Categories
media economy

Getting paid in the digital economy

Spring

Few topics are as potentially toxic as the question of how one gets paid for creative work in the digital economy.

This week has seen the latest round of recriminations on this topic following Nate Thayer’s posting of correspondence with The Atlantic, in which he was invited to edit a previously published 4,300 word article down to 1,200 words for no pay. Thayer’s post went viral, attracted more than 100,000 views on his blog, sparked widespread social media debate, and led to an apology from The Atlantic.

As someone who writes, lectures and produces freelance, I have a personal interest in these questions. I’m regularly asked to work for free. Only this week I was invited to present a new keynote lecture to the annual meeting of a European organisation, something that would have taken at least three days to prepare and required two days of travel, yet there was to be no recompense beyond the necessary economy flight and overnight hotel stay. Needless to say, in the absence of any other perceived benefits, this invitation was respectfully declined.

As much as examples like this invitation and Thayer’s experience invite a moralising response, we learn little about how the new media economy works through venting our disgust. Instead we need to probe deeper into what such moments reveal about the cultural economics of our current moment.

To that end, in repsonse to Thayer’s post, Reuters’ Felix Salmon detailed the new dynamics of online journalism, showing that while there are good digital journalism jobs available, overall the structure of publishing online means “the web is not a freelancer-friendly place.” Alexis Madrigal’s impassioned defense of The Atlantic editor’s perspective also revealed how an online operation differs from (often misplaced) assumptions about the good old days of print magazines. And paidContent’s Matthew Ingram spelt out how the almost infinite supply of quality writing available at no direct cost means few people are going to make a living directly by submitting work to traditional outlets.

This doesn’t mean that people don’t value good writing, or that there aren’t successful new publishing outlets, like Marco Arment’s The Magazine, which is digital only (and a testament to simple design), runs no ads, pays its contributors, and is already turning a handy profit.

What this latest debate shows is that in the context of infinite supply, creative practitioners will rarely be remunerated directly for their work, regardless of whether that work is in the form of words or images. Instead, as I’ve long argued, the dynamics of the new media economy means those of us working independently will have to be compensated indirectly from diverse sources. We all have bills to pay, but we may not get the money to do so from the words we write or the pictures we produce, but from value created around those words and/or pictures. Above all else, we have to forgo the easy moral outrage and develop a more sophisticated understanding of the role ‘free’ plays in relation to paid in a structurally open system like the internet. Creative experimentation is the order of the day. I know personally how hard this is, but it is now unavoidable.

Photo credit: Rebecca L. Daily/Flickr

Categories
media economy photography

Leveraging the web: how people are willing to pay for content

Will people pay for online content?

Here is a recent example, and a recent thought experiment, that gives us food for thought in the often fraught discussion of how people can leverage the benefits of the web (global access and ease of distribution at reduced cost) to generate income from creative content.

The example comes from the comedian Louis CK who asked:

If I put out a brand new standup special at a drastically low price ($5) and make it as easy as possible to buy, download and enjoy, free of any restrictions, will everyone just go and steal it? Will they pay for it? And how much money can be made by an individual in this manner?

Louis CK has provided an admirably transparent account of his thinking and production process, revealing the costs, revenue and profit. His experiment has been analysed in detail by Mike Masnick of Techdirect in two interesting posts (here and here). In short, he broke even after just 12 hours, and is now in profit to the tune of $200,000 or more.

On the purchase, page Louis CK put a message directed at prospective purchasers:

I made this video extremely easy to use against well-informed advice. I was told that it would be easier to torrent the way I made it, but I chose to do it this way anyway, because I want it to be easy for people to watch and enjoy this video in any way they want without “corporate” restrictions.

So Louis CK’s experiment made it easy for ‘pirates’ to take his content for free, avoiding all payment. Perhaps some did, but more than 100,000 people paid. That’s a pretty decent demonstration of willingness.

Which brings me to the thought experiment. Piracy is regularly cited as a reason for declining revenue to creators, and some of the figures bandied around – in the tens of billions of dollars – are breathtaking. At TorrentFreak they speculated “what might happen if all US BitTorrent users made the switch to Netflix.”? In other words, if all US file sharers, who were paying producers nothing, suddenly stopped passing around films for free and became paid customers of the online video service Netflix, how much money would be raised?

The answer: $60 million. Not to be sneezed at for sure. But that’s small change when Hollywood takes in $10 billion in ticket revenue annually and a major star can personally command $20 million to appear in a major film. It’s some three hundred times less than the loss from piracy claimed by the industry’s lobby, the Motion Picture Association of America. And its equivalent to the MPPA’s annual budget.

Let’s be clear about one thing – making these points is NOT a defence of piracy. But we need to critically assess claims about the impact of piracy, not to mention factor in those findings that suggest ‘pirates’ actually spend far more on legally acquired content than the average consumer.

Is there a lesson from this for domains like photography and journalism? I think so. While people continue to tell pollsters they won’t pay for daily, general news online, clearly there are increasing examples of people being willing to pay online for quality content with lasting value, even if they can get a copy for free.

Leveraging the web to make such content available for purchase requires creative producers to shift their starting position. Too often I’ve heard people blame the plight of creative industries on the alleged moral failings of potential consumers or fans. It’s time to move beyond the claim that most people using the web are feckless thieves just waiting to steal content. If you make quality content available in affordable, easily accessed formats, and you make it easy for people to find you and pay for that content, then you can leverage the web to find those who will part with their hard-earned cash for your work. That responsibility lies with the producers not the consumers.

