With the introduction of internet the traditional business model for spreading information has been challenged. Whereas before the largest part of the efforts and the investments where spent on the distribution side (printing, storing, selling and fulfillment) the internet (aka The Large Copying Machine) has facilitated easy and cheap distribution. Scientific publishers, who traditionally operated in a closed environment where they sold packages of journals and books through an annual license to libraries, are now (often forced by the community) turning their business model upside down. In this model authors are paying for the publication service in exchange for posting in so-called ‘open access‘ journals, where access is free at the point of use (also read Jan Velterop’s blog The Parachute). In this particular case it looks like a suitable business model has been found, as this model takes advantage of the power of the internet and leads to a greater return on investment for authors (visibility) while securing revenues for the service providers (publishers).
The music and film industry are facing similar issues but have yet to find a grip on the situation; the content is more often than not available for free through peer to peer networks therefore a large part of the incentive to go to a shop and buy a cd or film has vanished. As we are digitizing vast amounts of audio-visual cultural heritage we are facing the same questions: what models can be developed that fulfill the need for broad accessibility for the public while securing a solid return on investment for owners of the material (authors, producers, directors, etc).
Some, like Chris Anderson in his soon to be released new bookâ€™ Freeâ€™ build an entire economic theory based on the notion that freeâ€™ will be the leading model for media due to the vanishing marginal costs of distribution via the internet. The new model that rises from the ashes will be a model where the content or service is free, at least for the user. Google of course is a great example of a company that has turned â€˜freeâ€™ to itâ€™s advantage; the service is free to users while advertisers are the paying customers. At the core a beautiful system as the more you use the service the more revenue it generates for the service provider. Keeping the attention of the viewer is key in the â€˜economy of abundanceâ€™, so you better make sure the service you develop is so appealing that users get hooked on it. In fact, if this becomes the case, there may be an opportunity to upsell them from freeloaders to paying customers by adding a an additional layer of services or privileges. This freemium model (term coined by venture capitalist Fred Wilson) has quickly become the leading model for web 2.0 companies like Flicrk and Linkedin. Interesting fact is that the rule of thumb is that the 1% of paying users supports the rest.
The crux of developing business models in this economy of abundance, where content is free, seems to be to tap into values that people are willing to pay for. And those values may not be the same as in the old days where content was king. Kevin Kelly calls them â€˜generativesâ€™:
â€˜â€™A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold.” Think â€˜trustâ€™ or â€˜personalisationâ€™. In his blog â€˜Better than freeâ€™ Kevin distiguishes eight of them.
So how does this translate to our audiovisual digitization adventure? Will the specific characteristics of cultural heritage lend itself to open content models like advertisements (google just released a beta service of video advertisements: Adsense for Video ), Freemium services or even community supported businessmodels?
We are hosting a workshop on this topic during the Economies of the Commons conference on saturday April 12 2008 in Amsterdam to investigate the options.