In The Graduate, the father of Benjamin Braddock (Dustin Hoffman) — after learning his son is driving to Berkeley to propose to Elaine Robinson, daughter of a woman Benjamin was having an affair with — says “Don’t you think that idea is a little half-baked?” Benjamin replies, “Oh no, Dad, it’s completely baked.”

The idea I’m about to put forward is not even half-baked, in fact I haven’t even put it in the oven yet. But it can’t be any less helpful than the advice Benjamin is given for a career path: “Plastics.”

Over and over, at conferences, in books, in blogs, in newspapers, in conversations, the same theme keeps coming up. Creative industries know how to make money in a physical age. Now that their work is online — whether they like it or not — they’re trying to monetize those works. They can be monetized, but I’ve yet to see a model where online revenues per use or purchase of work exceed the physical world.

Now some out there wouldn’t really care about that. They probably think creators make too much money. But as I was saying today from the audience at a conference (I’ll blog on that soon), when you reduce the possible revenue awaiting a set of works in the market, that lower expected return meets the inherent risk in any creative venture, and some works that would have been funded and launched in the old model won’t in the new model. Contributions to our culture, each one according to the Long Tail likely to please at least some of us, won’t be produced or distributed.

This is a real problem, and so it’s inherent upon all of us in the culture to find new ways to generate revenues online for creators.

Right now there are really only a few models at work: 1) Purchase a download. This is basically analogous to buying something in the store, but it’s not been widely adopted by consumers, at least not on the scale of traditional physical sales, and price points are forced low by the free alternatives of piracy, further making it difficult to raise sufficient revenues. 2) Subscription model. Nobody thinks oddly of subscribing to a digital cable TV tier, but many dislike the idea of a subscription music service. I like my Napster to Go, but it is odd that the music will go away if I cancel my subscription or if the company goes under, and this produces very little revenue indeed for musicians and songwriters. 3) Ad-supported. This is what is pushed at places like Digital Hollywood, but consumers have never liked ads. DVRs are allowing us to skip through TV commercials, many viewers will abandon a video site if they use even a short pre-roll ad, nobody looks at display ads while listening to streaming radio, advertisers fear the less predictable environment of the Internet, and plenty of software is out there that can block or hide many online ads.

What if we’re thinking about this all wrong? We’re thinking about the existing Internet as we know and use it, and trying to shoehorn monetization of creative works into that model. What if we did some re-engineering of how we used the Internet? Now I’m not going to claim the model I’m proposing below is original to me, I’m sure brighter minds have envisioned it before, but I don’t see why it isn’t here yet.

This doesn’t require the redesign of TCP/IP. It doesn’t require monitoring by ISPs or some collective agency formed by a “voluntary” collective license. It simply requires a plug-in to your browser.

Under this scenario (and keep in mind I’m not a technologist), digital creative works such as sound recordings, TV shows, motion pictures, e-books, etc. would have metadata related to their price. This could burrow all the way down to an article from a newspaper (that industry needs some help quick or we won’t have newspaper web sites because there will be no newspapers). Maybe even some blogs might want to charge, say, a penny for each entry. The plug-in on the browser would track all of these fees; it doesn’t care if it’s 5 cents for an AP story vs. $10 for a motion picture. The computer user would have a credit card associated with the plug-in, and every time a transaction occurred the charge would be made (credit card companies might not like penny transactions, so the plug-in could collect charges until it hit a minimum threshold).

This model already exists with mobile phones. If you don’t have an unlimited text plan, every text message you send might cost ten cents, but you’re not asked to authorize ten cents every time; it just shows up on your bill. You can use services like VCast to download games, gadgets, ringtones, etc. It shows up on your bill. You don’t have to worry about using a credit card each time, and for the most part the costs are modest.

The plug-in could have a default where you have to authorize every time, and then you could disable that to make the experience smoother. Perhaps a little window could pop up briefly like Outlook does when you get an email, letting you know you just paid ten cents for the front page of The New York Times. There would be clear pricing info available wherever you went and found creative works that were part of this network. You could also have safety protocols to keep your thirteen-year-old daughter from using your browser with the plug-in to fill her iPod (can you tell that’s a directly personal concern with me?).

This won’t eliminate free. But we keep being told people are willing to pay at the right price and at the right ease of use. This system would certainly provide the latter. It would be up to the creators to set the price, and presumably the market would tell them if the price seemed reasonable. I would think many people would welcome a way to have a mobile phone experience at home, getting what they want when they want it without having to worry overly much about sweating the small stuff.

A system like this removes transaction costs from the purchase of all works, particularly popular ones such as motion pictures and sound recordings, but it also provides a way for everyone from writers to photographers to do those famous micropayments we heard so much about at one time that still haven’t arrived.

This of course requires a lot of participants. Someone has to come up with the plug-in, then figure out how to get paid for its development (perhaps a pool of industries fund its development?) Then you need creative industries that generally have no reason to work together to start implementing the rather laborious process of not just adding metadata to new works but going back deep into the archives. We’ve already heard stories about how difficult it’s been to convert older works to digital.

Still, when it comes to monetizing works online it seems we’re going nowhere fast. Jobs are being lost daily in creative fields; just read the latest press releases of any major newspaper or newspaper chain. For all of us who value creative works, we have an obligation to share in the search for a solution, or series of solutions.

I would very much welcome feedback from readers on how this model could be improved and if it is even feasible.

This entry was posted on Monday, November 10th, 2008 at 4:04 pm by Patrick Ross and is filed under advertising, creators, economy, internet, market forces, web 2.0. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.