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Apple’s ITMS (iTunes Music Store) is perhaps the most interesting example. People are not paying for music on ITMS because we have decided that fee-per-track is the model we prefer, but because there is no market in which commercial alternatives can be explored. Everything from Napster to online radio has been crippled or killed by fiat; small payments survive in the absence of a market for other legal options. What’s interesting about ITMS, though, it that it contains other content that illustrates the dilemma of the journalists most sharply: podcasts. Apple has the machinery in place to charge for podcasts. Why don’t they?
Because they can’t afford to. Were they to start charging, their users would start looking around for other sources, as podcasts are offered free elsewhere. Losing user attention would be anathema to a company that wants as tight a relationship between ITMS and the iPod as it can get; the potential revenues are not worth the erosion of audience.
Without the RIAA et al, Apple is unable to corner the market on podcasts, and thus unable to charge. Unless Apple could get the world’s unruly podcasters to behave as a cartel, and convince all new entrants to forgo the resulting vacuum of attention, podcasts will continue to circulate without individual payments. With every single tool in place to have a functioning small payment sytem, even Apple can’t defy the users if there is any way for us to express our preferences.
Which brings us to us.
Because small payment systems are always discussed in conversations by and for publishers, readers are assigned no independent role. In every micropayments fantasy, there is a sentence or section asserting that what the publishers want will be just fine with us, and, critically, that we will be possessed of no desires of our own that would interfere with that fantasy.
Meanwhile, back in the real world, the media business is being turned upside down by our new freedoms and our new roles. We’re not just readers anymore, or listeners or viewers. We’re not customers and we’re certainly not consumers. We’re users. We don’t consume content, we use it, and mostly what we use it for is to support our conversations with one another, because we’re media outlets now too. When I am talking about some event that just happened, whether it’s an earthquake or a basketball game, whether the conversation is in email or Facebook or Twitter, I want to link to what I’m talking about, and I want my friends to be able to read it easily, and to share it with their friends.
This is superdistribution — content moving from friend to friend through the social network, far from the original source of the story. Superdistribution, despite its unweildy name, matters to users. It matters a lot. It matters so much, in fact, that we will routinely prefer a shareable amateur source to a professional source that requires us to keep the content a secret on pain of lawsuit. (Wikipedia’s historical advantage over Britannica in one sentence.)
Nickel-and-dimeing us for access to content made less useful by those very restrictions simply isn’t appealing. Newspapers can’t entice us into small payment systems, because we care too much about our conversation with one another, and they can’t force us into such systems, because Off the Bus and Pro Publica and Gawker and Global Voices and Ohmynews and Spot.us and Smoking Gun all understand that not only is a news cartel unworkable, but that if one existed, their competitive advantage would be in attacking it rather than defending it.
The threat from micropayments isn’t that they will come to pass. The threat is that talking about them will waste our time, and now is not the time to be wasting time. The internet really is a revolution for the media ecology, and the changes it is forcing on existing models are large.
Because they can’t afford to. Were they to start charging, their users would start looking around for other sources, as podcasts are offered free elsewhere. Losing user attention would be anathema to a company that wants as tight a relationship between ITMS and the iPod as it can get; the potential revenues are not worth the erosion of audience.
Without the RIAA et al, Apple is unable to corner the market on podcasts, and thus unable to charge. Unless Apple could get the world’s unruly podcasters to behave as a cartel, and convince all new entrants to forgo the resulting vacuum of attention, podcasts will continue to circulate without individual payments. With every single tool in place to have a functioning small payment sytem, even Apple can’t defy the users if there is any way for us to express our preferences.
Which brings us to us.
Because small payment systems are always discussed in conversations by and for publishers, readers are assigned no independent role. In every micropayments fantasy, there is a sentence or section asserting that what the publishers want will be just fine with us, and, critically, that we will be possessed of no desires of our own that would interfere with that fantasy.
Meanwhile, back in the real world, the media business is being turned upside down by our new freedoms and our new roles. We’re not just readers anymore, or listeners or viewers. We’re not customers and we’re certainly not consumers. We’re users. We don’t consume content, we use it, and mostly what we use it for is to support our conversations with one another, because we’re media outlets now too. When I am talking about some event that just happened, whether it’s an earthquake or a basketball game, whether the conversation is in email or Facebook or Twitter, I want to link to what I’m talking about, and I want my friends to be able to read it easily, and to share it with their friends.
