WIRED ON FRIDAY/Mike Butcher: Once there was a business model, born and weaned in a time when the business world had gone insane: the dotcom business model. Read on.
This model was essentially "Give away what digital content you have online". People will visit your site which will be become famous and you'll translate that fame into money either through advertising or selling goods.
Some dotcoms went more insane than others. At buy.com, the owners used the millions in venture capital they had secured to sell goods "more cheaply" than they had bought them in the first place. In theory, many people would flood their site, and they would recoup in advertising what they had given away on the retail value of the products sold. In other words, it was an efficient way to transfer money from pension funds into venture capital into money off that fashionable T-shirt you were after.
It was this race to provide incentive that drove this type of site to convince the money markets they could float on the basis of millions of "customers". It was all a house of cards, but the ideas live on.
In Vienna this summer intelligentsia met for Open Cultures, a conference for the self-proclaimed cultural wing of the open source movement. There, geeks, blogging writers and academics discussed how the death of capitalism was slowly being brought about by the proliferation of free information and content online. Proponents of free software, and by implication free content, believe this will level the playing field.
Since software you pay for entails expensive licences, lawyers and little protection against hackers and viruses, society should opt for the distribution of free software. This would make online commerce collapse and speed the proliferation of freely accessible tools and information to all, thus bringing about true equality in society.
If almost any content can be digitised and nothing digital can be copyrighted or is worth copyrighting, what online business models can survive?
Well, one content provider that benefits now - and will in future - from our desire for free online content is the BBC. Last week its director general Mr Greg Dyke announced its plan to launch the BBC Creative Archive. As much of its back catalogue of programmes as is legally possible will be digitised and offered free online. Anyone will be allowed to copy, re-use and redistribute this content for non-commercial purposes.
This enables the BBC to fulfil its Royal Charter to inform, educate and entertain on as wide a scale as possible. In turn, all that audio and video content should help to incentivise consumers to sign up for broadband, thereby boosting the commercial sector.
What can commercial firms do to compete if so much quality content is freely available? Many websites have long since shut down access to free content, preferring punters to pay.
This is only possible if you have content which is either delivered faster than anyone else; is exclusive or unique; is business critical; or you aggregate content in a way no one else does or can.
It's easy to spot the business models that fit into these categories. The Financial Times can charge for its business news and unique insight. It has more than 50,000 subscribers. Reuters and PA charge other websites for their breaking news. Online databases such as Reed Elsevier and Factiva charge for the aggregation of content from thousands of specialist reports and journals.
But for general news, many publications have opted for a business model which is the wrong way round.
Instead of distinguishing between online archives which allow people to link to their content versus the timely delivery of information, they shut everything up behind a firewall.
But an exception has been the Guardian newspaper which recently showed the way by deciding to charge for its key email services but keep its website free. By placing a premium on the delivery of information, it has created an incentive to visit the site and for other sites to deep-link to articles there.
In this way, it has seeded the internet with millions of links to the content in its archive which will stay there more or less permanently, driving traffic to the site where freshly minted adverts can be served.
Other examples include Business Week and Wired magazine.Even in the mobile space you can see this model operating. It's no longer interesting for young people to buy single chart tracks when they can download for free. Much better is to pay the first with the latest ring-tone version of that chart-topper. Thus by placing a premium on timeliness, the ring-tone market has become worth more than the singles market.
Starting out as a free-for-all, the internet has become a place where many business models co-exist. But as huge amounts of content start to disappear behind paid-for firewalls, we have to ask is this the right business model for content owners and for the cultural value of society at large?
As Orwell said, those who control the past control the present; those who control the present control the future.
Mike Butcher edits mbites.com
