Will Money still make the world go round?

Money was supposed to be a convenient means of exchanging labor and its products. Perhaps, as in the Star Trek universe, civilization will elevate itself to a position where money becomes superfluous and everyone puts their potential into society and gets as much out of it as they want. I think some might think the Internet will facilitate this, perhaps it will, but it’s pretty likely we’ll have to go via a transitionary phase where there is a form of cyber-cash. This’ll help migrate the old way of doing business into its more direct, electronic equivalent.

But, more and more, I think we’re seeing information become the key commodity. Whether it’s the right share to invest in, the most economic way to build a bridge, a DVD, or even the color of Sigourney Weaver’s toothbrush: information is in demand and people are willing to pay for it. Trouble is, they rarely have to. Information is getting easier to distribute and duplicate. It only takes one altruistic (some might use a less benevolent term) person to spill the beans on a web page and the whole world gets it for nothing.

It’s not a problem to ensure that communication is secure, from vendor to purchaser, but how do you prevent the purchaser from passing on that information for nothing and thus devaluing it?

The problem that the Internet now presents us with is that the vendor can no longer hope to maintain their monopoly over information once they’ve sold it. It used to be that purchase of mass produced information (newspapers, books, records) was a much better experience overall (price, quality, convenience) than illicit duplication was for the potential customer or pirate. But, now a digital copy is free, perfect, and more convenient.

Of course it’s unfair, but what can you do?

Even in the digital realm, software producers have still been clinging to the hope that transmission costs dissuade people from illegitimate downloading. Sure, even with digital technology, there are still always costs in transmission, and these are in proportion to the quantity of information – whether it’s downloading a file or throwing a DVD across the room. But, these transmission costs are rarely proportional to the production costs.

It seems one idea Microsoft’s trying out to address this problem, is to not let the software out of its factory in the first place. The user only has the presentation layer on their local machine, but must pay a subscription to obtain the use of the back-end on a secure server somewhere.. I suppose this is an understandable approach if as some pundits predict, there will soon be vastly more web browsers around than installations of Windows alone.

But software isn’t the only information based product around. What about works of art? Why should anyone produce a movie, album, or other easily duplicated work of art if only a single sale can be obtained?

Well, it’s difficult to swallow, but the answer has to be that the single sale must cover the cost, even in spite of the fact that the work is unlikely to have a resale value.

This means getting millions of punters to stump up cash in advance before the artist hands over their work. So say Sting produces a new album. First, he’ll keep it under strict security. He then releases a low grade recording that gives a hint of how good it is. The near perfect, 5.1 channel, digital encoding of it is then put up for a kind of reverse auction. The marketplace is invited to make limited pledges for it, e.g. up to $1, up to $5, up to $15, etc. Sting can then, at a favorable point in time, select which price point he wishes to sell it at, and then it is delivered to all those whose pledge covered that price. After this point it is a free for all and anyone may give it away or sell it on – including Sting who may still be able to sell the original recording at a premium price (given its packaging).

The key thing in this scheme is that the product is not released until the artist feels they have arrived at the best return they can get, which may well be at least the production cost. Sometimes they may declare that the current pledges are insufficient and the work will be withheld until such time as the pledges increase. Conversely, the market may gradually reduce its offers for the work and the artist may take the best price while they can.

Of course, you can only practically do this kind of deal where the market can be addressed as though it were a single unit – something greatly facilitated by the Internet.

Similar types of deals can be done in advance of the work, for example, where the audience is presented with a movie script, and invited to stump up the funding necessary to produce the movie. I can see it now – “Star Wars: Episode IX – we need between $5 and $7 billion to complete this movie. The current optimum pledge only amounts to $3 billion. Please increase your pledge and/or encourage your friends, and remember that you get merchandising shares!”.

Do I hear five thousand broadcasters laughing their heads off?

Yeah, go ahead and laugh. You can still continue with the old ways of doing things if you want. However, even with the public subscription type approach I’ve just outlined, you could still do the big deals you’re familiar with (perhaps as a cartel), but once transmission has occurred it should be a free for all. The thing is, it will be a free for all anyway, and you can’t really stop it. So copyright becomes redundant for art in digital form. This should apply to software too.

This work is licensed under a Creative Commons License.