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Everyone knows by now that the old business models of the media sector are going obsolete.   Peer to peer music downloading renders it increasingly difficult for musical artists to make money from their work.  Free access blogs make it harder and harder for anyone to charge for news media content.  A huge amount has been written on these matters during recent years.  Last week a simple, straightforward  blog post by NPR intern Emily White on the reluctance of modern youth to pay for music garnered a huge online reaction, including a fairly scathing moral critique of illegal music downloading by musician David Lowery.

On the one hand, it’s incredibly convenient to be able to download whatever music you want for free, and read whatever content you want for free.  On the other hand, the musicians and writers and other content creators have got to be able to pay their bills somehow.  If all content becomes free, then in practice most content creation will end up getting done by the independently wealthy, or those with enough spare time after their day jobs … or those living off the government dole… or maybe the homeless?  Probably  most people, including most who prefer to consume their media for free, would not consider this a desirable situation.

It’s a dilemma. Information really DOES want to be free on the Net.  But, content creators also need to get paid!

So what’s the solution?

I think there is a decent one, actually.   It’s pretty simple too.  And a few websites out there are already making a start in the right direction…

The solution I’m advocating would certainly lead to some radical adjustments in the media content industry as we know it — but it would result in people getting media and creators getting paid.  Though how much which sorts of creators would end up getting paid, is admittedly hard to forecast….

Basically, what I propose is to embed the  making of micro-donations to content creators, directly into the media consumption experience.

If you’re familiar with Laybit , the new BitCoin based microdonation service, you’ll have some clue of what I’m talking about.   Laybit lets users pay a small amount of money (actually, Bitcoin currency) to the creator of a website they like, just by clicking a button.  This is a Very Good Idea, but for it to work really well for applications like music listening or new-reading, it will probably  need to be implemented much more slickly than the Laybit folks have done so far.  It will need to be seamlessly embedded into the software used for consumption, like music players and newsreaders, in an extremely easy-to-use way … and it will have to support traditional payment options like PayPal or credit cards alongside BitCoin.

The basic idea is: Rather than paying a company for media before you consume it, “tip” the creator of the media right after you consume it.  A simple approach, but if it’s embedded thoroughly in the consumption experience, potentially very valuable both psychologically and econoomically.

Since writing the first version of this article, a reader (Abram Demski) pointed me to the Bandcamp site, which embodies a somewhat similar idea.   Much of the  music on Bandcamp costs money for download, but listening on the site is free; and some music is available for free download, with the possibility of making a donation through the site if you like what you hear.  I think this is definitely a big step in the right direction.

There are services like Flattr that offer the ability to make microdonations for blogs, as well.   OpenCog, the AI project I’m involved with, has made some spare change this way.

But Bandstand and Flattr, awesome as they are, are still somewhat marginal to the way music and media are generally consumed.  What is needed to transform the industry is for this sort of thing to become the rule rather than the exception.

I’ll focus largely on music in this article, and secondarily on news media and other online writing, but the points made are more general in nature.  What’s really at issue here is how to distribute resources in an economy based more and more on information than physical goods.  This issue is going to get more and more acute as time passes and technology advances.  Imagine when we have 3D printers using Drexlerian nanotech, so we can print up pretty much any physical object we want, right there in our offices or living rooms — so long as we can download the needed spec for the object.  Who pays for what then?  The entertainment & media sector may serve the role of a testing-ground for new economic arrangements, that later on will apply much more broadly.

Touring and Merch Sales are Not the Salvation of the Music Biz

Getting back to the  music business — A common story one hears is that, in the new economy, musicians can earn money by touring or selling merchandise, rather than by selling their music.   This can work in some cases — but it’s a really hard path for musicians to follow, and only works for some artists and some genres.  And it also guides the music itself in ways that aren’t always desirable.

I love Buckethead’s concerts, but I’d love them even more if he had an awesome drummer backing him up, instead of always playing solo.  But I understand why he wants to tour solo — it’s not just because parts of his musical vision are better pursued that way, it’s because he can keep more of the revenue from his touring for himself that way, and he needs that money to pay his living expenses (even bucket headed freaks in masks need to eat, and buy new guitar strings, etc..).

