publishers there have come up with a business model that embraces the possibilities of the Internet: 

On Techdirt.

WIPO Article About Manga Piracy Describes Publishers' Failure To Meet Demand In Graphic Detail

Somehow you rather expect the head of the WIPO to come out with a statement on the potential benefits of patenting the World Wide Web. But you probably don't look to the WIPO website to carry stuff like this: 

On Techdirt.

Dishing the Dirt on Me and Techdirt

I'm sure all my readers know about Techdirt:

Started in 1997 by Floor64 founder Mike Masnick and then growing into a group blogging effort, the Techdirt blog uses a proven economic framework to analyze and offer insight into news stories about changes in government policy, technology and legal issues that affect companies ability to innovate and grow.

The dynamic and interactive community of Techdirt readers often comment on the addictive quality of the content on the site, a feeling supported by the blog’s ~800,000 RSS subscribers, 45,000+ posts, 600,000+ comments and a consistent Technorati Technology Top 100 rating.

(Yes, 45,000+ posts in 14 years: makes me look positively un-serious....)

One reason I'm pretty sure anyone who follows my microblogs will know about Techdirt is that I tend to post a huge number of links to its stories. Indeed, sometimes I think it would be just easier to hook the Techdirt RSS feed in directly and save myself all the trouble of doing it manually.

That's an indication of how closely aligned Techdirt is with much of the key stuff that I'm interested in: copyright, patents, digital rights, business models, digital abundance etc. Techdirt not only offers extremely knowledgeable analysis that you simply won't find elsewhere, it makes it all freely available – thus offering a good example of precisely the kind of models based around giving stuff away that it discusses and advocates.

Mike has already run some of my pieces there, and I'm delighted that he's asked me to contribute stories to the site on a regular basis. One knock-on effect will probably be fewer standalone posts on this blog, but overall the number of posts I write will probably rise. As for my writing on other titles, I'll post links to everything here, which will remain the central reference point in that respect.

Given this move, now seems a good time to produce a formal registry of interests, which I have made a separate post for easy reference.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Now That's What I call (21st-Century) Music

Thanks to the good offices of @nzJayZee, I have just been sent to this musician's rather heartwarming Web site, wherein he says the following:

There are lots of ways to get music from me, whether you’re a cyborg from the future with an iPod in your skull, or a little old granny in Idaho with nothing but an antique “CD Player.” Lots of it is freely available depending on how technical you are – you can get all of it for free if you really try. But please remember I do make a living this way, so if you like what you hear I’d certainly appreciate you throwing a little payment or donation my way. If you can’t afford it, for goodness sake please send copies of everything to all of your friends.

Wow - kudos to Jonathon Coulton for being such a wonderful example of what it means to be a musician in the 21st century.  Long may he prosper.

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Another Business Model for Art: eBay

One of the things that I and others like to emphasise is that investigating new business models is crucial for the survival of art, artists and the companies that work with them. A signal failure to do that has led to the current excesses by the content industries, which have instead become fixated on increased enforcement of copyright laws that are simply unenforceable in the digital age.

Against that background, it's always heartening to hear about artists trying out new things - like this:

Hello, my name is Daniel and I make songs. You can see my stuff by typing "Dan Bull" into YouTube. I've decided to find out what my music is really worth so I'm sticking myself on eBay. The winning bidder will receive:

One song on any topic of your choice, written, performed and produced by Dan Bull. Duration: 2.30 - 3.30 approx. I will liaise with you via e-mail if there any specific details you wish to include in the song. You will be free to use and redistribute this song in any way you wish, however I reserve the right to do the same. The song will be delivered to you in MP3 format within 14 days of the winning bid.

Get bidding now, because this may never happen again. Love from Dan :) x

Well, I actually think it might well happen again - especially if people bid enough money for Mr Bull's song. This patronage/auction model clearly generalises to other forms of creativity, and is flexible enough to encompass all levels of production, from rank amateurs to the biggest names. Interesting stuff. (Via @tdobson.)

