The New Content Economy

Writers, artists and musicians need to get paid. To do their craft full time, their work has to be able to bring in at least enough money to make a decent living.

However, on the Web, copying is all too easy. DRM is easily cracked and annoys legitimate customers, file sharing makes it easy to obtain copies of digital works illegally and the abundance of free material makes selling any content on the Web an unappealing proposition to consumers.

Clearly the traditional means of profiting from content, by selling individual copies, is tenuous at best on the Web. Content is still king, but there is a need for a new content economy.

How this will evolve will depend heavily on both the creators themselves and how the Web grows. But there are many different ways being used right now.

Here are just some of the main ones.

The Advertising Model

How it Works: The idea is simple enough, build a site with great content. As soon as traffic begins to reach decent levels, place advertisements on the site, probably Adsense ads, and reap in profits from the clicks.

Advantages: Allows all content to be free. If done properly, places minimal burden on the user and offers the Webmaster a relative maintenance-free way of generating income. Can, in some cases, produce very impressive financial results.

Disadvantages: Though attitudes have changed some, many still view sites with ads suspiciously. Also, this model requires a great deal of traffic before any real revenue can be generated. Finally, depending on the subject of the site, advertising clicks may not be worth a great deal.

Outcome: Useful for very popular sites with a large amount of content. Smaller sites or sites with odd niches will find it very difficult to profit from this model.

Example: Digg and Slashdot

The Membership Model 1 (Free Content)

How it Works: The system touted most heavily by J.D. “Illiad” Frazer in his excellent book, “Money for Content and Your Clicks for Free” works by distributing content for free but giving paid members greater benefits including commenting features, earlier access to new material, higher resolution media and access to community forums.

Advantages: Keeps all content free and can offer great incentive to join.To the Webmasters, paid members are only marginally more expensive than free ones, thus keeping profit margins very high.

Disadvantages: Many freeloaders may make this method impractical. Content creators distributing large media files may need to find ways to reduce bandwidth costs of freeloading members. Membership costs have to kept low to entice people to pay.

Outcome: Most useful for sites that are able to generate a very rabid following. Sites with large amounts of traffic but don’t serve as end destinations may find it difficult to use this system.

Examples: Rooster Teeth (RvB) and User Friendly

The Membership Model 2 (Paid Content)

How it Works: Similar to the first membership model, the second one relies on users to pay a regular fee however, unlike the other membership model, it’s for the content itself. Though some sites also incorporate other features, such as forums, email support and live features, the content is the primary reason to join.

Advantages: Easy to understand benefit in joining makes it easy to charge higher fees. Though content may be pirated, the appeal of getting the latest content can turner former pirates into new subscribers.

Disadvantages: Requires a very strict and frequent update schedule. Can be expensive and difficult to keep up. Requires maintaining level of quality over a very long period of time.

Outcome: Though not practical for many sites, especially text-based ones, can work well for audio and video sites, especially those in niche areas.

Examples: Most porn sites

The Physical Goods Model

How it Works: The entire site is freely available to anyone who visits it. No membership is ever required, no advertisements are on the pages. Instead, the site sells physical goods including shirts, books, CDs, DVDs and other items make money.

Advantages: Physical goods offer an obvious benefit over digital ones and are easy to sell. Keeps site free of ads and doesn’t make free users feel like less of the community.

Disadvantages: Low profit margins on physical goods necessitates selling a larger volume. Tracking, shipping and handing physical orders can be very expensive and/or time consuming.

Outcome: Works well for sites with a large amount of offline appeal. Also potentially very useful for text sites as physical books are generally easier to read than digital works.

Examples: Homestar Runner and Applegeeks

Donations Model

How it Works: Everything is available for free, no ads are on the site and no goods are sold. Instead, all revenue is generated by people voluntarily donating their money to the site, usually through Paypal.

Advantages: Absolutely zero obstruction on the part of the user (save the donate button and any asking that the Webmaster does). User decided what he/she thinks is appropriate and pays only that. Easy maintenance for Webmaster.

Disadvantages: For most, brings in almost no money. With no incentive, very few people donate and those who do generally donate very little.

Outcome: May work well for non-profits and for people who have other jobs, but few will ever make a living off of the donation model.

Examples: Groklaw and Wikipedia

Services Model

How it Works: Once again, there are no paid ads, no items for sale and no membership dues, all of the content is freely available. However, the Webmasters offers some kind of service for sale, such as consulting services or contract work, and profits from that. Effectively turns site into an advertisement.

Advantages: Minimal negative user impact. Can, depending on the quality of the services, generate a very high level of stable income. Income is often sustainable even if

Disadvantages: May be a tough sell in many cases. Not useful for artists and writers in fields where such services are not desired or needed. Very little help to the artists that produce purely creative content.

Outcome: Works best for authors working in niche areas where they are respected (or at least somewhat respected) experts. Not useful for most types of content.

Examples: Plagiarism Today (shameless plug)

Sponsor Model

How it Works: Similar to the advertising model, the sponsor model relies on advertisements to pay for the site. However, unlike the advertising model, it works not on generating clicks or selling random ads, but on getting one or a handful of sponsors to back the site. Those sponsors get advertisements, promotions and other special attention on the site in exchange for their funding.

Advantages: Enables the entire site to be freely available. Can make more money that the advertising model on smaller sites or sites in unusual niches. Also works well for sites in very profitable niches such as technology. Creates a very stable and efficient money stream.

Disadvantages: Can create doubts about impartiality of the author and can bog readers down if done poorly. Bad sponsors can also reflect badly on the sites they invest in.

Outcome: A decent solution for those who can get it, but few can command the kind of presence that it takes to get sponsors reliably. Only those in small, but profitable niches or are very big names overall will find this of much use.

Examples: TechCrunch and Mashable

Conclusions

In the end, the best solution is probably to mix and match different models. Many sites use more than method to generate income as most are not mutually exclusive. For example, there’s nothing wrong with offering a membership site that also has a store for material goods.

The greatest key, over all, is to experiment. I’ve tried several different methods with Plagiarism Today before finally settling on the services model. It works best here and enables me profit nicely from my work while offering it all under Creative Commons License.

The bottom line is that the business model of one copy, one sale might be going the way of the dodo, but content is still very valuable and very much worth protecting.

After all, almost no business model can survive plagiarism of a work. Once the original author has been lost to the reader, there is no way for that author to gain any rewards for it.

That alone is why some elements of copyright and moral rights are still important, even if the pure copying aspect of it might be growing obsolete on the Web.

Tags: Content Theft, Copyright, Copyright Infringement, Copyright Law, Digg, Plagiarism, Pornography, Slashdot, Licensing, AppleGeeks, User Friendly, Sponsorships