Continuing the ramble in open spaces amidst walled gardens

Cory pointed me towards this article in the New York Times, headlined Record Labels Contemplate Unrestricted Digital Music. [An aside: The retarded hippie in me just cannot comprehend the use of the word “contemplate” in a context where “navel” and “lint” are absent…]

Where was I? Oh yes, the New York Times article. Here are a few snippets from there:

Publicly, music company executives say their systems for limiting copies are a way to fairly compensate artists and other copyright holders who contribute to the creation of music.

But privately, there are signs of a new appreciation in the industry for unrestricted copies, which could be sold as singles or through subscription services or made freely available on Internet sites that support advertising.

The EMI Group said last week that it would offer free streaming music on, the leading Web site and search engine in China, where 90 percent of music is pirated. EMI and Baidu also agreed to explore developing advertising-supported music download services. This summer EMI licensed its recording to Qtrax, an ad-supported music distribution service.

I think there are two things here worth observing:

One, ad-based selling of singles is not as outrageous as it sounds. Ad-based selling of anything doesn’t sound that outrageous. Just look at Google. There is something Because-Of-Rather-Than-With about it that makes the model attractive. I can get something for free or at a reduced price, if I rent my eyeballs out. [In fact that is what I expected the iPhone to do; like any other handset, I can get it free or subsidised from a lock-in provider, or I can pay the unsubsidised price. But what do I know?]
Two, look at what happened when Sabeer Bhatia launched Hotmail, or when Niklas Zennstrom and Janus Friis let Skype loose. The revenue lock inherent in a particular business model just went and exited stage left, followed by a bear. But the new business model made money. In a strange kind of way, maybe that’s what Because-of-Rather-Than-With is about. Making money differently.

Someone will do this. I’m not sure “content owners”, or for that matter Wall Street, really understand the power behind today’s groundswell of opinion against bad DRM and bad IPR. Those walls will crumble. I love my Macs, I love my iPods, but I will not love them forever. iTunes will have to change. I will keep buying iPods because I want to, but from now on only if I don’t have to.

A related issue. I’m sad to miss the VRM meeting I had hoped to attend: doctor’s orders… I wish the participants every success. I think that what Doc and gang are working on is absolutely crucial, and in the current context it made me wonder about something:

If marketing as we knew it doesn’t exist any more, and if trusted recommendations are the new marketing…… Every one of us has so much “advertising consumption capacity”, and it all gets converted into iBalls or something like that. We start our lives with so much iBalls each. I spend my iBalls as I feel like: buy music, watch movies, read articles,  whatever. Sometimes I run out, I can buy spare iBalls from my next door neighbour. Or sell them.

It’s just capacity trading. But as human beings in markets, having Cluetrain conversations. Today’s been a Cluetrain day for me, for a variety of reasons.

Just a thought.

4 thoughts on “Continuing the ramble in open spaces amidst walled gardens”

  1. At what point does the advertising-revenue model fall down? One advertises something that someone wishes to buy – give you money for. If everything you “buy” is free because you are “paying” by renting out your eyeballs don’t we start chasing our own tail? Is advertising in this context the ultimate pyramid scheme. I remain a sceptic here :)

    My own belief: the price point for digital media falls to the same level as the price of a single malteser. Volume bought goes exponential.

    I do, of course reserve the right to change my opinion.

  2. Ok – I may have changed my opinion.

    How much does Google make from advertising and what is the total revenue of the music business and how close are these two figures.

  3. OK, let’s pursue your Winter’s Tale analogy to its logical conclusion.

    The music industry (Leontes) orders its faithful servant Steve Jobs (Antigonus) to hide its IP (Perdita) because of jealousy. Antigonus is not totally convinced but while he is dithering he is chased away by a bear (the RIAA).

    Perdita is then rescued by the people and grows up happily free and unencumbered by royalty (geddit?).

    Unfortunately, Shakespeare ends the play with a reconciliation between Leontes and Polixenes (Hollywood?) and Perdita resumes her royalty in a marriage that unites the two factions. Boo!

    Perhaps Dylan Thomas would have ended it differently. Exit, pursued by a beer.

  4. I am with you in most of your arguments re DRM, but the analogy with hotmail and Skype I don’t buy. The cost of an incremental sale for those companies is truly zero, whereas for music to keep the whole bandwagon rolling people have to keep writing new tunes – and they need to get paid.

    IMHO DRM is coming off (some) MP3s partly in the hope of increasing sales but partly also in the hope of making money off concerts, T-shirt sales etc. Because of rather than with in your parlance.

    Something similar is starting to happen with books too. I have posted on this at

Let me know what you think

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