Re-inventing Publishing for the Digital Age

As a former publisher (no, really) I am fascinated by, and sympathetic to, efforts to come up with new models for profitable publishing in the age of digital abundance. Clearly, part of that must include making digital text available for free (because if you don't do it, someone else will); the question is, what's the best way of doing that?

Against that background, I was intrigued to come across something calling itself OpenBook Publishers:

Open Book is an independent publisher run by academics for academics and for the readers of academic work. We are a Social Enterprise (CIC) company that publishes high quality, peer-reviewed monographs in the humanities and social sciences and ensures the widest possible distribution of its publications.

Open Book makes the whole publishing process in academia fairer, swifter and more affordable by utilizing three important technological advances: the digital medium, the Internet and print-on-demand.

Open Book:

* Provides free online access to read digital versions of all publications.

* Retails high quality paperback editions at around £12, and hardback editions at around £25.

* Enables printable digital versions of both the entire book and individual book chapters to be downloaded online.

* Allows authors to maintain copyright on their own works.

* Makes publication decisions on academic merit alone through a rigorous peer review and editorial process.

* Requires no publication payment by the author.

* Speeds up the refereeing and printing processes.

That sounds pretty promising, so I thought I'd explore a title that seemed rather appropriate in the context: Privilege and Property. Essays on the History of Copyright:

What can and can’t be copied is a matter of law, but also of aesthetics, culture, and economics. The act of copying, and the creation and transaction of rights relating to it, evokes fundamental notions of communication and censorship, of authorship and ownership – of privilege and property.

Sounds just up my street. Interestingly, it uses print on demand for its analogue copies:

Open Book Publishers uses print on demand technology, so your books(s) will be printed rapidly once we have received your order.

That seems absolutely right to me - no huge cost upfront, no bulky stock to store, and lower cover prices as a result. But I'd prefer to take a look at the free digital version, if I may; so where's that "printable digital versions of both the entire book and individual book chapters to be downloaded online"?

Well, it's there as a PDF - but it costs £4.95 - not quite what I was expecting. It's true that you can read the title on Google Books, but it's a painful experience.

But wait, it says here:

Privilege and Property. Essays on the History of Copyright edited by Ronan Deazley, Martin Kretschmer and Lionel Bently is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 2.0 UK: England & Wales License.

Which means that once I - or anyone - has bought a copy of the PDF, it can be freely shared, subject to those conditions. Which means that it *will* be available online, sooner or later (assuming it's worth reading, and hence sharing), and that all the search engines will find it. So why slow down that process of discoverability by forcing someone to buy one copy? Is it really worth losing all that free marketing and visibility in the intervening days or weeks for the sake of £4.95?

This is a perfect example of well-meaning venture that hasn't quite thought through what publishing means today, and is still penny wise but pound foolish about those digital downloads....

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Could You Adopt a Hacking Business Model?

Once more there is a lot of heated discussion about what constitutes a “real” open source business model – that is, one that remains true to the spirit of open source, and doesn't just use it as a trendy badge to attract customers. But such business models address only a tiny part of running a company – how it generates money. What about the many other aspects of a firm?

That's precisely what The Hacking Business Model seeks to spell out.

On Open Enterprise blog.

Why No Billion-Dollar Open Source Companies?

Last week, I met up with Jim Whitehurst, Red Hat's CEO. He gave a very fluent presentation to a group of journalists that ran through Red Hat's business model, and explained why – unsurprisingly – he was optimistic about his company's future growth.

On Open Enterprise blog.

When We Can Copy *Analogue* Artefacts...

The recent battle over the Digital Economy Bill has focussed renewed attention on the area of copying digital artefacts – music and films, for example. It's a subject I've started writing and speaking about more and more; for example, here are some thoughts on why free software's success is crucially important in this area.

