The content law

Through the various projects I've been involved in recently (openlearn, broadcast strategy review, Flosscom), I've come to the realisation that something very significant has happened to the nature of content. It can be summarised thus:

"Digital content wants to be free, and will seek the path to maximum access."

Let's call it the content law. It can be seen as a variation on Dan Gillmore's 'the internet interprets censorship as damage and routes around it'. Evans and Wurster have argued that the digital marketplace has seen the unbundling of the economics of information and physical product. This is most readily seen in retail, where you have to see the physical object in a shop to know about it, but online the product information is separated out. David Weinberger explores the implications of this unbundling further, in that it allows  infinite recategorisation because the information, unlike the physical product, can be in multiple places at once.

When the product is digital (image, movie, text, audio) then both the product and it's information (and in the Weinberger sense the product is the information since everything is metadata), can be in multiple places. One of the consequences of this is that for any given digital market the ultimate outcome will be that eventually, and despite all the efforts to restrict it, digital content will be freely available.

Let's consider some examples. Firstly, photography: in an analogue world the physical photograph (or the negative) was the information and the product. If you wanted to buy a photo you would have to buy a physical copy. The numbers of these could be controlled, and thus so could the price. With digital photography the initial online offerings still attempted to sell costly images in the $100s. For the individual services like Ofoto allowed you to share photos, but only at a thumbnail, and only with limited people. They didn't want users to download the digital file, only to order prints from them. Then along comes Flickr and now we have largely free content, available to everyone.

In broadcast the changes haven't quite gone this far yet, but they will. As content moves online and companies like Sky and BT move in to each other's territory (Sky offering broadband, BT offering TV services), then the expensive subscription model of Sky begins to break down. There is too much free content out there to make it worthwhile. Large events (mainly sports) are sustaining the subscription model for a while, but eventually it will become unviable. Sky know this which is why they are branching out in to other services which people will pay for, such as broadband.

Lastly, music has been the one industry that has really struggled with this desire for content to be liberated. For years the record company ignored the internet (a case of commercial negligence), until Napster forced them to take notice. Suddenly content was free and everywhere. They fought back with legal action and restrictive DRM. The important thing for record company execs to realise is that the success of iTunes represents a step along the path to the liberation of content, not an end point. Increasingly artists are recording their own material, releasing it  online and establishing a live following. They are effectively disintermediating the record companies. Having established an audience the artist may then sign a deal with a company for some of the marketing, but this is only because we have the intermediate stage of CDs still.

There are a number of steps in all these scenarios. The process goes something like this:

1. The industry ignores the implications of digitisation and the internet
2. The industry sees the internet as a means to find a global market for doing roughly the same business model.
3. An initial outsider breaks down barriers, but the industry fights back with heavy handedness that demonstrate it wants to hold on to the original model and doesn't get it.
4. A halfway business model is found. The industry breathes a sigh of relief and execs open the champagne, because they think they have found a way to maintain their established business practice and enhance the possibilities of the net. They're wrong.
5. Through bottom up activity and newcomers to the industry content gradually becomes free and alternative business models emerge.
6. The established players finally realise the model has changed and adapt or die.

The content law may seem simple, but it has enormous implications. Let's try a thought experiment: imagine a matter transporter has been invented. The implications for transport industries, car manufacturers, holidays, property prices, retail etc would be enormous. The physical (including people) becomes digital content as it were, so there is no need to live near your place of work (or even to have a 'place of work').

The internet is a matter transporter for digital content. If you are working in any sector where the content can be digitised (broadcast, music, newspapers, movies, and er, education) then you should repeat the content law to yourself everyday, because it means you have to find alternative revenue streams for when your content achieves its nirvanic state of free and available to everyone. There may be some content which can survive this law, but you are probably going to do your organisation a bigger service if you assume the content law is true for you also and instead of trying to find ways to combat it, you seek ways to build new models around it.

Comments

[Tony Hirst]

I think there is a whole bunch of other stuff going on here, too, including behavioural/psychological effects.

For example, in an oft-appearing phrase, what will happen when the kids of today who have grown up with free online content and apps get their own credit cards?

