We often point out here at the Copyright Alliance that while different business models work differently for different creative goods and different consumers, ultimately there are similar forces at work in everything from selling a motion picture to an illustration — you need to find your audience. This is true for the vast array of creators represented in the Copyright Alliance’s organizational members and its one voi©e individual creators.

We often are told that the digital age has changed the way creators can reach audiences; digital goods can be spread virally, consumers enjoy the works, and creators profit. It’s that “Phase 1: Steal Underpants, Phase 2: ?, Phase 3: Profit” approach so common in Silicon Valley. But life is more complicated than that for promoting, and profiting from, creative works, and it is frankly more complicated than that for Internet startups, based on how many have gone under despite tremendous “eyeball” counts. (Has Google made back it’s $1.7 billion on YouTube yet, by the way?)

Ben Worthen’s Wall Street Journal Tech blog had a great piece recently that examined an online creative industry that is finding online viral spread isn’t sufficient to, well, keep the lights on. (Speaking of online-offline, I will reveal my Luddite leanings by noting I first came across Worthens piece in the “Best of the Business Tech Blog” column of yesterday’s WSJ newspaper, the big thing with type that you can fold and gets ink on your hands.)

Software designers are, in my opinion, unsung creators, but are often not unlike Hollywood in that you have a corporation capable of drawing in money that can then hire talented people to produce a creative product people want. Hollywood studios sometimes look to independently wealthy investors from all sorts of industries, while software firms often look to venture capital firms, especially those in the online software industry.

This clever industry, which bypasses the need for the “shiny discs” so despised by some foes of copyright protections, still requires purchase. Word of mouth spreads online to an extent for these companies, Worthen writes, but “it is hard to make money” from the individuals, product teams or small businesses in that circle. In order to become a thriving company financially, “they can’t operate like an Internet start-up, letting their technology spread virally as end users hear about it,” he said. In other words, “online software doesn’t just sell itself.”

It turns out some executives want demonstrations. They want to vet the sellers. They want, in other words, all of the offline treatment that has helped them make the right purchasing decisions in the past. Worthen says online software companies are responding by bulking up on sales and marketing. Those services are something, for example, music labels and book publishers have always provided, and those self-recording or self-publishing are now finding that it is something difficult to do on your own.

Now skeptics will say things will change when the old folks in suits demanding a personal demonstration are replaced by the Gen Y generation, who will just goof around with the software on their own before pulling the trigger on a 10,000-work station order. Perhaps. And if so, great for the software designers.

But the issue here isn’t really online vs. offline. All creators — studios, music peformers, software companies, book publishers, etc. — are combining online and offline promotion. They will do whatever it takes to reach receptive customers. The key lesson here is that it’s not enough, if your goal is to build a profitable business capable of scale growth, to just go viral.

The other key lesson is that these online software companies are trying ways to make money, but no free culture blogger is telling them their business model is anti-consumer or that they should be following some other business model. No, they know if their model doesn’t work, they won’t get sales. That is true of all creative works. So let’s try to keep things in perspective here; if you don’t like an industry’s various business models, and you’re sure they’ll fail, then sit back and (1) enjoy some satisfaction when you’re proved right, or (2) enjoy the works that are made available to you if the creators succeed. Thus we go from online-offline to win-win.

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This entry was posted on Wednesday, August 27th, 2008 at 9:44 am by Patrick Ross and is filed under advertising, copyright opponents, creators, economy, internet, market forces. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.