Photo: Community Friend/Flickr

Categories
media economy

The new media landscape (1): contours of change

Change in the media landscape is constant. Everyone involved in the production of creative content – photographers, journalists, writers, and musicians, as well as those who deal in those products – knows that nothing is as it was.

Too much of the current debate about how creative practitioners can cope with these upheavals proceeds without an understanding of the big picture and historical context. There are some hard realities that have to be properly understood before new strategies can be devised.

In this series of three posts, I want to lay down an understanding of what is happening, how some are responding, and what others can learn from them. Many of the elements I discuss are well known, and many of the examples I cite show that people are already positioning themselves to prosper from these changes. But for those who are still unsure about what is happening and what to do I think it is important to take this step back in order to plan where to go.

These posts are based on a presentation I gave at the CEPIC New Media Conference 2 in Istanbul on 21 May, and I would like to thank Marco Oonk of Fast Media Magazine for the invitation. For that event I knew I could not compete visually with speakers from the stock photography industry, so I selected key words that named the main themes.

In this first post, I will cover the concepts of disintermediation, disruption, ecology, disaggregation and free, including the importance of the relationship between scarcity, abundance and fungibility in the new media landscape. In part two I will unpack the concept of community and its importance, and in part three I will review how some are thinking about business models in this context. As one of my concerns is how documentary photographers and independent photojournalists can work better, I will outline some practical steps they can take to incorporate some of the lessons from this review.

So what are the contours of change in the new media landscape?

The internet has changed everything. That is obvious, but the question is how? ‘Disintermediation’ is one ugly word, but an important handle on the change wrought by the internet. Made popular by Dave Winer, the idea comes from economics and points to the removal of intermediaries in a supply chain. It highlights the way you can cut out the “middle man” and deal directly with your audience or customer.

The internet ‘disintermediates’ because it collapses the cost of publishing, broadcasting and distributing, removes obstacles to the creation of new social groups, and eliminates barriers to the formation of distributed networks.

All of this means we live in a remarkable time where our ability to communicate, share, collaborate and act has been expanded beyond the limits of traditional institutions, distributors and gatekeepers.

None of this means the internet is the single cause of all change or that we have a perfectly open world. And we have to remember that for all its potential universality, the internet currently only reaches one-third of the world’s population. But it does mean the internet is an important enabler of change that challenges or routes around many of the barriers and gates in our world.


Through disintermediation the internet is disrupting many walks of life, especially information industries. When we consider that global internet traffic is predicted to increase fourfold by 2014 its easy to see how many areas are being affected by the internet.

The disruption that follows from disintermediation can be understood as resulting in what Richard Stacey describes as “the separation of information from its means of distribution.” This means that all those modes of information distribution we have taken to be natural – the newspaper, magazine, radio station, album-length CD, television broadcaster, cinema and the like – are being challenged by new means of producing and circulating content. As one analyst remarked recently:

The very model of the traditional entertainment industry is predicated on the inefficiency of distribution…Films, TV, music are all produced and distributed in a tightly controlled way. The internet blows the doors off that concept because it’s an environment where everyone can distribute with maximum efficiency to everyone else.

Netflix is showing what this means in practice. It now accounts for one-quarter of North America’s aggregate internet traffic because streaming video is so much more efficient than mailing DVDs. It costs Netflix $1 to send out a DVD, but just 5 cents to stream the same movie. As a streaming service they will eliminate the $600 million they currently spend on labour for checking discs and the postal service, with obvious negative impacts for both those sectors.

The lesson from this is clear – in Richard Stacey’s words, “hitch your fortunes to the information and you will prosper, chain yourself to means of distribution and you will die.”


The web, built on top of the internet, has created a new ecology of information, both literally and figuratively. ‘Ecology’ is the study of organisms in relationship to each other and their environment. As a new ecology of information, the web exists as much more than a competitor to existing infrastructures. It is not a new market side by side with traditional markets – it is reshaping both the infrastructures and the markets for everyone.

Yet many information industries treat the web as a competitor rather than an ecosystem. For example, a recent debate about the difficulty of linking from many newspapers stories to supporting information revealed the print-centric nature of media company workflows and CMS’s, and showed how far they were from a digital-first strategy.


In this new ecology – where disruption is powered by disintermediation – we are seeing a change in the structure and process of information.

It is changing what have been called the “atomic units” of established modes of information, and unbundling traditional modes of distribution. We are seeing the disaggregation of forms and formats we have taken to be natural:

  • the disaggregation of albums to individual downloads in music
  • the disaggregation of newspapers and magazines to stories that can be circulated or linked to individually
  • the disaggregation of broadcast stations and fixed schedules to personal streams that can be consumed anywhere and anytime

The idea of the ‘stream’ is significant here. It emphasizes process rather than product, because once disaggregated, things can be updated.

Even when thinks look like fixed commodities we should think in terms of streams. iTunes downloads and Kindle ebooks are sold as though they are fixed units, yet they are parts of a stream leased for use on particular devices. With ebooks your edition can be updated or removed by the organization that controls the stream.

Disaggregation does not mean things dissolve into a formless universe. They are re-aggregated, but that is increasingly done through social networks. For example, a study for CNN found that social media was used to share nearly half of all news.

Disaggregation, therefore, leads to the importance of information that is social, modular and mobile. As Mathew Ingram has observed,

the future of media consumption is going to look a lot more like a smorgasbord of sources and content, personalized and recommended by friends and our social graph, and a lot less like that megaphone traditional media outlets used to have and control.