But I have confession to make: that article is a bit of a cop-out. I didn't address the even bigger issue of what happens when we can copy *analogue* artefacts. Yup, you read that aright: the time is fast approaching when we will be able to download a chair or a bicycle and just print it out. Clearly, this will make the idea of *analogue* scarcity rather more complex (although energy concerns will always place a lower bound on the cost of making such copies).

People have only just begun thinking about the implications of this shift – not least because it's so mind-boggling, and will make the current brouhaha over digital copying look like the proverbial vicar's tea party. But the first works grappling with this have started emerging; here's one of them:

Throughout recorded history most people who have wanted a household article have bought or bartered it from someone else – in past times an artisan or trader, more recently a seller of mass-produced products. With few exceptions (such as some clothing) it is rare that any of us make such articles for ourselves these days. That may soon change. Thirty years ago only dedicated enthusiasts would print their own photographs or edit and reproduce their own newsletters. The advent of the home computer, and in particular of low-cost high-quality printers, has now made such things simple and commonplace. Recent developments in producing affordable and hobbyist-friendly printers that can reproduce three-dimensional rather than just flat objects may mean that printing a toast-rack or a comb becomes as easy as printing a birthday card.

Any lawyer familiar with copyright and trade mark law can see, however, that printing one’s own birthday cards could, depending on the source and nature of the images used, infringe a number of intellectual property (IP) rights. Tempting as it may be to copy and use a picture of a well-known cartoon character, the resulting cards would very likely be an infringement of the copyright and perhaps trade marks owned by the relevant rights holder. But what if someone uses a printer capable of producing a mobile phone cover bearing such an image? Or reproducing a distinctively-styled piece of kitchenware? What about printing out a spare wing-mirror mount for your car? Do these uses infringe IP rights?

In the first part of this paper, we review the history of 3D printing and describe recent developments, including a project initiated by one of the authors to bring such printers into the home. We then examine the IP implications of personal 3D printing with particular reference to the bundle of rights that would typically be associated with a product that might be copied.

It finishes with the following interesting observations:

rights holders are likely to be concerned if personal 3D printers become widespread and effective enough to impinge on commercial exploitation of their IP rights. Indications as to how they might react can be seen from the recent history of music copyright infringement via the Internet. Both technical and legal responses have been tried, including the use of Digital Rights Management (DRM) technology and proposals to strengthen legislative measures. Will these be applied to restrict low-cost 3D printing?

Technical measures would quickly founder on the problem that, unlike music file-sharing, personal 3D printing does not produce an exact copy that can be digitally signed or protected with DRM. It is the sharing of (as seen, legitimately) reverse-engineered designs that is the issue, not original design documents. Although scanners and printers have incorporated anti-forgery measures to detect attempts to duplicate banknotes, such techniques are very specifically targeted at one well-defined item.1 Whist commercially-produced low-cost 3D printers might be configured to only use authorised DRM-protected 3DPDFs digitally signed by the rights holder, such measures would seriously constrain their usefulness and make them unattractive compared to open-source 3D printers.

It is worth noting, however, that this same point indicates that it may be some time before the level of detail and accuracy attainable by personal 3D printers becomes sufficient to seriously impinge upon the market for quality products, as distinct from utilitarian goods or spare parts (the reproduction of which, as has been noted, is in any case less likely to infringe IP rights.) Unlike digital audio and video copying, which produces perfect copies, copying of articles via 3D printing will be readily distinguishable from the original.

It concludes:

The most optimistic evangelist of low-cost 3D printing would probably admit that the household domestic 3D printer is years, if not decades, from widespread use. Its impact will be gradual, as unlike file-shared MP3s it will not immediately provide for the reproduction of faithful copies. Rather, as its ease-of-use, fidelity and range of materials increases, so will its attractiveness and range of applications. This should, at least, allow for a more measured consideration of the legal issues that will arise from such use. In the longer term, personal 3D printers may conceivably lead to radical changes in the nature of the manufacturing economy; the IP implications of such further developments have so far been imagined only in science fiction.

But make no mistake: it's coming....

Follow me @glynmoody on Twitter or identi.ca.

