Future Revenues of Creators: Hal Varian: 14 Free business models (via Chris Anderson)

Further to my previous post on The Future Revenues of Content, Chris Anderson's Longtail blog has a timely post that is a perfect fit: Hal Varian: 14 Free business models.  A lot of this fits very well with Kevin Kelly's writings on his Technium blog, too - all of them are a must-read if you are in the content business, imho. So, citing from Chris who quotes Hal's paper (edits for length and some high-lights are mine):

Says Hal:

"Most information is born digital and that digital information is typically very easy to copy and distribute, it is conceivable that copyright laws may become almost impossible to enforce. Are there ways for sellers to support themselves in such an environment? It is worth considering some of the options. Here is a brief list of business models that might work in a world without effective copyright.

Make original cheaper than copy. This is basically the limit pricing model described earlier. If there is a transaction cost for a copy-a direct cost of copying, an inconvenience cost, or the copy is inferior to the original in some way-then the seller can set the price low enough that it is not attractive to copy.  (Note by Gerd: this is working very well on Asia, already, particularly in Thailand. Once a ratio of 2:1 is reached, i.e. the legal version [of a physical product] is only 2x what the pirated version is, then people are ok with buying the legal version - also because they can be assured the quality is there, and it's not a fake. I do think that this approach will require a dual strategy of selling some copies in this way while getting a lot more 'Attention Revenues" going, as well, since it will be hard to make any reasonable margin on low priced products like these)

Sell physical complements. When you buy a physical CD you get liner notes, photos, and so on. Perhaps you could get a poster, a membership in a fan club, a lottery ticket, a free T-shirt, as well. These items might not be available to someone who simply downloaded an illicit copy of a song. (Note by Gerd: this is a very crucial point, and something that already seems to work well in markets such as India. Adding compelling booklets, photos and other material to a CD or DVD makes it more desirable to own something)

 Sell information complements. One can give away the product (e.g., Red Hat Linux) and sell support contracts. One can give away a cheap, low-powered version of some software and sell a high-powered version.

Subscriptions. In this case, consumers purchases the information as a bundle over time, with the motivation presumably being convenience and perhaps timeliness of the information delivery. Even if all back issues are (eventually) posted online, the value of timely availability of current issues is sufficient to support production costs.  (Note by Gerd: I would call this the Flat Rate...yes: Music / Media Like Water)

Sell personalized version. One can sell a highly personalized version of a product so that copies made available to others would not be valuable. Imagine, for example, a personalized newspaper with only the items that you would wish to read. Those with different tastes may not find such a newspaper attractive.

Advertise yourself. A downloaded song can be an advertisement for a personal appearance. Similarly, an online textbook (particularly if it is inconvenient to use online) can be an advertisement for a physical copy.

Advertise other things. Broadcast TV and radio give away content in order to sell advertisements. Similarly, most magazines and newspapers use the per copy price to cover printing and distribution, while editorial costs are covered by advertising. Advertising is particularly valuable when it is closely tied to information about prospective buyers, so personalization can be quite important. In an extreme form, the advertisement can be completely integrated into the content via product placement.

Monitoring. ASCAP monitors the playing of music in public places, collects a flat fee, which it then divvies up among its members. The shares are determined by a statistical algorithm. The Copyright Clearance Center uses a similar system for photocopying-a flat fee based on an initial period of statistical monitoring.(Note by Gerd: "New pools of money and a fair way to split them up"!)

Media tax. This a tax on some physical good that is complementary to the information product (i.e., audio tape, video tape, CDs, TVs, hard drives, etc.) The proceeds from this tax are used to compensate producers of content. For example, the Audio Home Recording Act of 1992 imposes a media tax of 3 percent of the tape price. (Note by Gerd: I don't favor taxes but in some countries it may work well. A commercial VOLUNTARY COLLECTIVE LICENSE would have the same effect, though).

Ransom. Allow potential readers to bid for content. If the sum of the bids is sufficiently high, the information content is provided. Various mechanisms for provision of public goods could be used, such as the celebrated Vickrey-Clarke-Groves mechanism. This could be used in conjunction with the subscription model. For example, Stephen King offered installments of his book The Plant on his web site. At one point he indicated he would continue positing installments if the number of payments received divided by the number of downloads from his site exceeded 75.6 percent. His experiment did not succeed, perhaps due to the poorly chosen incentive scheme. (Note by Gerd: I would rather call this patronage)

Pure public provision. Artists and other creators of intellectual property are paid by the state, financed out of general revenues. This is not so different from public universities where research and publication is considered integral to the job.

Prizes, awards and commissions. Wealthy individuals, businesses or countries could commission works. The patronage system achieved some notable results in Europe for several centuries. The National Science Foundation or the National Endowment for the Humanities are examples of modern day state agencies that fund creative works using prizelike systems."

And finally, here's a video I made on this a few months ago: