Can I have your supermarket cart?

I'm not sure how common this is outside of The Netherlands, but here all supermarkets have carts that require a coin to operate. The carts are locked together in a long line, and you need a coin of 50 euro cents to free it from the line. Fortunately you get it back after you're ready shopping. Here's what it looks like:
Well, the main idea is of course to ensure that more people actually return the cart to the line after shopping, instead of leaving it in the parking lot. Sort of a very short-lived deposit (statiegeld).

As you walk back to the line, often other shoppers ask for your cart, giving you the 50 cents. Why? Because there are no more carts, or they are too lazy to get one, or they have the 50 cents only in smaller coins, or whatever. Well, no problem usually.

But: I have a special fake coin that is the same size as the 50 cents piece; you get these for free from companies with their logos printed on them; like this:
Why do I use it? Because without it, too often I do not have a 50 cents coin because I've spent them all. I keep this in my jacket pocket, so I always have one. Excellent.

However, what happens when now a nice lady asks me if she can have my cart, offering me 50 cents for it? I decline. I was thinking: why do I do that?
  • Is it because I feel sorry for that person, when she discovers she has paid 50 cents for a fake coin later?, or
  • Is it because I do not want to lose my coin, even when offered 50 cents for it?
In other words: is the coin worth less than 50 cents for me, or is it worth more than 50 cents for me? Let's be clear that the coin itself costs next to nothing, I would be suprised if the manufacturing costs of it (including logo) would be more than 5 cents for large enough quantities. The companies giving it to me for free will get more value out of it just because I see their logo every day (brand recognition). So it makes sense for them to give it to me.

I think the coin is worth more than 50 cents for me, and that is why I refuse the old lady her cart. So: the coin is worth less than 50 cents, but worth more to me... why? Because I have this coin in my pocket available and I cannot spend it for anything else, so next time I need a cart, I know it will still be there.
So: it is worth more than 50 cents for BECAUSE it is worth nothing on the market, because I cannot pay with it in shops. Interesting. Of course I only need one. But still a great way to create value by creating something worthless :-)

@Wednesday, February 10, 2010  

Is Content king? Or is the User king?

If I have something that you want, you can give me money for it. So if you're hungry, and I have an apple, I may give you that apple for some money. I'm more likely to do that when I have a lot of apples, or have cheap access to apples (or other forms of nutrition) and I want something else that I do not have and this money may help me get that from someone else.

This is easy when the things are tangible things that I can stockpile in my garage. But how does this work when we're talking about non-physical things like thoughts, creativity, love, or ideas? Specifically how does this work for non-physical stuff like books, music or commentary?

A few hundred years ago, it became much more easy to distribute thoughts and creative products like that, among others via the book press, and then the people in charge invented Copyright Law. If you have created something of value, you "own" it, and if others copy it and use it, they have to pay you some money. A very basic idea come to think of it, right? Copyright law is the basis of many of our ideas of how to value ideas. But why is it so? Does it make sense? Why would we want copyright laws to protect content?

There are quite a lot of big industries for which their entire existence is based on the idea of copyright law: book publishers, the music label industry, newspapers. I'm not talking about the authors, the musical artists or the great commenters. I'm talking about companies that somehow "own" content and make money selling it in whatever form to whoever wants it.

All of these Content-is-King companies are in big big trouble nowadays. They all see diminishing sales, a very problematic business model, and have to compete against small startup companies and groups of individuals who "steal" their content and give it away for free to others. And they get away with it, too! Well, the industries of course desperately try to keep their stack of gold safe and sue the world to death.

So. This is happening in the world today because of digitization of non-physical content, making it easier and cheaper to distribute and copy.

But the real question is: is this bad? For whom is it bad? And why?

One of the goals of copyright laws, and one of the main arguments of the publishing industry (or the RIAA) is that they do important tasks and that they actually protect the business model of the content creators, that is: the book writers and the musical artists. If everyone can simply download mp3s for free using utorrent, no-one will pay for physical cd's anymore, and the cut the artists get will dissappear, and all artists will loose their jobs because they still need to pay their mortgage, and so they will stop making great art. And that is bad.

An interesting argument. And of course I feel too that authors and artists, when they create something out of nothing that many people like, they should be supported. But should that be done via companies and intermediaries that sell content? I'm not sure. Many people have predicted the end of the middle men because of the rise of the Internet. And have predicted the end of the publishing industry too. I'm not sure what will happen, but I do think the way the publishers are struggling to keep their old ways of working intact, is pathetic and there's no way they will survive like that.

Lately there's been a lot of discussion on the future of the publishing and book industry, because of the Amazon/MacMillan dispute over who is in control of pricing. Many great things have been said about this, and it seems to bring both sides of this war out of the trenches to shoot by blogs. I've been in discussion with @tacoe and @evilrooster lately on this. We've shared links to excellent blogs discussing this point. Let me paraphrase them here
And many more of course. Let me be clear: I think whether or not the Publishing Industry will survive, is not that important. Yes I think that good publishers who add value both for the authors (take away some of their cost and risk) and for their consumers (filter, edit) will survive.
I think the problem that we're facing is much deeper and important than just books or publishers. It is about how to make money in the future, what are viable business models now that the world has changed dramatically through the Internet. I think there are two camps:
  • the Content is King believers; who believe that if you "own" content, that is how you make money; that is why it's not good enough to sell a Kindle, you have to have the content too; that is why companies buy the rights to the entire Beatles collections, or have fights over who may make a film from a book, that is why Sony bought picture companies, etcetera. Main point: if you control the content itself, you can charge money for it
  • the User is King believers; who believe that it's not about sitting on content and charging money for it, but if you own the user, if he trusts you for adding value to other peoples content, that is where you can make money. This is what Google does by giving away almost everything for free, hoping to gain access to the attention of the user in more and more aspects of their lives, and making money from ads.
Let me try to take some of the main arguments of people from the publishing/book industry and try to repute. Here are some of the arguments I hear about people who claim Content is King