The cult of free is not just limited to online, though. The Observer Business section this Sunday had an article about a new free mens' magazine that is due to appear anytime, having taken heart - presumably - from the several 'free' (ad-supported) London/metropolitan newspapers.

"Free" at the moment is actually "paid for", but NOT directly by the consumer of the 'free' content. The cost is borne elsewhere, with the customer paying across several layers of indirection/intermediation.

Sometimes, we're happy to pay direct.

Disintermedation and reintermediation will find some sort of dynamic balance, I suspect, as consumers move between levels of indirect payment for the services they consume.

An appreciation of ecological concepts is key to developing this sort of model further, I think. My starting point would probably be to read up on the nature and structure of food webs!

tony

[stuart]

yep, i agree(fwiw!). I blogged something similar, esp re Wienberger, here http://conclave.open.ac.uk/openair/?p=104 and mentioned in passing today that the openlearn global warming document on scribd got nearly 600 unique visitors IN A DAY (30 July) which is more than the most popular unit in LearningSpace gets in a week!

[Martin]

Tony
you know I like an ecological metaphor, so I'd agree there. As for what will today's teens do with credit cards - they'll buy trainers and gig tickets. They certainly won't pay for digital content. And once something is free there's no going back really.
Stuart - yes, you're Scribd post is interesting. It reinforces what Clay Shirky was saying in 2003 about why micropayments would fail (http://www.shirky.com/writings/fame_vs_fortune.html). He followed this up recently, concluding that in a digital age creators would need "to decide between going for audience size (fame) or restricting and charging for access (fortune), and that the desire for fame, no longer tempered by reproduction costs, would generally win out." (http://many.corante.com/archives/2007/04/25/sorry_wrong_number_mccloud_abandons_micropayments.php)
Martin

[Doug Clow]

Martin, I think you're right that "music has been the one industry that has really struggled with this desire for content to be liberated." The looming battle is for video content, and there the signs are that the video content owners are being just as ham-fisted as the audio ones. Even the organisations who you might expect to Do The Right Thing here are armlocked in to Getting It Wrong. Witness the outrage of the BBC's DRM solution (for stuff the licence-fee payers have already paid for!) and the disastrous car-crash that Google Video is turning in to (denying people the right to watch stuff they've already paid for!).

It's worth remembering that the full Stewart Brand information-is-free quote is:

"On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other."

I reckon the battle's not even fully joined yet in video.

[simonfj]

That's very Cartesian of you. (from seely brown's OpenLearn conference keynote)

If we were more Atelian we might say, "Digital content wants to be free, and will aggregate between the paths of it's greatest communication." (OK it's not good, but something like that).

I get surprized by people treating 'content' as something which precludes its communication, and the communication derived from it. You have UK Idol over there don't you? So yu can see the broadcast model = wrapping ads around (mostly) crap. And you will have noticed how many pennies the voting generates. (Interactive? Yeah right.)

We are watching (and contributing to) the convergence of the two models. So depending on which end 'the ínitial outsiders' are coming from, they are either a Simon Gallagher (Idol's privately interested broadcasting founder) or Jimbo Wales (Wikipedia's publicly interested interactive founder). The archetypes are pretty clear.

The internet might be "a matter transporter for digital content", but its where things are cached, where the libraries of common content packets stick as they REpass through nodes, which defines where content is (economically) transponded from/to (between TCP/IP networks).

I do like your 5 steps. If we generalized a bit more, it sounds like 'the five steps of Innovation', although "än initial outsider breaks down the barriers" might become "someone finds a way to make money, both going (broadcast) and coming (it's response)".

So how should we refer to this convergence? "The bundling of the economics of information with its related communication" or "the bundling of the economics of communication with its related information?" Depends whether one is coming or going I guess.

Hopefully, sometime in the (far) future we can expect to see a more seamless, and a more balanced, approach between (say) a BBC/OU programme and its related Lab/Learning/ (communicating) space. Of course this will depend on what archetypes exist in our public institutions. It also depends on long it takes public networks managers to reconfigure (portions of) their networks from a client/server model to a P2P model, so 'their' members can (economically) share transponding points. i.e. interactive libraries/communication tools.

Until then, we'll just to duplicate the same discussion across a thousand blogs.