Few words rile creative producers more than the idea of free. But it is a concept that has to be confronted. We have to move beyond the competing ‘theological assumptions’ that either content should be free or that people should pay. ‘Should’ cannot be the basis for a rational response to the hard realities of the new ecology of information.

There is no escaping the fact that free is part of the intrinsic architecture of the internet. Tim Berners-Lee, who is credited with inventing the web, was recently asked why he put the web into the public domain as a free facility rather than a private enterprise. “Because otherwise it would not have worked,” he said. (Just watch the first two minutes of this video interview with Berners-Lee to appreciate this core value).

The problem is that the web’s essential characteristic makes earning revenue hard. As Frederic Filoux notes, “the social web’s economics are paradoxical: the more it blossoms, the more it destroys value.”

Filoux’s statement renders value only as price or revenue, thereby overlooking the cultural and social value that flow from free circulation and distribution. Nonetheless, the web’s architecture of free intersects with a basic economic formula.  As Chris Anderson argues in his book Free (p. 173), “if ‘price falls to the marginal cost’ is the law, then free is not just an option, it’s the inevitable endpoint.”

That does not mean that everything is given away for nothing. Despite claims to the contrary – for details see my review of his book – Anderson is very clear that (a) free is not a business model and (b) that it is always linked with paid.

The ability to leverage the web’s architecture for paid content depends on the relationship between scarcity and abundance. Most content producers have priced their work on the assumption that it is scarce, and inefficient modes of distribution have supported that. But because the web has made many things abundant, charging scarcity prices is not easily sustainable.

Here I want to introduce one more concept – fungibility.  Something is fungible if it can be substituted by something else. A breaking news story is fungible because there are a number of credible sources that can be substituted for each other. A music track or a specific photograph is not fungible because if you are a fan who wants only a track from a particular band, or an image by a particular artist, they cannot be replaced by music or images from others.

Scare items are not fungible. Abundant items are fungible. If you produce something that is unique and not found elsewhere, you can resist the inevitable free endpoint. If you produce something that is abundant and can be replaced by something else, then you will not be able to directly charge scarcity prices for it (although, as I will argue in the third post, there will be other ways of using that content to produce revenue to support its production).

Conclusion

These are the dynamics that I think drive the changes in the new media landscape. They are the hard realities creating the new ecology we all operate in, producing a landscape marked by disaggregation in which traditional forms and formats of distribution are being unbundled, and content is increasingly social, modular and mobile. Content producers and distributors have to face up to these dynamics, and try and work with these developments in order to achieve their goals. In the second post in this series, I will argue that the concept of community is an essential part of that process.

 

Related posts

The new media landscape (2)

The new media landscape (3)

 

Photo credit: laihui/Flickr, used under a Creative Commons license

Categories
media economy photography

Paying for photojournalism: a review of the New York Times ‘pay wall’

Newspapers in the US and UK continue to struggle with growing debt, declining circulation and falling advertising revenue. In the search for additional sources of revenue, new schemes for paid content are being implemented. (For an excellent overview of the issues, listen to WNYC’s On the Media podcast from January 28). After nearly two years planning, the New York Times launched its “metered” system this week.

This development has been greeted positively in the photographic world, with Aric Mayer, Rob Haggart and Joerg Colberg endorsing the thrust of the scheme. While agreeing that news organisations need to find new ways to fund critical journalism, I don’t share this upbeat assessment of what the New York Times scheme means for photojournalism. Indeed, as I’ve been arguing for the last eighteen months (see here, here and here), I think it’s a mistake for photography to pin its hopes on a revival of the long-lost editorial paymaster.

Here I will review commentary on the NYT scheme and suggest an alternative way to think about revenue that would be more beneficial for photojournalism. This a complex issue that demands some key assumptions are questioned, so this is a very long post. I don’t pretend to have all the answers, but I hope you will take the time to read it in full and engage the debate.

The pay scheme that isn’t a wall

Although much of the discussion has proceeded in these terms, the NYT scheme is not a pay wall. As Steve Yelvington argues,

A paywall…is a dumb, blunt instrument that separates content from the general public, prevents sampling, inhibits linkage and sharing, and usually is the product of an unhealthy arrogance.

That view sumps up the approach of the Times and Sunday Times in London, the experience of which demonstrates the limits of that approach. Although there are now 79,000 digital-only subscribers to the Times pay wall, there has been a massive reduction in the paper’s online readership (90% according to one initial estimate), advertisers have become nervous about the decimation of their online audience, and the journalists are cut off from the wider social media conversation because of the block on search engines and the inability to link freely. The small gains in monthly revenue will not make a significant dent in the tens of millions of pounds the Times loses annually, they may not offset the lost advertising revenue, and they come at the price of cultural presence and global engagement, which in turn most likely reduces advertising revenue that depends on reach.

To try and avert the falls in readership that result from demanding online payment, the NYT scheme permits some open access and encourages continued linking. Everybody can access 20 articles a month, after which you are asked to pay $15-$35 every four weeks depending on the device you want to use. If you are a print subscriber, you get access without additional cost, and if you come to a NYT article via a search engine or distributed link (via Facebook or Twitter), that does not count against the quota of twenty. To get it all up and running, NYT is offering, in an echo of iTunes, four weeks access for 99c.

