Online Payments for Digital Content

The loss of Physical Media

Physical Commodities – Exchange or Access

What is the fundamental basis on which we deal with the customer?

·        Exchange           (This bottle of water, this service, this information, etc.)

·        Access              (Attend this conference, hire this car, use this road, etc.)

One’s a single-shot deal (mostly): say hello, exchange goods/money, say goodbye.

The other’s a deal that lasts for a certain period. In the case of this conference, three days.

In both cases the physicality of the commodity wholly represents the product and the work that went into producing it. The property is clear, the deal is clear.

Non-Physical Commodities? (Digital Content)

An oxymoron surely?

Let’s see. Here’s some digital content I’d like to make available for you to download (in only twelve bytes of ASCII) – Write the following down on your pads: “A, D, A, M, space, H, A, D, space, apostrophe, E, M”. Thus: “Adam Had ‘em.”

Incidentally, I’m not the copyright holder of this work, Ogden Nash is. So all of you who’ve made digital copies by writing it down have just become criminals by copying the work in its entirety.

It’s called ‘Fleas’, also known as the shortest poem in the world, and thus highly valuable. I understand that printed copies of this poem currently retail for up to £5,000 and that consequently the punitive damages for illicit copying may be quite substantial.

If literary works of art were this easy to copy a few hundred years ago, no-one would have invented copyright, let alone convinced themselves that digital content was a commodity.

Copying Physical Commodities is not inherently profitable, so it doesn’t need to be controlled

There’s nothing wrong with copying physical commodities, because in general the copies are just as much work to produce as the originals.

This is except for novel, patentable devices which enjoy a dispensation to retain a legal monopoly on production for a certain period (to enable the development costs to be recouped). This is to foster economic and technological progress, not to create a human right.

If a non-physical commodity doesn’t represent the labour that went into it, then either we assign a right to copy it, or we stop treating it like a commodity. If the latter, then the original work represents the work.

Art is slightly different to a commodity, it’s an idea given form

Art, whether written, pictorial, or sculpted is a little different though.

Once upon a time (and today if you’ve got the money) you could commission art, or you could buy art from artists who’d produced it for sale.

Then, forging art didn’t so much hurt the artist as hurt the purchaser. Overt copying was fine, it enabled the art to be enjoyed by more people, e.g. the Bible.

In the case of popular but painstakingly original art the economics were difficult, i.e. it’s difficult for an artist or author say, to communicate en masse to their potential readership and encourage them to club together in funding a new work (unlike royalty, aristocrats, etc.). So with the advent of the performance of plays and the printing of books designed for a larger audience, we see in retrospect a new revenue mechanism arise: price each performance or copy as though it were a share in funding the original work. This also requires some ability to prevent anyone else producing copies.

Copyright is Artificial, not ‘self-evident’

So we see that copyright is also not a human right, it’s just another expedient mechanism to enable the copy to act as the share certificate. You bought a book? You’re a paid up shareholder.

The thing is though, copyright’s a magic purse. It need never stop bringing in revenue (well beyond the original development costs). And in some fortunate cases, for particularly popular art, a few artists and much of the publishing industry can enjoy great wealth.

It’s a brave government that would recall all these magic purses from the rich, powerful and popular. However, there is one organization more powerful than both combined.

Widespread Copying is Endemic

What happens, when there are half a billion people online (out of a planet of 6 billion), each of whom can make a copy of any art they fancy in a moment’s thought?

We’re talking on a scale of mankind. If people, globally, en masse, copy art, it’s possible that it’s not really wrong. Rather it’s that the law, created to enable a revenue mechanism that requires exclusive copy privileges, is now ineffective, irrelevant and redundant. You cannot prosecute the world. It’s the revenue mechanisms that must adapt or die.

Loss of Physical Media

We’ve lost the physical media upon which art was distributed. This served to reinforce general acceptance of the underlying revenue mechanism in people’s minds. However, online, the Emperor is now wearing the finest of sheer silks (fully naked if you ask me). There’s no scrap of clothing, no wodge of paper, magnetic tape, plastic box, not even an acrylic disc. It’s now just a memory. The only thing that reminds us we’ve paid our share for the pure information that now comprises art, is the click of the I Agree button on the license page.

So what’s the answer?

Don’t sell the horse after you’ve let it out of the stable. Or in other words, don’t release the digital content and then try to sell it (relying on copyright). You can’t sue 5 billion people. Nor can you place a compensating levy on computers (madness!).

And of course the classic: don’t try to lock the stable door after the horse has bolted. Here, I’m obviously talking of encryption and digital rights management. If the art can get into people’s eyes or ears, it can be copied by a computer. Encryption is fine for keeping things exclusive when the parties concerned wish to. If you’re communicating with someone who doesn’t care for exclusivity, encryption won’t really work, it just hinders.

Deal En Masse

So what should we do?

Sell the horse before you let it out of the stable. Go back a few hundred years and pick up the old revenue mechanisms that weren’t quite so good, because it was difficult to do deals en masse.

And this is because something has changed. For the same reason that copyright is becoming ineffectual, so the public commissioning revenue mechanisms are now becoming feasible.

The biggest mental block facing business today, both online and even with interactive TV companies, is to be unable to think of dealing with the market except as a collection of individuals.

The only deal we’re particularly familiar with en masse is voting, e.g. democracy, etc. We dabble with this in TV shows, even with online polls, but that’s about it.

Who has dared to let people vote with their money? In the same transaction?

The new value chain

Bypass the agents, the publishers, the marketers, the advertisers, the distributors, the retailers, the packagers, etc. The new value chain is the artist and the audience. We’re right back at the craftsman and the customer. Except this time, there’s nothing stopping the artist doing a deal with a million people at once. Though no one’s thought to create the necessary de facto e-commerce web site for such a deal. Still too busy selling to punters one by one…

The Emperor is Naked

Of course, it’s very difficult to believe an emperor could possibly be naked.

If you’re selling digital art, digital content, digital whatever, reserve a tiny piece of your long term strategy for the inconceivably possibility that King Canute’s bottomless purse of copyright will be overrun by a tide of countless tiny infractions.

Even so, the end of copyright is not the end of commercial viability for digital content, it’s the end of a particular revenue mechanism.

Consider Revenue Mechanisms that don’t need Copyright

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