This is superdistribution — content moving from friend to friend through the social network, far from the original source of the story. Superdistribution, despite its unweildy name, matters to users. It matters a lot. It matters so much, in fact, that we will routinely prefer a shareable amateur source to a professional source that requires us to keep the content a secret on pain of lawsuit. (Wikipedia’s historical advantage over Britannica in one sentence.)
Nickel-and-dimeing us for access to content made less useful by those very restrictions simply isn’t appealing. Newspapers can’t entice us into small payment systems, because we care too much about our conversation with one another, and they can’t force us into such systems, because Off the Bus and Pro Publica and Gawker and Global Voices and Ohmynews and Spot.us and Smoking Gun all understand that not only is a news cartel unworkable, but that if one existed, their competitive advantage would be in attacking it rather than defending it.
The threat from micropayments isn’t that they will come to pass. The threat is that talking about them will waste our time, and now is not the time to be wasting time. The internet really is a revolution for the media ecology, and the changes it is forcing on existing models are large.
The above argument against micropayments is not true in every scenario (which is a generalized point I believe smooth also made upthread or in a PM).
For example, there is a crisis in music streaming because 95% of users don't want to spend money on streaming music and (see the following quotes) the payouts to musicians from advertising are at best $0.01 per play and at worst less than 1/1000 of a penny:
Paying users to view ads is not an economic model (ditto paying users to solve CAPTCHAs such as for crypto coin faucets). If it was, many sites would be doing it successfully and teenagers and third world would be employed doing it.
While Chinese consumers are increasingly listening to music on licensed services, the most popular services are free and supported by advertising, generating very little revenue for record companies.
Quote from: http://nextshark.com/tidal-pays-artists-spotify/
As shown by Information is Beautiful’s updated-for-2015 visualization of the subject, signed artists make .0019 cents per stream on Pandora and .0011 cents per Spotify stream. The worst payout of all for musicians, however, comes from Youtube, which pays out about .0003 per play. An artist signed to a record label would thus have to have their Youtube video played 4,200,000 times in order to earn the monthly U.S. minimum wage of $1,260.
Pharrell’s ‘Happy’ Streams 43 Million Times, Makes Less Than $3,000
I believe users will happily pay a few pennies (cents) for unlimited streaming plays for each song they like. I believe they will pay even more to download the song as a file which they can do what they want with.
I note even my impoverished filipina gf was willing to spend 2 pesos (about 5 cents) per song for songs she really liked when the local internet cafe refused to let her insert her microSD memory card in the netcafe's computer to download music directly from youtube-mp3.org.
A subscription model wouldn't work, unless the split of all subscription revenues were subdivided according to aggregate plays, but then that requires songs to be aggregated by a provider who is likely to create unfair policies (i.e. transferring more subscription revenue to signed artists for labels that provide exclusivity so as to further concentrate its captured market) as the provider's market share grows (because they have a captured market a.k.a. walled garden).
In short, only microtransactions would have the crucial End-to-End principle for streaming and downloading music.
They key insight I am making is a very profound one. It concerns the proper design of decentralized social networking. There can't be orthogonality of services without microtransactions, because otherwise services (e.g. streaming storage) have to bound together with other capabilities (e.g. streaming players) which then creates captured markets and the resultant effects (which was my criticism of the future of Ello):
Economics and game theory seems to be one of my forte or at least interests/hobbies, so let's take a tangent and start by analyzing economically Ello's business model:
The problem is that due to centralized control, Ello is putting itself in a position where it has to compete against others who might want certain features which ameloriate other features which Ello has a vested revenue interest. It is simply impossible for a centralized, top-down controller to remain impartial. Some users may want some feature which provides some necessarily benefit to those users but in some other way actually bypasses the need to buy a different feature from Ello. These users presumably won't be free to program a plug-in that destroys Ello's revenue stream, just as no one is allowed to program a App plugin for Facebook which displays advertising.
Ello has just shifted the enslavement problem from ads to paid features.
And their claim of anonymity and defense against national security gag orders is BULLSHIT. They can't guarantee those attributes being a centralized entity. Furgetaboutit.
So right off at the start, we see Ello's principle founder is not thinking clearly or is disingenuous.
Not to mention that a site which charges for features can't scale as well as one that gives everything users want away for free. Nevertheless Facebook and SoundCloud are also restricting and harming some (but is it significant enough?) users as well, so maybe there is a better balance. Is it Synereo's decentralized design? I will continue the analysis.
