Alternative business models from INDICARE

An article on alternative business models in the digital content industry. In addition to a quick overview of the stakeholders in the DRM world, the article explores the very provocative notion of a marketplace in which "paying is essentially voting." In this model, though their may be a minimum, there is no limit as to what level the user can "vote," and the amount of money taken in for that content raises it's rank relative to other content available in the market. This is rooted in the idea that the desire for fans of the content to see it's popularity rise will give them incentive to pay more, much like text message voting where there is a cost per vote, but multiple votes are allowed (and certainly received).

Though I am not, nor am I ever likely to be, a text voter, I can identify with this concept. Have you ever loved an album so much that you wished you could buy it again? I certainly have. I've gone as far as to buy (not burn) copies for friends and family, expanding not only the reach of the content, but the gross revenue as well.

This idea also interests me for two other reasons:

1) One of its tenants is directly opposed to my ideas regarding dynamic pricing. The supply/demand aspect is removed, meaning the minimum sale price does not change regardless of the number or average level of "votes." Though they are different approaches, there is a parallel in that both serve to present the content as desirable. The key difference is that the "voting" model does not exclude those who aren't willing or able to absorb the higher sale price, either for financial reasons or simply because they aren't influenced by the tastes of others. This would certainly promote the content's reach. Minimizing exclusivity (ie, keeping the minimum price low) does not affect price-sensitive consumers as the supply/demand approach would, and does still make the content appear desirable. The question is whether exclusivity (price increase over time as popularity increases) would have a powerful enough effect from a perception point of view to drive additional sales at a higher price to make up for the lost sales of the price-sensitive consumers. Though most marketers would probably say that such desirability is advantageous to drive margins, there are plenty of low-margin retailers out there who do just fine by relying on volume.

This leads nicely into the second reason this idea interests me:


2) Intent. Another idea of this model is that if money is extracted by the content owner, the rank declines. So the "votes" expire when the "ballots" are moved from the marketplace to the content owner's pocket. There is no doubt that larger music companies track cash-flow, short-term revenue, profitability and the like very closely. They most likely would not be comfortable allowing "votes" to accumulate for too long, knowing that money, from a strictly financial perspective, is more valuable in their bank account than in their marketplace account. The spreadsheet in which such a content owner would attempt to calculate how much to extract and when would certainly make Excel crash on an under-rammed system. But the unknown, unsigned artist, though probably already in debt, is more likely to be a slave to his or her creation and not the bottom line. Those artists would only extract what they need to survive, and if possible, extract nothing. To me, this aspect is the most intriguing.

In addition, the voting experience and excitement of watching your candidate win is certainly a marketable element of this model. I could see this working at a site like MySpace that already supports a sizable community with a wide variety of smaller artists. Despite the popularity of the model, I would expect larger content owners to resist participation, probably up until the point where some other spreadsheet convinces them that the opportunity is too large to ignore.