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media economy photography

The new media landscape (2): the importance of community

 

The disruptive power of the internet has made ‘community’ an essential concept in the new media landscape. A community is a group of people who share the similar interests, concerns or pursuits. They form around common purposes or practices.

As argued in the first post of this series, 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.

These distributed networks and new social groups are the basis of any new community. This post will argue that for creative producers community is a precondition of successfully operating in the new ecology of information.

There is, however, one common assumption about community that need to be dispelled before I consider what is involved in the development of a community that can support an individual’s creative practice.

Does size matter?

The ease with which web content can reach a wide audience can lead us to think that success is defined by mass interest. YouTube videos with millions of views seem to be the benchmark we must aim for. However, some data from new organisations shows how scale is not necessarily synonymous with success.

Newspaper web sites hailing the tens of millions of unique users they attract monthly is a regular feature (see this example). However, Navigating News Online, a recent report from the Pew Research Center’s Project for Excellence in Journalism, although flawed in many ways, offers a different take on these numbers.

NNO identified an important distinction between ‘casual’ and ‘power’ consumers of information. More than three-quarters of the traffic to the top 25 American news sites came from users who visited just once or twice a month. In most cases they will have arrived via a link or search, read once piece, and then moved on.

While there is an obvious social benefit in getting a media organisation’s content to as many as possible, these infrequent flyers will not offer much economic benefit even in terms of an audience for advertisers.

In contrast, the NNO report found that ‘power users’ – people who came to the same news site more than ten times each month, and spent more than hour each month on those visits – comprised on average only 7% of the total web readership.

This trend was known before the NNO report, and applies also to UK examples. Although the numbers are now larger, these 2009 metrics from the Daily Mail show the number of casual versus power consumers:

  • 28.7 million unique users/month globally
  • 8.9 million unique users/month from the UK
  • Of the UK users 611,588 came to the web site every day
  • Half of those UK daily users (c. 300,000) stayed for 20 minutes/month

So while the headline-grabbing tens of millions of unique users suggests a vast audience around the Daily Mail, their loyal British users numbered no more than 300,000 in 2009.

These dynamics are the reason pay walls attract a small number of subscribers in relation to the overall readership of a news site. Subscribers come from power users: pay walls exclude or limit casual users so depend on subscriptions from the most loyal.

Working with fans

The idea that it is the power users, the most loyal consumers, that are the basis of an economic strategy to fund creative content is common to the music industry, where such people are known as fans.

What the internet has done, however, is made to possible to directly access prospective fans and provide them with content. The consequence of that is that artists don’t have to pursue a ‘blockbuster’ strategy to succeed. Instead of waiting for the one thing that might offer stardom with all its rewards, artists can build a community of those who appreciate their work and might be willing to support it.

Kevin Kelly famously outlined this concept with his post on 1000 True Fans. Like so many things influenced by the web, Kelly identified how a power law curve, which is the basis of the long tail phenomenon, suggested new possibilities. While the number of 1000 was indicative only and varied according to the artist’s media, Kelly maintained that if you could move people from an encounter with your work to being ‘lesser fans’ and on to  ‘true fans’ regular support would be forthcoming.

Kelly later conducted interviews with artists to see if his argument played out in practice. The results supported the thrust of his original argument but tempered its enthusiasm. He concluded that:

there are very few artists making their entire living selling directly to True Fans. The few that are, are selling high-priced goods, like paintings, rather than low-priced goods like CDs. But there are many that partially fund their livelihood with direct True Fans. (my emphasis)

Mike Masnick’s review of musicians supports this conclusion, and importantly demonstrates that the logic applies to more than just the famous who already have a fan base.

How does an individual create a community?

So, if you wanted to pursue this strategy what would it involve? The first thing to note is the hard graft. Kevin Kelly’s interviews made clear “it takes a lot of time to find, nurture, manage, and service True Fans yourself. And, many artists don’t have the skills or inclination to do so.”

Assuming you are committed, here are six steps to create a community around your practice:

  1. Get yourself a web platform (site, blog etc) to make some work and your thinking available for viewing and linking, and keep updating this platform;
  2. Think of yourself as a publisher or broadcaster, find your angle or voice, and offer information beyond self-promotion on a regular basis;
  3. Participate in social networks and other on-line forums, offering comments, links, information;
  4. Understand that a community is more than the sum of your social media followers and friends. Social networks are a necessary but insufficient condition of community;
  5. A community’s members have varying degrees of commitment, from observers to occasional supporters to committed fans. Followers and friends are, until they demonstrate otherwise, not ‘true fans’. But they might become committed supporters if they are engaged with your work;
  6. Engagement means offering your community a sense of belonging and commitment to your practice and the thinking that informs it. This comes through conversation and dialogue around ideas and information rather than just appeals or material inducements;

In the debate about crowd funding photojournalism I have emphasized how having a community is a precondition of successful support. Those who have raised funds have either been already well-known (which means they have had a community of support) or they have in effect followed most of the steps above. As Bryan Formals wrote in his good post on crowd funding, “it all starts to tie together: transparency, authenticity, community building, collaboration, funding.”

Point 6 is probably the most difficult and most important in the process. It is the step where supporters feel they participate in the project, something Joerg Colberg identified as important, and which Tomas van Houtryve has put into practice creatively and effectively. But like all engagement, this participation is not a one-way street – as van Houtryve has found, creative practitioners can learn a lot from their supporters and their work can be better as a result. The benefits are not just financial.

Conclusion

As I shall argue in the third post of this series, the idea of community is important for big media players as much as individual artists, and it is behind some of the new economic strategies to support journalism. There are lessons to be learnt from those strategies for individuals too.

The principles that make community possible are the same in both cases even if the scale is different. The internet’s logics of disintermediation, disruption and disaggregation affect everyone. It’s harder for individuals to perform all the necessary tasks that make a successful community, but the rewards are potentially great.

 

Related posts

The new media landscape (1)

The new media landscape (3)

 

Photo credit: victoriapeckham/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.