Broadcast 2.0 v. Open Market

April 6th, 2010 by Andrew Swenson in Biz

Beyond all of the iPad hype, beyond the lovers and the haters and the blenders, there’s a really serious question lurking, and Doc Searls nailed it in his brain dump response:

Do we want the Internet to be broadcasting 2.0 — run by a few content companies and their allied distributors? Or do we want it to be the wide open marketplace it was meant to be in the first place, and is good for everybody?

On closed systems

Searls, Cory Doctorow, Dave Winer, Mark Pilgrim, Alex Payne (cf. this post also), Tim Bray, and Peter Kirn, take the side of the open marketplace.

Predictably among the common complaints: the iPad is a closed system (one that is stacked to give the most power to whomever Apple wants).

Much like with the iPhone, all hardware and software must descend like manna from Cupertino—app approval, battery replacement, the Flash decision, the non-standard port, the fact that you have to sync everything through iTunes.

Sure you can write an open web app that runs on the iPad (because even a behemoth like Apple can’t close the open web), but you miss out on the efficiency and feature set that’s available in the native code.

And yes people are already working on a jailbreak, but if it’s anything like the iPhone, jailbreaking is technically illegal.

The concern is that the iPad, with its tightly sealed case and obscure software approval process, will greatly diminish tinkering. For Geeks, this is scary because without open systems that support, even encourage experimentation, we wouldn’t have the likes of Doctorow, Winer, Pilgrim…etc.

And the world would be a much darker place because of it.

As a society, we need more, not less, tinkerers.

2.0 Business Models

Perhaps what’s scarier than the closed box issue is the mentality of publishers. From the WSJ:

Magazine publishers see the device as crucial to their future as they scour for new ways to make money, with print advertising still under threat. Digital advertising has been a disappointment for many publishers, but with the iPad they feel they have a technology that best marries the splashy look and size of a full-page print ad with the cool interactive features of a digital ad…

Heaven help us.

Instead of shifting business models to embrace what the new technology enables (which, I would argue is simply increasing use of the open Web), companies are seeing the iPad as a digital way to keep doing what they’ve always done: as they “scour” to find revenue, they see the iPad as something that gives them “splashy look and size of a full-page print ad.”

We saw this same sort of thrashing when radio replaced vaudeville: people were scrambling, trying to figure out how to charge for access to radio programming (like people paid to see a vaudeville show).

But radio didn’t become vaudeville 2.0—it became its own business with its own business model based on ad revenue instead of charge for access.

Since we can’t force the internet to fit our business models, it makes more sense for us to change our business models to fit the internet.

The Ongoing Copyright Issue

Part of the reason that business models are so hard to change for traditional content companies—newspapers, magazines, book publishers, TV broadcasters, movie and record studios—is because they all still worship at the altar of copyright.

Look around and you’ll see them all trying desperately to bleed every last drop from the intellectual property they “own.” Stowe Boyd articulates the problem in his response to a recent NYT op-ed piece by Marc Aronson:

Aronson proposes a simpler model of managing the costs of copyright use [for digital rights], but never mentions creative commons, presumably because it is assumed that everything that can be copyrighted, will be, and those holding such rights will seek to maximize the amount of moeny [sic] they make from them.

I want to live in a world where the goal is maximizing knowledge, happiness, and understanding. And this isn’t it.

The Looming Battle

So here we have it, two issues that are inciting a coming battle:

1. An increasing acceptance, even celebration, of closed systems like the iPad.

2. The pervasive mindset that copyright should be handled like a proverbial gem, the only way a content company could hope to make money…because after all, it’s the way they’ve always made money.

So to go back to Searls:

Do we want the Internet to be broadcasting 2.0 — run by a few content companies and their allied distributors? Or do we want it to be the wide open marketplace it was meant to be in the first place, and is good for everybody?

I’m hopeful open systems will win out.

But that means crushing the idea of broadcast 2.0. That means that content companies are going to need to find ways to make money because of their content, not simply with it.

I’m certain that those brave content companies that open up their intellectual property will stand to gain immeasurably more than they stand to lose—they stand to overcome the problem of obscurity. Because the more open content is, the more it’s shared, the more ubiqutous it becomes, the more revenue they make as a product of scale.

And when content is open, we all stand to gain immeasurably more than we stand to lose—because money is no longer the goal. Our goal shifts to Boyd’s vision, “a world where the goal is maximizing knowledge, happiness, and understanding.”

What do you think?

Do you think publishers should open the gates on their intellectual property, making it less expensive and more easily shared?

How do you think they can make money if they do?

I’d love to continue the discussion…

-Andrew

Related Posts

  1. Back to Basics: An Open Letter to Publishers
  2. The Open/Closed Fight is About Philosophy, Not Facebook
  3. Why the iPad won’t save Publishers (and what to do about it)
  4. A couple of facts about revolutions
  5. Why “iPad” is a brilliant name
  • mattgalloway
    Andrew,

    Thanks for the thoughtful response. And no, you neither came off as a crazy nor as demanding that others give everything away. However some of the folks you're quoting sometime do - although I have great appreciation and respect for these folks, I often feel that they argue in the extreme because they feel it necessary to move the needle in the conversation. (FWIW I think similarly of folks like Rush Limbaugh, Jesse Jackson, etc.)

    And I agree with you that open models, or at least models that provide some "free" content are increasingly successful on the internet and elsewhere. As an application developer for iPad, I myself am evaluating exactly what pieces of my product I can give away in order to make a living with the non-free ones.

