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A letter to Buzzmachine from Greg Beato of Soundbitten

hey jeff,
i share much of your optimism re: the future of media -- it's getting cheaper and cheaper to produce content, and easier and easier to distribute it. the one thing that's getting a lot harder, though, is to get people to pay for it. and i don't just mean because it's so easy to copy and then share digital content. that's a problem content producers need to learn to live with, in my opinion, just like the software industry does. (of course, it's probably going to have a bigger impact on content producers than it does on the software industry, because the content industry has fewer opportunities to sell to big institutions and fewer opportunities to sell high-cost service...) another obvious thing that makes online payment hard is a lack of transaction options, the failure to create viable micropayment solutions, etc. Eventually, they'll figure that out, but the one problem that will always remain is how to make online payment efficient and convenient. People always talk about some coming utopia where fans will pay artists directly and cut out the middlemen, but when push comes to shove, how many listeners/viewers/readers are really going to pay that way? retail record stores may be broken in a number of ways, but imagine if you had to go to a different store each time you wanted to buy a CD or song -- suddenly, the traditional retail store seems better than the digital future in at least one regard.

obviously, the solution is bundling content -- but bundling means middlemen, someone to aggregate the content, market the content, process the transactions. so far, there are services like cdbaby.com and ibill.com that offer transaction-processing to independent content creators pretty cheaply, but those services don't offer any bundling services yet. the only ones that do this so far that i know of are services like realPass and rhapsody, and the age verification services of the porn world, all of which offer pretty good value to users. but even so, many users still insist that such services are way too expensive -- i.e., $10 a month to rhapsody for on-demand streaming access to 200,000 songs is seen as a deal so outrageously bad it's not even worth contemplating. So what will it take to get people to actually buy? Maybe unlimited downloading for $10 - $20 a month. and, ironically enough, that might actually give the RIAA the monopoly on digital music that it supposedly wants -- i.e., when you can get the entire catalogs of the Big 5 labels for $10 - $20 a month, how many people are gonna bother paying more than a buck or two per CD to independent artists? some will because $1 - $2 isn't much, but at the same time, why even bother with the hassle if you've already got access to more music than you can possibly listen to for that one fee of $10 a month? My guess is it will eventually be pretty hard for independent content creators of all kinds to ever sell their work individually -- they'll be able to offer it for free, sure, but if they want to sell they'll have to become a part of some larger subscription service. and it may be that those services offer better terms than record companies and publishers now do, but on the other hand, if joining such a service is really your only shot at making money off digital content, those services might have pretty good leverage to take a pretty big cut of the proceeds.

of course, there's also a possibility that content creators might work together to bundle/package themselves. in a way, this is what the blogosphere does already, as you suggest when you say "We link to the good ones." Unlike many blogosphere boosters, I don't think the blogosphere is qualitatively all that different from professional pundits/journalists -- in both cases, there's some good ones, and a lot of mediocre/bad ones. but where the blogosphere decidedly trumps its professional counterparts is in the area of reciprocity -- in essence, each blogger isn't just a content producer, but also a middleman too, so each blogger potentially has hundreds of middlemen pushing traffic his way. and very few professional pundits/journalists offer that service to their colleagues on any sort of regular basis. so the blogosphere is already "bundling" content in a very ad hoc, decentralized way -- but of course they're not really trying to get people to pay for it yet. but if 100 popular bloggers got together and formed a network, and then charged $10 a year for access to that network, i bet they'd collectively make more money than the aggregate total they'd be able to amass working individually. but $10 split 100 ways isn't much of course, and i think that same dynamic is going to inform all types of online content sales. so in a way, i could see musicians and others actually making less than they do now, even with all the middlemen, bad contracts, etc.

of course, there's a chance that people will pay a premium for service in the form of individual attention from the content creator -- i.e., the webcam girl model, where users clearly value the personalized interaction/feedback they get from the "content creator" and thus pay a premium for the service. will this work for musicians, bloggers, etc.? maybe. i.e., part of the appeal of bloggers, i think, is that they are *famous* in the realm of blogging, but not so famous that they are impossible to interact with -- if you write Glenn Reynolds an email, there's a good chance he'll respond. but if you write maureen dowd an email, she probably won't. at a certain point, however, famous bloggers get so famous that they stop responding too. except, maybe, if you're a *subscriber*. then they maybe they will respond, because what you're really buying is a subscription to their responses to your emails. that particular idea seems kind of heavy-handed, but in order for individual creators to charge money for their work (be it opinion, music, animation, whatever), they're going to have to offer something a lot more unique/special than just songs, columns, etc. and even then, there will probably be middlemen involved in some fashion, because how many content creators really want to become salesmen/subscription managers anyway?

but as you say, that just means there's "huge opportunity in creating new collections of talent." so far, however, most of those efforts (realPass, rhapsody, the various porn age verification services) are being driven by entities that don't seem particularly interested in enhancing the lot of content creators. instead, they want to aggegrate content as cheaply as possible, so they can offer it to users for as cheaply as possible...and my guess is that while users talk about wanting to pay artists directly, that desire will mostly disappear when faced with the burden of having to pay a premium to do so. of course, i'd love to be wrong about this.

best,

greg beato