Reactions and estimates

Reactions to the details of the NYT scheme have been many and varied (see eleven mixed responses garnered by the Nieman Journalism Lab here). Whatever one’s initial take, it is clear that the paper’s aim is to limit the number of readers who will encounter the request for payment. As Steve Buttry observed:

they have structured this to apply to a small segment of their online audience (people who read more than 20 pieces a month who don’t subscribe to the print edition and don’t find them through search or social media).

Buttry feels that the result will be “a trickle of revenue, not worth the time they spent developing the plan.”

Given that the NYT spent $40-50 million on planning and implementing its scheme, it needs to produce a significant amount of money just to cover development costs before there is any hope that new revenue will make its way into content creation – the journalism, and then photojournalism.

There is also the issue of lost opportunity cost. As Koi Vinh – a former NYT designer who was involved in the initial planning — asked what else could the NYT have developed with the enormous effort and resources the scheme consumed in the last two years?

I’m not qualified to judge detail of the economic projections, but it is clear from reading the commentary there is a great deal of uncertainty around the plans. From its global audience of 42 million unique users each month, the NYT is hoping to get 300,000 digital subscribers in the first year. That could mean it takes two years to repay the development costs, or it could mean increase in subscription revenue of 10% or more. However, even the latter, more optimistic calculation offers a boost that is marginal in comparison to advertising revenue. Ken Doctor notes that digital advertising makes up 26% of total advertising revenue for the paper, and that sector is growing:

If the Times could nab another half a percentage point in market share of that still-growing pie, that would amount to $140 million a year, dwarfing new digital circulation money.

Personal expense and premium content

The NYT scheme varies in cost depending on the number of access points, and is being sold somewhat disingenuously as a particular amount “every four weeks” which, although it sounds like a “per month” proposition, actually requires thirteen annual payments. At the top end, it is a very expensive deal when compared to others offering similar services. Michael deGusta has visualized the NYT and its competitors, and he concluded by asking:

Does The Times really think the mass audience is going to decide their $455/year is better spent on The Times rather than getting 20+ free articles/month from The Times plus The Wall Street Journal ($207/year) plus The Economist ($110/year) plus say The Daily ($39/year) for good measure, and still having ~$100 left over each year? (emphasis added)

What the NYT is requiring for its digital-only subscription has lead deGusta and others (such as Frédéric Filloux) to argue that the NYT scheme is a defensive strategy designed to stop existing customers from cancelling their print subscription revenue rather than a creative approach to generating new digital revenue.

Another part of the NYT scheme underscores its defensive nature. At first glance the scheme is a “freemium” approach in which a certain amount of free content is provided in order to build up demand for premium, paid-for access. Yet while the NYT is requiring payment from its most regular readers, it is not offering them anything new in return. The scheme requires payment for content they have accessed for free until now. As Dave Winer remarked, “they’re not offering anything to readers other than the Times’ survival, and they’re not even explicit about that.”

Still free for many

The NYT scheme is also not a pay wall because it is porous and easily avoided.

Part of that is intentional. To ensure it remains in the global social media conversation, the paper allows the front page of its blogs to be freely accessed, and has no limit on the number of articles that can be read by following a link on Facebook, Twitter and some search engines. Indeed, the paper has its own Twitter account @nytimes with more than 3 million followers, all of whom can follow as many links as they like each month. The Lens blog has discussed all this overtly in a special note.

In addition, NYT journalists and columnists with their own followers – such as the Lens blog’s James Estrin – will get more articles, posts and galleries for free. This is all before the computer literate pursue other ways to maintain free access, which involves little more than four lines of code to get around.

Can it emulate other successful pay schemes?

People who want to see good journalism well funded have been hoping that the NYT scheme might replicate the Financial Times success with digital subscriptions (although there is now a debate how successful the FT actually is). Nonetheless, the fortunes of the FT (or the Wall Street Journal) are not replicable for general news and daily journalism. The FT and WSJ provide time-sensitive market information that has direct value to subscribers, many of whom get it as a business benefit rather than through personal expense and are therefore not price sensitive.

Much as we may wish otherwise, even the investigative journalism of the NYT is not a scarce or fixed commodity like an FT market analysis or a music track from iTunes. With other credible news sources (e.g. the BBC, Guardian et al) pledged to remain globally free, and the news stream constantly updating, readers are resistant to paying for online content that has been and will remain freely available.

If that makes you wish for a chance to rewrite history – imagining that ‘if only’ newspapers had ganged together and set up universal walls at the beginning of the Internet age we would now be handing over money without complaint – then pause for a moment and reflect on this. The Internet is an intrinsically open system. If all the legacy media outlets had withdrawn into walled gardens, do you not think that sometime during the last fifteen a bright spark would have set up a free global news site attracting millions and funded via advertising or related sources? Something like, you know, that Harvard graduate and his little project called Facebook…

What is the purpose then?

The NYT scheme is expensive, complex, porous, and easily worked around. Even if it functions as desired it won’t generate anything like the revenue that would flow from the growth in online advertising. It is accompanied by risks, such as alienating the NYT’s most engaged and loyal users and reducing the reach of NYT stories. And it has potentially large lost opportunity costs – an on-going commitment to a print-based strategy that will run its course in the years ahead, and the lack of investment in creative alternatives during that continued decline.