And some bands are just plain “studio bands” — not optimally oriented to playing in concert.  And some types of  music don’t work in live performance at all.

And what about writers?   Not many bloggers are going to be able to make their livings by going on speaking tours, or selling coffee mugs emblazoned with their smiling faces.

The Power of Convenience

In her NPR blog post, Emily White argues that youth are not willing to pay for music, but are willing to pay for convenience.   She advocates some sort of subscription service, where the user pays a certain amount per month and gets access to all the music they want.

In his counter-argument, David Lowery notes that artists tend to get extremely small revenue streams from participating in this kind of service.  He also notes that the main inconvenience that youth find with buying music through iTunes or similar services, is probably the inconvenience of paying money.   Other than the cost factor, such services are actually pretty easy to use.

But I think Lowery misses a key point.  Buying songs via iTunes provides a fundamentally different experience than downloading songs via BitTorrent or similar peer-to-peer protocols.    On iTunes, you have to know exactly what song you want to buy in advance, and then pay for it before you hear it.  Yeah, you can listen to a preview before paying — but that’s a bit of a rigmarole.  Part of the convenience of BitTorrent is that someone can download the whole discography of an artist, and then dip into it casually at their leisure later on, figuring out which parts of it they like or not on the fly.  This is genuinely far more convenient.

Let’s say Bob recommends that his friend Jack should check out the jazz of Charles Mingus.  Compare these two options that Jack has:

1. Download the Mingus discography via BitTorrent, which takes a few minutes.  Then he has all of Mingus in his local music folder, which he can listen to whenever he wishes — maybe listening intently, maybe the background while he works or in the car.  Maybe he doesn’t like Mingus, maybe he likes only the late Mingus, etc.  Whatever.  He can figure it out casually as he goes about his life.
2. Buy some Mingus songs in the iTunes store or similar.  In this case he has to evaluate each song or album before purchasing it.  He can read reviews; he can listen to previews.  But this is a lot of up-front work.  And these days  most folks are busy and/or have a short attention span.

A subscription-based streaming service could provide even more convenience than BitTorrent, which has its own hassles.  But as Lowery points out, this solution is not necessarily good for the artists.  It places control of the relationship between artist and consumer in the hands of the company selling the subscriptions, and this company will have the motive to pay the artists as little as it can get away with.

News media has basically the same issues.   When I scan Google News each  morning, I typically see multiple news articles grouped under the same content heading.  Today, for example, I have the choice of multiple different articles on the current Egyptian presidential election.  Some of these articles are free, some are behind paywalls.  For the paywalled articles, if I click on the headline, I can sometimes see a free snippet.

How often do I, in practice, decide to pay to read the full text of a paywalled news article?  Never, so far.  It’s possible that one day the introductory snippet of some news article will be SO appealing to me,  that I’ll decide to pay to subscribe to the website providing it.  But so far, it’s never happened.  Actually, even if an article were free, but required me to fill out some registration form to read it, I probably still wouldn’t bother.  No individual news article is all that important to me, because there are always other articles saying largely the same thing.  And no individual news source is consistently so differentially appealing-looking to me, to move me to pay for a subscription.

A Solution: Embedding Micro-donations in the Consumption Experience

Radiohead made history by funding their 2007 album In Rainbows entirely by freely offered donations.   They made the album available for free, and gave listeners the chance to donate however much they wanted in exchange for the music.   Estimates indicate 40% of listeners paid for the album, in the initial batch of downloads.

Radiohead made quite clear that they viewed this as an interesting experiment, valid for them at a particular point in their career, and not necessarily a general solution for the music business.   But I believe they were onto something.

It seems to me there is a tweak to the Radiohead model that could work as a general solution to the economics of the media sector…

I take as premises that

• consumers like the particular sorts of convenience offered by current peer-to-peer music downloading, and current online news-reading, and freewheeling Internet media consumption in general
• many, though not all consumers, are willing conceptually to pay something for the media they consume, especially if they feel this payment is going largely to the content creators themselves

So, what I advise is to embed the  making of micro-donations to content creators, directly into the media consumption experience.  Sort of like Laybit, but embedded directly in the music player, news reader or other media consumption software.   Much like Bandstand or Flattr, but pervasive throughout the media consumption ecosystem.