I can say with near certainty that unless you offer some compelling feature where all their friends will want to join, users here in the Philippines will not be interested in leaving Facebook where all their friends already are.
Understand from the upthread guessimates, that Tsu's and GetGems' business model is fundamentally flawed (probably also in other ways):
[...]
"Say you’re a musician or a band, and you want to control multiple accounts from a single login," Budnitz said. "We can charge $2 for that. It’s not for everyone.”
Budnitz says he has seen thousands of emails from users suggesting features for which they would be willing to pay, and Budnitz says plenty are already in the works.
Ello founder Paul Budnitzpaulbudnitz.com
"Let’s say that for a few bucks, you can buy an emoji pack designed by a popular street artist," Budnitz says. "Because of how we've built Ello, it naturally lends itself perfectly to that."
Other hotly suggested features include the ability to browse Ello with inverted colors, turning the screen black and overlaying it with white text. Interestingly enough, the feature saw over 500 requests, mainly from Ello users in Europe and Japan.
And while others have debated how feasible Ello's ad-free business model will work out
[...]
"An advertising-based social network is by its nature, it actually has to do things, because all those things are the things that make it money," Budnitz says. "If we started doing that, everyone would say 'f--- this' and leave — excuse my language."
At the end of the day, Budnitz says keeping Ello sustainable will be a relatively simple feat, given that Ello's business model is inherently different from Facebook's, and that means the costs are different, too.
"There are seven of us running Ello now, with some extra programmers helping us out," said Budnitz. "It is not very hard to run at this scale, and Ello’s getting pretty big. And data is really cheap! I think if you don’t have to have an office building full of people figuring out how to manipulate people into giving you more data, it’s really not that hard to run a network with a ton of people on it."
Budnitz says he has seen thousands of emails from users suggesting features for which they would be willing to pay, and Budnitz says plenty are already in the works.
Ello founder Paul Budnitzpaulbudnitz.com
"Let’s say that for a few bucks, you can buy an emoji pack designed by a popular street artist," Budnitz says. "Because of how we've built Ello, it naturally lends itself perfectly to that."
Other hotly suggested features include the ability to browse Ello with inverted colors, turning the screen black and overlaying it with white text. Interestingly enough, the feature saw over 500 requests, mainly from Ello users in Europe and Japan.
And while others have debated how feasible Ello's ad-free business model will work out
[...]
"An advertising-based social network is by its nature, it actually has to do things, because all those things are the things that make it money," Budnitz says. "If we started doing that, everyone would say 'f--- this' and leave — excuse my language."
At the end of the day, Budnitz says keeping Ello sustainable will be a relatively simple feat, given that Ello's business model is inherently different from Facebook's, and that means the costs are different, too.
"There are seven of us running Ello now, with some extra programmers helping us out," said Budnitz. "It is not very hard to run at this scale, and Ello’s getting pretty big. And data is really cheap! I think if you don’t have to have an office building full of people figuring out how to manipulate people into giving you more data, it’s really not that hard to run a network with a ton of people on it."
The problem is that due to centralized control, Ello is putting itself in a position where it has to compete against others who might want certain features which ameloriate other features which Ello has a vested revenue interest. It is simply impossible for a centralized, top-down controller to remain impartial. Some users may want some feature which provides some necessarily benefit to those users but in some other way actually bypasses the need to buy a different feature from Ello. These users presumably won't be free to program a plug-in that destroys Ello's revenue stream, just as no one is allowed to program a App plugin for Facebook which displays advertising.
Ello has just shifted the enslavement problem from ads to paid features.
And their claim of anonymity and defense against national security gag orders is BULLSHIT. They can't guarantee those attributes being a centralized entity. Furgetaboutit.
So right off at the start, we see Ello's principle founder is not thinking clearly or is disingenuous.
Not to mention that a site which charges for features can't scale as well as one that gives everything users want away for free. Nevertheless Facebook and SoundCloud are also restricting and harming some (but is it significant enough?) users as well, so maybe there is a better balance. Is it Synereo's decentralized design? I will continue the analysis.
I can say with near certainty that unless you offer some compelling feature where all their friends will want to join, users here in the Philippines will not be interested in leaving Facebook where all their friends already are.
Understand from the upthread guessimates, that Tsu's and GetGems' business model is fundamentally flawed (probably also in other ways):
[...]
Just a small glimpse into marketing strategies I am formulating.