It is possible that all the sceptics are wrong, and we shouldn’t knock the willingness to experiment in these revolutionary times. There is great uncertainty about the details of the economic projections, but even if the scheme succeeds beyond anyone’s wildest dreams it is only going to provide a fraction of the needed revenue to fund critical journalism. Paid content schemes, no matter how flexible and nuanced, are subscription models, and subscriptions have historically only ever provided approximately 20% of a newspaper’s revenues with 80% from advertising (although papers like the WSJ have a 50/50 split). Given the availability and culture of freely available general news, who would bet on digital subscriptions reaching even that historical share?

So why have they done it?

I think the NYT scheme is less a business model and more a moral imperative.

It is based on the claim that people should pay for quality journalism. It is a scheme designed to defend the worth of the paper’s journalism. This has been explicit in a number of arguments in favour of such schemes that talk about a “value proposition.” It appears when an editor says

the act of placing a value on our journalism may be more important than any penny we ever collect

And it is to be found in Aric Mayer’s statement that

it [content creation] is a thing worth paying for, and requiring the audience to pay for it demonstrates its value.

Of course, quality journalism and photography costs, and it should be paid for (though I am not as misty eyed about the USP of the NYT as some). The question is how and by who is content paid for. Taking an historical perspective again, we have to note two important things.

First, news and investigative journalism has never made money by itself in order to pay for itself. We should not, therefore, be judging current plans by the flawed assumption that we are looking for a single business model that will do what has never previously been done.

Second, we as readers have always paid for modes of distribution but never directly for content. Viewing the NYT scheme as a device for readers to value content though direct payment is wishing for a historically unprecedented change of behaviour in the most unlikely of circumstances. As Steve Buttry caustically observed:

My friend and former boss Jim Brady says that you can’t build a business model based on what people should do (and newspaper people believe in their bones that people should pay for their content). You build a business model based on what people will do. This tortured maze of exceptions and trigger points is a laughable effort to collect because people should pay but to find a way not to lose the people who won’t pay.

The NYT scheme also comes up short as a value proposition because of it offers subscribers nothing new, there being no exclusive or premium content to go with the newly demanded payments. And quite how a company rationalises asking patrons at the front door to pay while the very same goods are being handed out the back door free (via its own Twitter feeds) remains a mystery.

But above all else we should recognise that value has different forms and manifestations. It is a mistake to see price or payment as the only index of value. Circulation, distribution, engagement and global presence have considerable value.

Fine, but where does the money come from?

In his welcoming assessment of the NYT scheme, Aric Mayer wrote:

Journalists and Photojournalists should be applauding this move. It signals an effort by the New York Times to uncouple content creation from direct dependence on online advertising. Without online subscription prices or online newsstand sales, there simply is no other way of generating a predictable online revenue stream.

There are, of course, problems with a dependence on advertising, although that has historically been the mainstay of the legacy media many continue to view fondly, and online advertising is growing and will soon overtake print advertising.

Diversifying revenue has to be a good strategy. But is it that case that without online subscription “there simply is no other way of generating a predictable online revenue stream”? I disagree with that claim.

There are many other ways of generating predictable revenue streams, and this is where the news business has to learn from other sectors like the music industry, which encountered digital disruption before journalism. Pursuing these routes could mitigate the risks of the paid content approach.

John Temple, the last editor of the Rocky Mountain News, argued we have to appreciate that news organisations do not make money from news – news is the ‘brand’ for the organisation and the money comes from relationships and services only indirectly related to journalism. Instead of a single business model for journalism emerging, we need to see a series of diverse models producing revenue indirectly.

For music, the idea that content creation (the songs) is what provides significant revenue through fans paying directly is slipping away as album sales fall. For some of the mega acts, only a tiny fraction of their revenue comes from the music they write. The bulk comes from things that revolve around the content – concerts, merchandising, video games, advertising, and sponsorship. And some of these mega acts give their content, the music, away for free in order to enhance their revenue from the related but indirect sources.

This means that instead of just advertising and subscriptions, transactions are a major alternative revenue stream. Indeed, a Fairfax media executive has remarked that transactions rather than advertising or paid content were the best on-line revenue streams. Crucially, transactions require news organisations to build a community around their brand and product, and then take a percentage of the transactions (hotel bookings, financial advice etc.) those community members conduct through the associations, links, and relationships provided. The various ‘reader’s offers’ that papers have long provided are a pre-web version of this.

How might this work for the NYT in relation to photojournalism? Here is a proposal that is much more direct that the newly proposed scheme and the hope that some of its revenue trickles down to content creators. (BTW, has anyone reported a rise in photo fees or a spike in demand for photographers by News Corporation since the Times pay wall went up?). If someone takes up this proposal for a photography site, I might even coming calling for a consultancy fee, but for a limited time only I am offering it for free!

The Lens blog is a high profile site with some 750,000 users visiting each month. Instead of raising money by hoping some of those subscribe on their 21st visit each month, consider the monthly visitors as a community of interest around photojournalism and offer goods and services to that community. There could be Lens-sponsored master classes, special events and workshops for both professionals and the general public; print sales; discounted equipment and photographic services via business affiliates; photo tours and themed travel; equipment, medical and travel insurance for practitioners; logistics and visa services for photographers having to travel at short notice…you name it, anything that interests a broad photographic community, amateur and professional, could be offered by negotiated deals where Lens’s earns a percentage on each transaction.

This strategy would leverage the Lens blog Twitter feeds and referrals providing unlimited free access. It would be based on growing the community that comes to the site, thereby underscoring the value of having quality photojournalism distributed globally and the benefit of having it accessible to as many as possible. It could raise more revenue than subscriptions could achieve, and the revenue could go directly to photojournalism.

