Open Content Business models

Thursday, September 18th, 2008

Last week we were asked to give a presentation at the ‘Ilovebusinessmodels‘ conference on the subject of Open Content in Utrecht- The Netherlands. A good overview of the day, including the presentation of Alex ‘Dr Businessmodel’ Osterwalder can be found at Frankwatching  (in Dutch). The audience consisted of specialists covering the complete spectrum of the media industry, varying from music publishers, magazine editors, filmproducers, even a good representation from the archive community. A decent crowd to test out some ideas we developed over the past couple of months.

Business model canvas

Our pitch was that as the internet makes copying so easy and is close to becoming ubiquitous, the business model of the future should clearly not be focussed on the low added value of distribution, but on something else. So what else? Chris Anderson has already provided some strong arguments that content, or for that matter anything for which the variable costs of distribution is close to zero, will available for free in the very near future. Free as in free lunch? No, Anderson argues, ‘it doesn’t mean it’s being given away; just that someone else is picking up the tab.’ Which means that it will not be the end user who pays, but entities that have an interest in the behaviour of the end user, very often advertisers but increasingly also service providers that use open api’s. Not surprisingly, the advertiser model came up in several of the presentations that day. Someone in the audience rightfully remarked that it is hard to believe that a multi-billion dollar media industry can be saved solely by advertisement budgets! While it is true that these budgets still increase and that internet ads show a fairly sharp increase I fully agree with this remark. We have to look for the solution elsewhere as well.

First of all, content providers should deeply realise (again) that the media industry is very literally a ‘medium’ between someone who creates and someone who consumes (also read Clay Shirky ) for more on this subject). Because we live in an imperfect world we need service providers to connect the two, gift-wrap it and make the delivery. In this context the internet should be recognized as an incredibly efficient distribution system providing a new problem, or opportunity as you like, of abundance. This abundance is exactly where we should look for our future business model.

To investigate this we mashed up the ideas put forward by Kevin Kelly in his remarkable blogpost ‘Better than Free’ with the business model canvas developed by Dr Alexander Osterwalder (check out his blog). Kelly argues that when copies are free, you need to sell what cannot be copied. He provides 9 ‘generatives’, psychological drivers, that if applied well will make people pay for something that is also available for free. We put this theory to the test using Osterwalders businessmodel canvas and looked at example like Hulu, Big Champaign, Radiohead and others to see if the theory would hold out against reality.

The bottom line here was that certain generatives like ‘authenticity’ and ‘immediacy’ are perhaps still too ambiguous and certain drivers like ‘convenience’ should probably be added, there is certainly enough here to continue our investigation. And that’s exactly what we are going to do. Because Open Content business models are the key to an environment where social, cultural and economic value can happily co-exist.