Argument: If you give away content for free, the content creators cannot make a living. Thus we will have less high quality books and music
Answer: That would be bad. Yes we need a business model in which good authors can make a living. Is the old way the only way? I don't think so. I think people will still want to give money to good authors, I think people will still pay for a physical book or ebook even if some of the content is free. Maybe they should put first editions on the net for free, but only start charging money once they are famous? Or use a form of up-selling or cross-selling? I don't know. What I do know is that our economy continues to be based on making money when you add value. No one is claiming authors are worthless. We need easier entry to publishing and less monopolies in publishing. And that is what is happening anyway, no MacMillan can stop that from happening fortunately. If change is coming anyway, better to adjust to it, than to fight it.

Argument: The publishing industry is valuable because they filter; they find the good stuff in a world of mediocrity
Answer: Are they? Do they do a good job? Isn't the result of hundreds of years of publishing a top-seller-list model where all bookstores look exactly the same and only bestsellers make money? Why do we have only Grishams and Harry Potters? What happened to the Long Tail of publishing and books? Niche markets, strange subcultures? Yes there are some publishers and middle men who help these niche markets and small editions (but high quality to some users) books. I think large publishers did try to filter Quality, but they did a shitty job, deciding for me what actually is Quality. You're fired, publishers for trying to filter what I should find high quality and what not. I will turn to friends, small niche publishers, authors, and community recommendations and reviews for filtering.

Argument: The publishing industry is valuable because they edit
Answer: Sure, it's valuable to have someone criticize your work. If an author needs a professional for that, and they add value for their money (or take in the book profit), sure, let them be. However, let's not exagerate... many books are not edited that much, many reprints. So sure, it's a valid added-value for the industry, but not that much. Let's create valuable Book Editing companies who do just that

Argument: The publishing industry is valuable because they take over cost and risk from authors
Answer: Yes I do understand that as an author you cannot take the risk of your book not selling privately. So sure, if you want to give a way part of your potential book profit to a publisher, please do so. But you shouldn't be required to do so. There are other ways of doing this, including just putting the book on your website for free, and communicate with your readers through a blog/community. Unknown authors initially publish their musings out of exhibitionism anyway. Once you have a strong community, and readers, they can monetize in different ways

Argument: Look at what is happening in the Music Industry, we do not want the same thing to happen to books, right?
Answer: Interestingly, a lot of these blogs actually use this as a main argument. The same thing happened to the music industry in the past decade, oooh we do not want that. Really? Why not? Indeed the changes coming to books are preceded by what happens to music. There is still no free public ebook format like mp3, yet. And yes, the music industry is struggling. But if they're 10 years ahead of the book industry, let's use that to validate whether the risks and predictions actually come true!

People have said that because artists cannot make money through record sales anymore, they will go out of business, and we will have less, and worse music. Is that so? Do you really think the music of the 80's was fundamentally better or wider than it is today? Indeed artists make no money from CDs anymore (yes, only Beyonce). So what do they do: they use CDs and tracks as marketing collateral to attract people to their concerts. Concert tickets have become much much more expensive, but artists still fill the arena's. And yes, it does mean that if you're only a studio singer (and cannot sing in tune live but need to be edited in a studio), you no longer can make money. Only the real performers can do that. Is that bad? I don't think so; I do not miss all of those Milli Vanilli's...

I think the same thing will happen to the book industry. No problem of quality loss, quality will find a way. And yes, good authors will find a way to share their great ideas and make a living too. Maybe even better than before now that they no longer have to be filtered by a publishing molog and having to sell off their rights.

The same has happened to the Newspaper industry already. Why pay money for newspapers? Because they filter? My online community and RSS feeds can do that much better for me. Quality? Is that so? Now that they've laid off all good reporters, the only thing journalists do is copy newswire. The real good stuff comes from freelancers with blogs anyway.

So. This post is getting too long anyway. Let me try to recap.

I strongly believe the days of Content is King are over. Yes sure there will be companies still making money from simply charging access to stuff they own for many years to come. But things will change, and if a company will not adapt, they will die.
I believe its more important to focus on the key question

What is the value you add for the end user?

If that is unique and valuable to someone, they will pay. Not for the product itself, but for your service that adds value. So if you're a good printer, you charge money for converting nice bits (free or bought elsewhere) into dead trees. If you're a great analyst and can make sense out of news, that is your added value: do so in a blog and make money doing consulting and creating custom commentary for people. If you're in the music industry, make money not be charging for a DRMed MP3, but by offering a valuable community driven recommendation radio like last.fm

Will the publishing industry die? No; only the stupid ones. Do we need stronger copyright law to fight the bandits? No, you cannot fight this silent revolution.

If you cannot easily find the answer to the question before: what is your added value? If you feel your (or your company's) real value lies in what you already own, then you're in great trouble.

Exciting times. Happy to hear your point of view. But don't forget to watch some of the highpoints of musical quality the music publishing industry has brought us: Girl, I'm gonna miss you:


[I am not charging you any money to read this post]

@Tuesday, February 02, 2010