Funding critical journalism and photography has always been difficult and will remain difficult. Hoping for a paid content scheme to offer salvation strikes me as being like a cargo cult. Paying for premium content, or content with longevity – like the move to make magazine articles saleable as in-app downloads or Kindle singles – has a future, through the amounts may not be large. But there is little historical or contemporary evidence to suggest people will start paying for daily news in sufficient numbers, and remonstrating with individuals about what they should do is something best pursued by priests rather than corporations.

Equally, scepticism about paid content is not a theological position dependent on the virtues of free. I think an appreciation of how ‘free’ functions on the web is essential but that means seeing how it connects to paid. Like many I happily pay for multiple modes of news distribution. Having stumped up for a seven day print subscription to the Guardian and Observer, a digital replica subscription of the same papers and two versions of the Guardian iPhone app, while eagerly awaiting their iPad app, GMG has many of my hard earned pounds. They would get even more from me if they had a photography blog that offered equipment transactions, because purchasing that new tripod I need or shotgun mic I want could earn them affiliate revenue.

But if the Guardian was to go back on its commitment to free access to quality content through those modes of distribution, I would be heading elsewhere for my general news and comment. That is the nature of media ecology in the twenty first century, and only a realistic assessment of how people function in the world of social media will provide a sound basis for funding new content.

Featured photo: borman818/Flickr, used under a Creative Commons license

 

Categories
media economy photography

Making documentary possible: How the Internet leads to new funding opportunities

Finding the money to enable new photographic work is one of the most pressing issues practitioners currently face. Editorial paymasters have been in decline for a very long time, forcing those who want to pursue challenging and time-consuming projects to seek other means of support. Now the Internet’s disruption of the media economy has quelled any forlorn hope that there will be a single, universal business model to replace the advertising revenue that enabled – some time ago, in a limited and indirect way – photojournalism and documentary work.

This challenge requires a radical rethinking of how creative practice can be supported. One step is to recognize that because the Internet has solved the problem of distribution by bring the cost effectively to near zero, it’s highly unlikely any business model can hitch itself to a single mode of distribution and succeed. Another step is to understand that leveraging the benefit of the Internet’s capacity for distribution in all these channels requires some content to circulate for free.

In our digital present, as soon as something (like a song or photo) becomes an easily replicable file of bytes, nobody can exercise perfect control over its distribution. And if one cannot exercise this control, then being rewarded for the creative process that arranged those bytes cannot be limited to the sale of those bytes.

Of course, few concepts raise more hackles in the creative world than the idea of ‘free’. At the base of this concern is the misplaced belief that free is itself the business model. Instead, free needs to be understood as an acceptance of the dynamics of digital distribution and the first stage in finding ways to gain rewards from that largely unfettered circulation.

What does this mean in practice? As examples from the music industry (as opposed to the recording business) demonstrate, many artists, both new and established, are already pursuing these strategies. They may or may not replicable in the photographic world, so we cannot say a ‘new business model’ has been discovered and will work for all concerned. Nonetheless, I’ve come across a few examples in recent times of new ways of working that are producing the financial means to foster new creative practice.

  • Stephen Gill publishes his work through his own imprint Nobody Books, and issues both regular versions and limited editions of 100 that sell for £200 or more. This is “versioning” and is driven by the fact that in a world of infinitely reproducible digital copies a sufficient number of people want the non-reproducible in material form and are prepared to pay handsomely for it.
  • Nick Turpin of Nick Turpin Publishing told the British Journal of Photography earlier this year:

“My business model is very specific, I have to make my publications quickly and efficiently, sell them directly to the public through the internet, thereby avoiding the loss of 45 percent of my cover price to distributors and bookshops, and market them using social media such as Twitter, Facebook and my own website. I build a community around the publications allowing, for example, street photographers to submit their work for inclusion in the next Publication magazine. More than 1000 have done so. I hesitated to show too much of my first magazine online, but I actually found that the more I displayed images from it, the more people wanted to buy and own it – the opposite of what I had expected” (emphasis added)

  • Ctien, a Los Angeles-based fine art photographer, has used his web presence to solicit regular sponsorship from his community of admirers. He offers people four contributor levels, asks for monthly subscriptions, and offers various cards and prints in return depending on the amount they pledge. From just 94 fans he has obtained $15,000 per year, which amounts to one third of his living expenses.
  • This approach also works for social documentary. Rob Hornstra and Arnold van Bruggen have garnered a lot of attention for their Sochi Project, which is covering the issues in the run-up to the 2014 Winter Olympics, and makes some examples of the project public on the web while retaining others for subscribers. Like the previous case, through different supporter levels and their engagement with those who sign up, they have attracted €22,000 in the first year which enabled them to undertake the first stage of the work.