The essence of the idea is given in the figures below, which I crudely hacked together using my essentially nonexistent graphic arts skills.   What I have done is simply to paste a DONATE NOW button onto images of a music player (Miro) and a news reader (Google Reader).   I’m quite confident that real user interface designers will find more visually appealing ways of achieving the same end!

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The idea is simple.  When you listen to a song, if you like it, you can click DONATE, and that will automatically send a little money to the artist.   When you read an article, if you like it, you can click DONATE, and that will automatically send a little money to the writer.

This requires, obviously, that the consumer has connected their music player or news reader to their credit card or PayPal account or whatever.  But this is a one-time action which is not really so time-consuming or difficult.

Variations are obvious

• users could set a default amount of donation (five cents, twenty five cents, whatever), and they could have the option to override that and donate a different amount sometimes.
• users could get to choose whether a donation is anonymous or has their name attached to it
• etc.

Of course, not all consumers will choose to make donations.  Students or others with very little disposable income, would probably choose to continue consuming music for free, under this system.  But those people aren’t paying anything for content now either, and since they have more time and ingenuity than  money, they are probably going to find ways to work around any system for paywalling content that the industry comes up with.

I believe that many consumers would choose to make these donations regularly.  The propensity for donation will be higher, I suggest, if the set-up  makes clear that most of the donation goes to the actual content creators.  Consumers do feel some emotional and personal bond to the musician whose  music they’re listening to, or the writer whose words they’re reading.  They often feel some gratitude to this other human being for creating the content they’re consuming, and would be happy to express this gratitude via a small amount of money.  The psychology of directing a little money directly to the person who just gave you a great song or an interesting read, is quite different from the psychology of paying a company for a subscription service, or buying an album before you’ve heard it.

Additional steps could also be taken to reinforce this psychology of personal connection between consumers and producers.  News articles could be linked to pages profiling the authors, giving curious readers a concrete sense of who they’re donating to.  There could also be an option for consumers to get communication directly from those artists to whom they’ve made significant donations.  If you had this option enabled, then if you donated more than $1 to Buckethead in a given month, you’d get on the list to receive the Buckethead newsletter in your email, with info about Buckethead’s latest doings and recordings.   Of course this sort of deeper relationship with the artist isn’t for everyone, but for some it  might be a psychologically powerful option.

The Role of Aggregators in the New Order

What would be the role of aggregators like record labels, magazines or newspapers in this sort of “consumption-embedded micro-donation” approach?  Essentially they would provide  marketing services, in exchange for a percentage of donations received by an artist through the media they market.  So they would still have their part to play, though it may not involve as large a chunk of the revenue stream as they received in the pre-digital order.

If I choose to post an article on H+ Magazine, it may get more hits than if I post it on my personal  website.  So, it may be worthwhile to me, as a writer, to post an article on Humanity+ Magazine — even if this means H+ Magazine is going to get, say, 25% or even 50% of the donations that come in for my article.

The embedded micro-donation mechanism should be able to handle this automatically, taking donations coming in through a user interface, and directing portions of them appropriately to content creators and associated aggregators.

As well as traditional aggregators, there may be an increasing role for AI recommendation agents, that aggregate media in a manner customized for each consumer.  An content creator could arrange with a company providing intelligent recommendation agents, to provide the recommendation agent a percentage of any donations that the agent brings to the creator.   With this approach, a content creator doesn’t necessarily have to sign up exclusively with any particular media “source” like a record label or a magazine — they can do business with many different recommendation agents if they wish.

Getting There

OK, so this is an interesting vision — but how would it actually come about?

The path toward consumption-embedded microdonation is already started, with various existing websites.   What’s needed is for someone to build it and market it on the grand scale.