Saving Clay Shirky

I am not an unthinking fan of everything Clay Shirky says, but I do find much of the stuff he writes thought provoking. In particular, I found his recent essay, “The Collapse of Complex Business Models” really spot-on in analysing the central problem faced by certain industries.

But not everyone seems to agree judging by this post:

That evening I reread the essay more closely, and the closer I read it, the less I liked it. At sunrise the essay had been an entertaining set of anecdotes built around an intriguing core idea; by sunset it had wilted, revealed as an entertaining set of anecdotes pulled from all over the map in the vain hope that there might, somewhere, be a theme that would hold them together.

The point about Shirky's use of anecdote is fair enough, although he's hardly the only person to adopt this rhetorical trick. Most "big idea" books follow the same pattern of getting their message across through easily-digested stories (but then, so does the Bible).

However, I did find problematic the following section of the critique:

Aside: here is Clay Shirky writing about YouTube:

The most watched minute of video made in the last five years shows baby Charlie biting his brother’s finger. (Twice!)

which is, as of this date, no longer true. The most watched video made in the last five years shows Lady Gaga and a group of hired models dancing on an elaborate set in a video that embodies complex production methods, that is part of the Vevo channel (a joint venture between Google and major record labels) and that features product placements by Nemiroff Vodka, Parrot by Starck, Carerra sunglasses, and HP Envy [link]. Now there is a complex business model.

As a further aside, analysts Visible Measures add in all copies of a video together with spoofs and pastiches, and their list of the top fifteen videos is as follows.

1. Soulja Boy: Crank Dat (music video: Universal) - 722,438,268
2. Twilight Saga: New Moon (film: Summit Entertainment) - 639,966,996
3. Beyonce: Single Ladies (music video: Sony) - 522,039,429
4. Michael Jackson: Thriller (music video: Epic Records) - 443,535,722
5. The Gummy Bear Song (music video: Gummibear International) - 394,327,606
6. Lady Gaga: Poker Face (music video: Universal) - 374,606,128
7. Lady Gaga: Bad Romance (music video: Universal) - 360,020,327
8. TImbaland: Apologize (music video: Mosley Music Group) - 355,404,824
9. Susan Boyle: Britain’s Got Talent (TV: Freemantle/ITV) - 347,670,927
10. Twilight (film: Summit Entertainment) - 343,969,063
11. Modern Warfare 2 (video game: Activision) - 339,913,412
12. Jeff Dunham: Achmed the Dead Terrorist (TV) - 328,891,308
13. Mariah Carey: Touch My Body (music video: Universal) - 324,057,568
14. Charlie Bit My Finger Again (user generated) - 288,666,331
15. Michael Jackson: Beat It (music video: Records) - 286,279,009

It seems that complexity has its place after all.

The first point is fair enough, but the following section actually undermines it. For notice that this long, impressive list counts "copies of a video together with spoofs and pastiches" - in other words, *precisely* the kind of stuff that has nothing to do with complex production. So the figures actually include all the stuff that Shirky is suggesting as an alternative to traditional production - hardly a valid way of arguing against him.

That's not the only place where the post is incorrect. Later on, it says:

Back to his Charlie story again:

Expensive bits of video made in complex ways now compete with cheap bits made in simple ways. “Charlie Bit My Finger” was made by amateurs, in one take, with a lousy camera. No professionals were involved in selecting or editing or distributing it. Not one dime changed hands anywhere between creator, host, and viewers. A world where that is the kind of thing that just happens from time to time is a world where complexity is neither an absolute requirement nor an automatic advantage.

But Charlie didn’t “just happen” because Charlie is not the only story here. As YouTube became a phenomenon, those 174 million-and-counting views could only be delivered by acres of these:

which then shows us a picture of serried ranks of Google hardware in Google server farms.

It's true that the YouTube video was indeed held on these systems; it is not true "those 174 million-and-counting views could only be delivered by acres" of such massive, organised server farms. Unstructured P2P systems are not only capable of delivering this kind of volume, they have been doing so for over a decade, often under the radar of the established companies, which only sit up and notice when some of their stuff starts being shared across them.