There are also collective funding platforms where the web’s reach enables people to pitch for public support to support their work:

  • Kickstarter is the most notable of these. It has seen 3,000 projects funded (a little less than half those that bid for support) and you currently needs a US bank account to start a project, but anyone with a credit card can give. Projects are only funded when they reach their goal, and most projects are asking for under $10,000 but some raise many times that. The most successful projects are over-subscribed, and the total amount of money raised is available for the proposer. As in the above cases, higher rate pledges are encouraged through versioning. While used for all sorts of proposals other than photography, documentary projects have done well too. A recent example is Amira Al Sharif’s proposal for “Unveiling Misconceptions: A Muslim Woman Documents Lives of American Women Project.” Currently with 208 backers it has raised $8017, and will likely double its goal by the November deadline. Amira was aided in her efforts by the support of Ed Kashi who effectively used Twitter to distribute her plans through various networks (mine amongst them).
  • Starting early next year, emphas.is will take the crowd-sourcing model of Kickstarter and partly apply it to photojournalism. An introduction to the project is online now, and is preceded by screens that declare “what if you were on Robert Capa’s email list in 1944?…what if Don McCullin was blogging live from Vietnam?…Now imagine if you had sent them there yourself.” Its invitation for supporters to engage with photographers directly is enticing, and given that 3,500 people have already registered their interest, substantial support seems likely. While the funding is open and crowd sourced, the projects on offer are limited and “carefully selected by a board of reviewers composed of industry professionals.” Although emphas.is depends on the new thinking demanded by social media, and the supporting blog titled its first post “never mind the gatekeepers,” the project does unfortunately turn to some old ideas to introduce its purpose, not least when they claim to have “partly” found “the silver bullet that will cure all that ails the media industry.” Likewise, casting contributors as people “willing to pay a small fee for the privilege of being included” is to potentially rely on an outmoded idea of subscription and diminish the necessary community building aspect of crowd sourced funding. I hope they recast their thinking to more accurately reflect current realities as they go forward with this important initiative, and I hope the gatekeepers on their board of reviewers would be open to a project like Amira Al Sharifs.

These examples pursue a variety of different approaches, but all use the power of the web to connect with supporters and offer them both engagement and reward for their support, often for projects that are yet to be undertaken. Even when material products like books are being produced, all these examples depend on having a web presence and being active in social networks to build a community of supporters. In all of these cases free does not mean giving everything away for nothing; it means creatively using the new media economy for new works.

None of these examples lead to a single, replicable, one-size fits-all business model. Each has its own business model. It’s never been easy funding the good work in photojournalism and documentary. It will continue to be as difficult as it’s ever been. But if we think beyond the confines of the past its possible to see a wider range of tools that can both create and access a larger community to make it possible.

This post is drawn from a lecture I gave at the International Orange Festival, Changsha, China on 23 October 2010.

Photo credit: iskanderbenamor/Flickr, used under a Creative Commons license.

 

Categories
media economy photography

Thinking freely: New business models for the digital economy

Everything costs something and no body wants to work for nothing. This statement of the obvious drives those disturbed by the impact of the Internet on business models for information industries. Individuals declare that they won’t give their work away, critics claim someone has to pay for content, and insiders (like the editor of Photo District News) repeat hoary old adages such as “no one will buy the cow if your giving the milk away for free.”

Free. If there’s one word that divides people and raises hackles it’s ‘free’. Things do cost and we do want to get paid so how can free make financial sense? Like all contentious concepts, free has lost much of its meaning in its transition from economic idea to bête noir of traditional business. It is time to go back to the beginning and appreciate what ‘free’ involves and for whom it makes sense. I will be using Christopher Anderson’s book Free: The Future of a Radical Price as a guide, which will take us to some unexpected places for those who think its argument is no more than its title.

***

The ability to charge directly for something depends on the relationship between scarcity and abundance. If you are producing something that is scarce you can price your product in a way that those operating in an abundant market cannot. If your company manufactures exclusive, unique sports cars you can demand a high price. But if, like most information businesses, you operate in competition with numerous content providers, you cannot charge scarcity prices (Free, p. 127). We might think that The Times offers something unique and can therefore price itself accordingly, but its news coverage is not sufficiently different from its numerous global competitors to justify its readers paying a markedly higher price.

For an information business in the digital economy, where information is formed through bits, and the cost of distributing bits is near zero, the ability to charge scarcity prices is further diminished. It is here the virtue of the web leads to an economic conundrum. The web has collapsed the costs of production and distribution for anything made up of digital files, thereby expanding the bounds of creativity, communication and collaboration. If maximizing the reach of information is the goal then the web is an indispensable and unavoidable tool. However, the digital capacity that so enhances circulation also undercuts the capacity of content providers to charge directly for their commodities. By largely removing the barriers to entry, the web has enabled the number of content creators to expand dramatically, thereby increasing competition and ending scarcity. At the same time, the end of those entry barriers makes paid content a difficult proposition. As Anderson argues, “if ‘price falls to the marginal cost’ is the law, then free is not just an option, it’s the inevitable endpoint” (Free, p. 173).

***

When we read that free is “the inevitable endpoint” it seems impossible to square the circle and reconcile this with of our starting point – that everything costs something and no body wants to work for nothing. But this is where we need to pay closer attention to the details of Anderson’s argument. Far from arguing that all things are given away and no one earns a penny, Anderson proposes that we stop fighting the disruptive powers of the Internet and find ways to harness its virtues so that creativity can be rewarded.

This means that free is not the business model. Aside from the fact that we are not searching for a single, universally applicable business model, Anderson makes clear that “the most interesting business models are in finding ways to make money around Free” (Free, p. 14). Throughout Anderson’s book he repeats the point that Free is not enough and cannot be pursued alone. Free always works in conjunction with Paid, has to be matched with Paid and should make Paid more profitable (Free, pp. 70, 153, 176, 240).

The close and necessary relationship between Free and Paid might surprise those who relied on reviews of Anderson’s book for their understanding of his argument. Perhaps the most prominent of Anderson’s critics – Malcolm Gladwell, writing in The New Yorker – argued that “Free is essentially an extended elaboration of Stewart Brand’s famous declaration that ‘information wants to be free.’” Here we have a misreading based on a misunderstanding.

