The Current System does not work.
If you want to purchase the new Nine Inch Nails CD: “Y34RZ3R0R3M1X3D” online, you have two choices:
- DRM-infected files.
I do not advocate Piracy. It is not OK to steal the work of others. I also do not advocate DRM. But this is the Current System: we have the IPOD for music and video, and we have Kindle for books. We have subscriptions for online newspapers, and paid access to the content of certain websites (you know what I’m talking about…).
But the system is not working: people are still pirating virtual products like graphics, music, video, books and software, and the creators of that content are not getting paid for their work.
Why is the Current System not working? I suggest three reasons. Not surprisingly, they are the same three reasons consumers need to purchase a product of any kind – Desire, Cost and Convenience.
A New System For Selling Virtual (Soft) Products
I suggest a New System be devised, which takes these things into account. A new system that will reduce piracy, and increase the potential for artists to be fairly compensated for their soft products. The New System that takes Desire, Cost and Convenience into consideration will succeed where the current system is failing.
1) Desire – The consumer must want or need the product.
Why would consumers want DRM-infected files? Why should they pay for files that come with a list of restrictions on how they are used? Would you buy a car that came with rules for when and where and under what conditions it can be driven? Or a shirt that came with rules for what days of the week it can be worn, and what accessories must be worn with it? Of course not.
People use DRM-infected content from I-tunes because they either don’t know any better, or don’t care. People who do know or care pass on the DRM-infected files and opt for the non-DRM ones available through piracy. Neither of these solutions is acceptable.
Also, why should consumers tolerate products like Kindle that will only work with one supplier? I wouldn’t buy a CD player that only played CDs from a particular Record Label, but that’s exactly how the new Kindle from Amazon works. This is not an acceptable solution either.
The New System should let consumers use soft products the same way they can use the hard products: WITHOUT RESTRICTIONS.
2) Cost – Consumers must believe the product is worth the price.
There is an underlying rule which never changes: PRODUCTS ARE WORTH WHAT PEOPLE ARE WILLING TO PAY FOR THEM. You can set your price point anywhere along the bell curve, but the consumers ARE the bell curve. Accept it. It doesn’t really matter how much it cost to make the product; it never did. The consumer ultimately sets the price.
Hard goods aren’t a problem. People are willing to pay $30 for a Jagged Spiral hoodie. They know $30 is less expensive than the effort and materials it would take them to make it themselves. But for soft products like music and books, the internet has created a system where the product is an endlessly renewable resource, available from any internet connection, at any time, in infinite supply. Remember the laws of Supply and Demand? Worldwide, instant availability with negligible distribution cost has created a significant shift in what people are willing to pay. It truly has devalued soft products, and the current system has not taken this into account.
For example, you can draw a picture of your stupid kid with his tongue stuck to a flagpole in a Minnesota Deep Freeze, and hang it on the wall of the local coffee shop with a $200 price tag. But scan that same picture to a .jpg and post it on the internet. How much is that worth?
What is the cost of your picture done in Charcoal on Canvas, versus the cost of your JPG? Whatever people are willing to pay for them. The questions you *meant* to ask are: What are people willing to pay for Charcoal on Canvas, and what are people willing to pay for digital bits on the internet? OK, how much would it cost them to exactly duplicate your Charcoal on Canvas? Let’s see…Art Supplies, Art Lessons, then the time required to duplicate your every stroke, or possibly contract an artist willing to duplicate your work for a lesser price… OK, now how much would it cost them to exactly duplicate your jpg? Click, paste, done.
And song downloads from I-Tunes are a dollar each? So a 12-song CD that used to cost $12 is still…$12???? Why should people pay the same price for downloaded, mp3-compressed, DRM-infected files that they pay for the higher quality and unlimited use of the physical CD? Wrong, wrong, wrong. Some people buy the DRM-infected files because it’s convenient, or because they want the song badly enough, but they shouldn’t have to. The price is too high.
The New System will have to take this into account. The more the prices line up with what the consumer is willing to pay, the less attractive the piracy options becomes. If piracy abounds, that’s an indicator your prices are too high. That is why bands like Radiohead are jumping onto the model that Jagged Spiral devised: post the media online for free, and let the customer pay what they want. This might be the New System. It might not. But it holds to the rule that the product is worth what the customer is willing to pay.
It could turn out that artists are not able to make a living on this system, especially if their art is crap.
3) Convenience – The customer can’t get the product more conveniently anywhere else.
Which do you think is easier?
- opening an account on Amazon, entering your personal info and shipping address, agreeing to the No-Privacy Statement (without reading it, natch), entering your credit card info, verifying your e-mail address, going through the checkout line with your purchase…
- Downloading BitTorrent, install, type in the name of the album, and downloading to your hard drive?
Admittedly, the online purchasing experience has gotten better. It would be better still if someone could devise a system where the consumer’s online ‘wallet’ was usable at all online locations. Consumers should not have to provide any personal information for a downloadable soft product purchase, and they certainly should NOT have to provide their personal info for each-and-every-website they do business at. You don’t have to go through all that bullshit when you go to a Burger King you’ve never been to before! You shouldn’t need a username and password to make a purchase at amazon.com, or any website! ID and Credit Card, that’s all!
Google, PayPal and Microsoft are working on this, but it just isn’t there yet. This is a major holdup to a New System that would reduce piracy, and there is no reason for it, other than businesses that are not willing to cooperate. They want that user info, they want those e-mail addresses. They want it to be difficult for you to purchase from somewhere else.
The New System should let you make your purchase quickly, securely, and conveniently, without setting up an account on the seller’s website.
When we look at the Current System from the perspectives of Desire, Cost and Convenience, Piracy makes more sense; it offers better product for less money, and it’s easier to access. I’m not advocating piracy, I’m saying the existing system is fucked up, and here is why, so let’s get it fixed so I can buy music online at a fair price and without DRM restrictions.
No System is going to eliminate piracy, there are people who will pirate works simply for the fun of it. But a New System that takes Desire, Cost and Convenience into account could significantly reduce piracy by filling consumers needs, and help artists make a living selling their works online.