Building and marketing a massive-scale micro-donation mechanism would  be a substantial undertaking.  One would need to get a large number of content creators to sign on, and then release and widely market appropriate consumption software.  The embedded micro-donation feature would need to become sufficiently popular that many makers of consumption software felt pressured to include it in their software, at risk of alienating users who want to be able to show appreciation to their favorite content creators via point of consumption  micro-donations.

Technically, realizing the solution I’ve outlined here would be fairly straightforward.  But conceptually, in terms of its implications, it could be a major development.  As more and more aspects of the economy become information-based, the problems now plaguing the  music and news media businesses are likely to spread further and further.  Embedding the option for donations directly to content creators, directly into the consumption experience, may end up being a very broadly successful strategy.   What makes sense for music and news today, may apply in the future to downloading specs for physical objects into our 3D printers, or even downloading new ideas and skills into our brains.

As more and more aspects of the economy become information-based, the issue of compensating creators in the face of easier and easier “piracy” will become broader and more acute.  Appropriately embedded microdonations provide a relatively clear-cut solution, that I believe can work well if the implementation and marketing are done right.

The dislocation of industries via radical technology innovation isn’t always going to be pretty.   Transitions can pose all sorts of difficulties.  But with a bit of creativity and open-mindedness, the same technologies that are causing the dislocations, can be used to provide solutions — and paths forward to new ways of creating, sharing, communicating and doing business.

But Will People Really Pay If They Don’t Have To ??

The most common reactions I get to the “consumption-driven microdonations” idea are comments like — “Yeah, right — you bleeding-heart hippie idealist!  Nobody will pay for music if it’s voluntary!”

“Radiohead may have made $6 million in donations for that album, but they would have made a lot more if they’d charged money for it.  And not everyone is Radiohead.”

I certainly understand this skeptical reaction.  But, I suspect it’s based on an overly limited understanding of human psychology.

I paid Buckethead $100 for his 12-CD “In Search of The” collection, even though I could have gotten it for free from a friend’s music collection, because I like Buckethead and wanted to give him the money, so he could keep on producing awesome music.  I wouldn’t have done that when I was a college student, as I had almost no money then.  At that point in my life, I would not have paid for anything that I could get for free via some legal or low-risk strategy.  But now, though I’m far from rich, I chose to pay for that particular product.

I would personally donate $25/month or so, total, for the music I listen to, if I knew it were going mainly to the artists…

I’m generally pretty skeptical of arguments that “people wouldn’t do” this or that altruistic-sounding thing, because I remember hearing so many confidently-delivered arguments, not so long ago, to the effect that

• Open source software will never take off
• Wikipedia will never take off

because both of these require people to donate time without payment.  Turns out that, in these cases, human psychology is different than the skeptics believed.  People are, in fact, willing to donate lots of time without payment to updating Wikipedia and coding and debugging open source software.  Now we take this for granted, but when these things were young, many people assumed it obvious they could never work, or could never scale up beyond a small community of altruistic enthusiasts.

I remember reading a lot, a few years back, about how Google’s Knol was a better model than Wikipedia, because it allowed people to explicitly get credit for their contribution, and people are fundamentally after status and reputation-boosting, more so than they’re interesting in contributing to something anonymously.  But these “obvious” arguments were wrong….  In spite of Google’s wealth, might and savvy, Knol never took off.   And similarly, I think the “obvious” arguments why folks won’t donate, or won’t donate enough, to support artists via a consumption-embedded donation approach — are wrong, based on a similar misunderstanding of human psychology….   Humans aren’t quite as systematically selfish and egocentric as they often think each other to be — and this is a good thing.

Another interesting piece of data, from the Bandcamp FAQ, is that 40% of Bandstand music purchases are made for more than the  minimum listed price.  Bandcamp consumers choose to pay more, to help the musicians and show their appreciation of the music.

I feel human psychology will broadly support consumption-embedded micropayments, far more than the obvious skeptical reaction implies.  But as with open source software and Wikipedia, the only real way to see if the skeptics are right or not, is to get started, try to get people involved, and see what happens.   Fortunately this progress is already underway, with various innovative startup websites.  The future is ours to create! ….