Like many, Gladwell only quotes half of this now infamous mantra. What this selective understanding always leaves out is that Brand – who founded the Whole Earth Catalogue and The WELL and was a significant figure in the early days of the web – identified the tension between the ease of distribution and its impact on value. Speaking at a 1984 hacker conference, Brand declared:

On the one hand information wants to be expensive, because it’s so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.

Few recall the beginning of this quote, so there is a chapter in Free exploring Brand’s statement, which Anderson says has become “probably the most important – and misunderstood – sentence of the Internet economy” (Free, p. 96). In a later conversation Brand demonstrated for Anderson what he meant:

The physical world analogy, [Brand] said is a pub. It provides a place for community and conversation, but it doesn’t charge for that. It just charges for the beer that lubricates it. ‘You find that something else to charge for…you always wind up charging for something different from the information’ (Free, p. 100)

The business models that evolve around the relationship between Free and Paid will therefore use indirect means for reward. This means that although Free looks like something novel and untested it effectively draws upon the established approach we know as cross subsidy.

What Free does do differently, however, is use the web’s ease of circulation and collaboration to create the probability that people might pay for something that is unique and considered relatively scarce. Although Free is not the business model, Anderson outlines some basic principles for any business model using Free as its starting point. These include:

  • Build a community around free advice, content or information
  • Collaborate with that community, getting feedback from them that enhances the free content or information being offered
  • Offer different or special versions of the free content or information provided and let those with money buy them
  • Build in a substantial profit margin to the limited products in order to pay for the production of both the abundant and scarce versions

This, then, is the much talked about “freemium” approach, where Free leads to payment for premium. It builds on the established idea of “versioning” whereby similar products in different versions are sold to different customers at different prices (Free, pp. 69, 165, 176). And it covers the full range of consumer psychology so that everyone from the person who wants something that is abundant for nothing, to the client prepared to pay for something similar but which is scarce, can be part of an information business’s constituency.

***

Does this approach work? The experience of the music industry says yes, and Anderson cites the oft-quoted Radiohead model in his book. For their album In Rainbows, Radiohead put it on-line prior to the standard CD release and gave fans the freedom to download then pay what they wanted. Zero was an option and some got it for free while others were prepared to hand over $20. In addition the band offered a deluxe box set at $80 each, and all of the 100,000 available sold quickly. The result was that Radiohead sold three million copies of the album across all formats (online, physical, deluxe), with the money made just from digital downloads prior to physical release exceeding the total from their previous album in all formats. Even more importantly, their subsequent concert tour was the biggest ever, and with the top bands now earning four times as much from events as from selling and licensing music, Radiohead reaped the rewards of extending their reach through free, on-line access to their music.

Mike Masnick at Techdirt has distilled the experience of Radiohead and other bands such as Nine Inch Nails into a “formula” for a business model that echoes Anderson’s principles:

Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model ($$$)

Masnick’s report offers a dozen detailed examples of musicians and companies that have embraced this approach and generated handsome revenues that reward them for their creativity even though they are not being paid directly for their content.

This embrace even extends to benefiting from the file sharers who are pilloried for the revenue they supposedly steal from content producers (something that motivated the controversial Digital Economy Bill in the UK). Masnick argues that the music industry needs to give up on the pursuit of new copyright laws, licensing schemes and DRM because of the way they inhibit connections with fans. A number of studies demonstrate that the “pirates” spend much more on legal music than regular consumers, and in his book Remix, copyright specialist Lawrence Lessig argues the downturn in physical album or single sales is not attributable to illegal copying. As such, prohibitions on sharing music are designed to defend the traditional recording industry with its business models based on the control of distribution, but get in the way of expanding the overall music industry, which is thriving like never before.

Can this approach work for industries other than music? Again, the answer is yes. Evidence from the book world shows that releasing free e-book versions of titles generally leads to increased sales of physical copies. Photography is also well placed to benefit. Cory Doctorow has argued that the more copies there are in the digital era the more valuable the non-reproducible becomes. This means that as digital copies of images proliferate – making both the image and the photographer better known and creating a community of interest in the process – the more a small but significant number of people will pay for “talismanic items” like signed, limited edition prints. This was borne out by a recent remark from Ben Burdett, director of the Atlas Gallery in London: “we sell to people who fall for individual images, especially well known images people recognise. They sell most easily because when people see them, they know and love them already.”

***

Getting to grips with how Free works requires strategic thinking freed from its established ways. Some of the hype around the arrival of the iPad has come from those who see it as a chance to correct “the mistakes” publishers made in the early days of the web (see the Photo District News editorial from February 2010). But imagining that there could have been world where every reader or viewer paid publishers directly for all their on-line content betrays a fundamental misunderstanding of what the Internet means for information industries. The web is an intrinsically open system, and new ventures would have emerged to provide quality information even if all the legacy companies had retreated behind pay walls from the outset.

Content creation has to be paid for, but in the digital world of information abundance that revenue is no longer going to come principally from direct payment. Free is part of a larger business strategy that leverages the web’s virtues for circulation and collaboration in pursuit of greater rewards, while recognising that we cannot (and should not) fight the impact of the Internet on distribution systems. Free does not mean giving everything away for nothing; it means creatively pursuing indirect mechanisms and cross subsidy to reap the benefits of the new media economy


Photo credit: TheAlieness GiselaGiardino²³/ Flickr

This was written as a guest post for Fast Media Magazine, and appeared there on 12 May 2010.