Initial Proposition

Making Money When Everything Seems to be Free

In a p2p system with its perfect communication, any individual item is still valued, but is valueless in terms of its supply to an individual. Few will pay for what they already have. The p2p system is the 'public domain' made digital.

So, the individual disappears from the digital marketplace. The tables are turned. It is now no longer a case of a vendor offering its product to many individual consumers. It is now a case of the public domain demanding product from many suppliers.

The public domain is now a single entity, albeit a collective, but p2p technology is able to facilitate its collective expression of desires and collective payment for its purchases.

We'll have the following mechanisms:

1) A way to collect suggestions for new content.

2) A way to collect bids for each item of new content.

NB This is similar to the CoSource reverse auction, but I'd propose that the final transaction be based on the same payment coming from all bidders (whose bid covered the final price). This facilitates a more generous bidding process and thus a far better reflection of the public's valuation of the product they seek.

For example, given a suggestion for a new Sting single. Sting produces a noisy MP3 demo. Five million people bid varying amounts for the perfect DVD-Audio version of this new single to be released. Sting chooses a price point of $1 even though it was only covered by 1 million people, however, it turns out to be the best deal available given the bid distribution. Of course a few thousand people offered >$50, but not enough. However, if you're thinking the aggregate bid should go to Sting, think again. Why should the few good fans pay $50 when the majority pay much less? Indeed, in a normal aggregated bid, reverse auction, bidders are inclined to undervalue because of this. But then the vendor goes for this type of auction because there isn't usually a large number of bidders and the aggregated bid tends to be significantly better than a better valued equal bid total.

Now this is just one of many ways of enabling the public to operate as a single entity in order to execute a transaction that is only feasible as a one-time event, yet still allows either party to haggle until the deal is done.

There is also potential for getting the public domain to subscribe en masse to content producer/aggregators. However, in all cases, the public must be able to satisfy itself that it is getting value for money.

This is just like democratic government really. The people realise they have to pay for the services of their country (defence, policing, education, etc.), but at least they have some (poor) means of selecting the provider and ensuring they get value for their money (tax).

So the way it goes for a production company that produces a sizeable chunk
of content is like this:

1. The production company proposes its manifesto of content that it expects
   to be able to produce in the next 'period' based on budget forecasts.
2. The production company receives millions of conditional bids for its
   forecast (some of the bids contain advances - refundable in the event of
   default)
3. The production company decides whether to accept or reject the deal.
4. The production company produces the content
5. Demos can be produced (which do not compromise the content)
6. Upon completion the independent review board (voted for by the bidders)
   appraises the content (secured) and publishes its view as to whether it
   meets the manifesto
7. If negative, the company continues work until the review is positive or
   the bidders vote to accept or abandon the deal. The company can refund any
   advance now, or after a future, successful deal.
8. If positive, the company collects the equal price, bid total of its
   choice - or it unfixes the bidding and awaits a greater bid (with a risk of
   it actually decreasing).
9. The production company can elect to fix/unfix the current bids at will
   and at any time.
10. Any party can opt out at any time whilst the bids are unfixed.

The difference with p2p is that the market must be dealt with en masse, either in advance of production, or afterwards, but always before release. It's akin to vapourware, or games consoles. If people have confidence in a producer they will still put their money down for products that arrive in due course, i.e. released later. It's just that you have to tolerate the fact that it may still be difficult to get the entire potential market to be interested at the same time, but then this is balanced by the vastly cheaper distribution costs. You also have to forget about the holy grail of getting people to buy your product who don't want to pay your price for it. There is no money to be made from freeloaders in the current system anyway.

Refinement

This work is licensed under a Creative Commons License.