Free distribution of digital content (music, books, visual art) is embraced by—and benefits—customers because it gives them access to a much wider range of content. This is because the restrictions on the amount of content they could get—based on how much they can financially afford—is eliminated.
Instead of money, the bottleneck becomes the time required to find content they’re interested in – this is where Google leads the field by providing an ever-improving and expanding search facility for finding the content, whether it’s webpages, books, news, academic articles, images etc.
Free distribution of digital content is slowly being embraced by—and will benefit—creators (artists, musicians, authors etc.) because it allows their work—and reputation—to be distributed to a much wider audience.
Musicians such as The Charlatans and Nine Inch Nails are making headlines with new ways to make money while giving away MP3 files of their music for free (and unsigned bands have been doing it for years).
Authors such as Suze Orman and Dan Solove are giving away free ebook versions of their books, in the knowledge that the wider distribution this gives them helps to sell more paper copies of their books.
So where does this leave publishers? The book publishing companies and music companies seem to have been left out of this equation. You could argue that they’ve left themselves out of the equation by desperately attempting to pretend that the business model of content creation hasn’t changed while vainly suing fans for the crime of being early adopters of a new economy.
Actually, there is a role for clued-up skills-rich publishers. It’s just a slightly different role than they’re used to. The clues can be found when you examine the new business model summarised above and look for the holes. That’s what I’m going to try to do now (but not exhaustively – I’ll leave that to people much smarter than me).
Publishers can provide instant attention
As mentioned above, one of the biggest benefits to both creators and consumers is that content is more widely distributed and available to all. But in a world where a huge amount of digital content is free, finding that content is hard – it’s like finding a few choice needles in a field of haystacks.
Obviously search engines provide front-end interfaces for finding that content, but that’s not enough. Search engines such as Google need to interpret the searcher’s requirements and display the most relevant results first. Google’s algorithm relies on correctly interpreting the relevancy and reputation of each piece of digital content in order to give their users the right results.
Publishers can provide a huge amount of relevancy and reputation because Publishers’ old-business-model reputations have been translated into high rankings for their websites.
A record company specialising in hip-hop music has already built-up a reputation and many incoming links from hip-hop-orientated websites, whether they’re sites belonging to hip-hop musicians, fan-sites, hip-hop forums, etc.
A publishing company specialising in a particular niche—whether it’s an academic subject area, a particular genre such as science fiction, or a particular service such as news & current affairs—will have built up a reputation (and the accompanying relevant incoming links) from other websites in their particular niche. If I was publishing this blog post in the Freakonomics column of the New York Times then the chances are that it would get a lot more attention!
This reputation and the resulting links are incredibly valuable because they’re both numerous and extremely relevant, and can take years to build up. So Publishers are already well-positioned to take on the role of distributing instant reputation and relevancy to creators. After all, that’s one of the things they’ve been doing for centuries.
So publishers need to revalue their business models so that the bestowal of reputation and relevancy (and therefore attention) is seen as a major service that they can offer to creators. In order to better leverage this service, publishers need to work closely with relevant communities. That means actively engaging in conversations with their niche communities on email lists, discussion forums, social networks, and blogs (and in the non-digital world at conferences, gigs, book-signings, etc.).
Publishers can provide quality control and specialist technical expertise
Creators are not perfect, and most are grateful for help.
An author’s work frequently benefits from the skills of their editorial team, which is why you’ll often see the editor thanked in the author’s acknowledgements in the front of their book. The book production team use their amassed knowledge of design and typography to turn a word-processed manuscript into a professionally laid-out book that is a pleasure to read.
Musicians benefit from the editorial and technical skills of the producers & engineers who spend a huge amount of time coaxing the best performances from them, then expertly mix the raw sound into a polished—or artfully unpolished—finished track.
Moving back to the web, authors or musicians are unlikely to be their own web team. I’m not just talking about being able to throw a website together, I’m talking about a full web team consisting of ecommerce programmers, web developers, web designers, SEO experts, and emarketing strategists. Sure anyone can put a small website online (and that’s one of the great things about the web) but as the web has evolved the skills necessary to create and maintain a good website have both multiplied and increased in their complexity.
Any content creator—author, musician, or artist—can’t be expected to have all these expert skills, and hiring them individually (and project-managing the coordination between them) would be expensive and a huge consumption of valuable time and effort that would be far better spent doing what the creator actually excels at: writing, composing, playing, or painting.
That isn’t to say that the author or musician shouldn’t be directly communicating with their fans – they should. But managing the framework that enables and amplifies this communication is a job for a dedicated team.
So, publishing companies should be positioned to provide services that greatly enhance both the book/music and the online presence of the author/musician.
Again, this is already something that publishing companies do, but they need to emphasise this aspect of their service and market it as a suite of valuable services that they can provide to creators.
But publishers need to make money
Obviously publishing companies will want to be paid for providing these professional services – they need to make a profit. At the moment they get this money by charging for content, but as more digital content becomes free then this particular revenue stream will start to dry up.
I think that paper copies of books will continue to sell, as will CDs & DVDs. Returning to Nine Inch Nail’s recent release of Ghosts, even though Trent Reznor made the first 9 tracks available free of charge, he also released various paid versions from a full digital download of 36 tracks for $5 to a $300 ultra-deluxe limited edition package.
The $300 Ultra-deluxe limited edition package has already sold out, despite there being multiple cheaper (and even free) versions available. This utilises the generative of “embodiment” coined by Kevin Kelly which I’ve already talked about in a previous blog post. Hardback bindings of paperback books are another long-standing example of this strategy.
So higher-quality (higher revenue) non-digital formats are one revenue stream that could be added to sales of non-digital content in “standard” formats (paperbacks, CDs etc). This strategy can also be expanded to cover revenue from supplementary material such as subscription elearning software for textbooks or t-shirts and posters of musicians. Again this is something that is already happening (especially within the music industry) so the groundwork has already been done.
But to offset this, expensive traditional marketing (direct mail advertising, broadcast television ads) is going to have to be drastically reduced. I can’t think of any way to recoup the huge amounts of money spent on direct mail and mass-market broadcast ads in this newly emerging marketplace – it’s just not viable. Certainly not when you can better reach a more carefully-selected market (i.e. with a much greater percentage of potential customers) by spending much less money online.
The traditional marketing model of throwing a huge amount of cash—in the form of TV ads, billboards or direct mail campaigns—at an undifferentiated mass of people can only be sustained when you (artificially) control the scarcity of your product. When your product loses that scarcity (i.e. it can be easily copied and redistributed online) then you simply can’t keep following this old dogma. I’m not going to go into more detail about this because it’s been explained before by the likes of Chris Anderson, Kevin Kelly, Michael Masnick, and Umair Haque (amongst many others).
Unfortunately this is where many companies in the publishing and music industries “don’t get it”. They do understand the ideas of new revenue streams and the benefits of free content, but they can’t imagine not having to shovel vast amounts of cash into the raging furnace that is the traditional (obsolete) marketing system – they don’t understand that the potential cost of their marketing is plummeting for exactly the same reasons of efficient distribution and connectivity.
Once they accept this (and realign their marketing strategy accordingly) then the equation will balance and they’ll see the profit.