In a way, the fact that this could be overlooked is a neat summary of what's going on here: the changes Shirky describes have already happened, but not everyone has noticed.

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An Old Train of Thought

An analogy I and others frequently use in discussing the media industries' refusal to consider new business models is that of the transition to the motor car, particularly with reference to obsolete accoutrements for horse carriages. But I've just read an article from TorrentFreak that links to a rather interesting Wikipedia page about the Locomotive Act - the one that required a person to walk in front of a car with a red flag. It had this interesting paragraph:

Under pressure from motor car enthusiasts, including Coventry manufacturer Harry J. Lawson, the government introduced the Locomotives on Highways Act 1896, which became known as The Emancipation Act, which defined a new category of vehicle light locomotives, which were vehicles under 3 tons unladen weight. These vehicles were exempt from the 3 crew member rule, and were subject to the higher 14 mph (22 km/h) speed limit.[5] In celebration of the Emancipation Act Lawson organised the first London to Brighton run.

The relaxation of usage restrictions eased the way for the development of the British motor industry.

Nearly one and a half centuries later the motoring journalist and author L. J. K. Setright speculated that the Locomotive Acts were put in place to suppress motor car development in the United Kingdom, because of the financial interests that some members of government and other establishment personalities had in the development and viability of the railway industry.

So maybe a better analogy is motor cars and railways....

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Copyright Industries Very Nearly Get It

They're getting there:

Copyright holders on Wednesday acknowledged they have done a poor job of countering the “anti-copyright” lobby and demonstrating the creative community’s value to the world.

During the second day of the 9-10 June International Confederation of Societies of Authors and Composers’ (CISAC) World Copyright Summit here, some content creators also lamented that instead of fighting for compensation with the advent of new technologies, they fought the technology - like the VCR - itself.

But then they spoil it with stuff like this:

”The enemies of copyright have really done a good job at creating the false premise that the interest of copyright holders and the interest of society as a whole are antagonistic, and they always talk about the need for balance,” said Fritz Attaway, executive vice president and senior policy adviser for the Motion Picture Association of America. “We have got to do a better job” at attempting approaches at copyright protection “in a way that we get paid but also that consumers can access our works,” he added.

So...balance is bad, eh? And still looking for copyright *protection*, instead of working on the business models.

And then there's this:

Although Israelite made the comparison that if people were stealing computers from stores en masse, the technology industry would be up in arms, Shapiro argued that it is not the same, and that copyright and intellectual property rights are different than “real” property - a statement that received groans from the rights holder-friendly audience. “That’s hurting your case because you’re being rejected by anyone under 25 who is saying, ‘these guys are full of it,’” Shapiro continued.

OK, I was wrong: they *still* don't get it.

And Now for Something Completely Different...

Instead of suing people who upload your content on YouTube, you put up *better-quality* copies, and try to sell something off the back of them:

For 3 years you YouTubers have been ripping us off, taking tens of thousands of our videos and putting them on YouTube. Now the tables are turned. It's time for us to take matters into our own hands.

We know who you are, we know where you live and we could come after you in ways too horrible to tell. But being the extraordinarily nice chaps we are, we've figured a better way to get our own back: We've launched our own Monty Python channel on YouTube.

No more of those crap quality videos you've been posting. We're giving you the real thing - HQ videos delivered straight from our vault.

What's more, we're taking our most viewed clips and uploading brand new HQ versions. And what's even more, we're letting you see absolutely everything for free. So there!

But we want something in return.

None of your driveling, mindless comments. Instead, we want you to click on the links, buy our movies & TV shows and soften our pain and disgust at being ripped off all these years.

It's still a bit limited, at least they're trying.

Open Source Business Does Not Scale

At first sight, the findings of The 451 Group’s latest CAOS report, “Open Source is Not a Business Model“ might seem to be terrible news for open source....

On Open Enterprise blog.