    What I find interesting is that when people talk about giving stuff away they always seem to be talking about SOMEONE ELSE giving their stuff away. And the stuff in question always seems to be something that the speaker would find of value, but apparently, is not willing to pay for. (I'm not talking about you here either. ;) I'm talking about the broader "conversation".)

    Another point that I find interesting is that people seem to lose their mind when this conversation is applied to software. Few folks (at least those that agree with some form of capitalism) would suggest that Ford Motor Company give away cars or that Kraft Foods should give away Mac-N-Cheese. These, of course, are physical property so people generally have no problems with this concept. This also true with some types of intelleectual property - no one suggests that they should have the right to re-write and publish Harry Potter or a Stephen King novel without the explicit permission of the respective authors. No one is demanding the Colonel's Secret Recipe so they can mash it up. And no one seems to think they can change the words to Beatles tunes with out the blessing of Sir Paul. (Although they often mistakenly think they have the right to free distribution which is another rant altogether.) But with software, for whatever reason, we seem to think we have (or should have) way more rights (entitlements) that we actually do.

    Take the case of Apple iPad, for example. People seem to confuse the physical and intellectual property. Part of the thinking is that since they buy the physical property that they also gain ownership (not license) of the intellectual property. Yet Apple is very clear about the terms of the licensing agreement. If you don't agree to them, don't buy it. But instead, many folks will buy the product and knowing violate the agreement simply because they think the terms are unfair or "not they way they should be". BUT THIS IS NOT THEIR CALL. The original Linux crowd has it right - if you don't like commercial closed products then create your own open products. This is very different from stealing the intellectual property of others, or violating terms you've agreed to simply because you've rationalized out that they shouldn't have these rights in the first place or that it's somehow better for society if you do.

    The reality is that those who jailbreak iPads are acting in opposition to their own espoused believes. By buying an iPad in the first place these folks are contributing to the financial success of Apple. They are tacitly acknowledging that a closed system is capable of producing a closed architecture device that is superior to any of the (dozens of) devices that are coming from manufacturer that are more open. And finally, there is the hypocrisy of acting in the name of "freedom" while knowingly violating the rights of Apple.

    As much as I love openness, and I do, the reality is that in many cases closed systems can produce far superior products, in less time, and for a lower cost (cost to the consumer per unit for hardware specifically) than open systems.

    Furthermore, no one is forcing us to choose Apple. And for those of us that do choose Apple, we recognize Steve Jobs as a very benevolent dictator. While Apple products are undoubtably closed, Apple is arguably doing more than any other company to further open standards such as HTML5. You want free? All of the development tools for the iPhone and iPad from Apple are free. Lots of folks are quick to be critical of Apple without recognizing the things that make them a truly great company. The reality is that while Apple does chose to keep something very closed they do give other stuff away. And because of the balance between the two that Apple has chosen they are on track to surpass the market cap of Microsoft any day now.

    But now I'm back to ranting about Apple when you were REALLY talking about publishers. The same arguments apply. The content belongs to the copyright holder and they chose how to license it, not (figurative) you. If you don't like the terms, don't buy it. Or create your own content (it's easier then ever to create, harder than ever to capitalize on.) And seek out independent content creators (local bands for example) and support them (financially, etc.) The harsh reality is that for the masses, people do want Broadcast 2.0 because it's easy. Geeks and tinkerers will always use alternatives when it's necessary to meet their needs or intellectual curiosity but mainstream folks use media to tune out, not to tune in. If openness really want to win, people need to stop whining about what Apple or television networks, or the newspapers should or should not do and start creating open products that are superior to their closed product alternatives. In the end, it's the only thing really moves the needle.

    -M.
  • Wow. Thanks Matt. Especially for this:

    "If openness really want to win, people need to stop whining about what Apple or television networks, or the newspapers should or should not do and start creating open products that are superior to their closed product alternatives. In the end, it's the only thing really moves the needle. "

    Enough philosophical whining. It's probably time I start building something.

    Thanks for calling that out.

    -Andrew
  • mattgalloway
    You're certainly welcome. BTW, I think lots of people are doing just as I prescribed - Firefox, Linux, Apache, PHP, WordPress, Hibernate, Drupal, Eclipse, etc. on the software front to name a few.

    Thanks again for starting a great conversation.

    -M.
  • Wow, I just learned a lot from reading these comments. That is what this is all about...

    Thanks Guys!
  • mattgalloway
    Thought provoking post and discussion, Andrew. Several thoughts...

    1.) Openness isn't always the answers. As you pointed out in your comment back to Abby, largely the iPad/iPhone/iPod is successful BECAUSE it's close, not in spite of it. I'm working on a post that elaborates on this thought ad nauseum.

    2.) I really take issue when it is suggested that someone's work product should be free and essentially public domain because someone else (who has no investment in that work product) thinks it would "maximizing knowledge, happiness, and understanding." If Cory Doctorow wants to give away his own work product because that business model works for him, power to him. If he want to try to persuade other into doing the same thing, great. But when one party tries to defined what another party SHOULD or SHOULD NOT give away I think a line is crossed. Doctorow gives away some stuff but not other stuff. Great. But is it fair for me to demand that he rethink his idea of copyright and ownership and give away EVERYTHING for free? Or course not. The production of content is expensive and who ever pays the bill should be able to decide whether that content is free or not. Period.

    3.) The problem that many media outlets are facing is because the value of the content has gone down while the production cost has gone up. So why has the value gone down? Has the content changed? Nope. In fact it's exactly the same content as before. So what has changed? Well, it's simple supply and demand. Because of desktop publishing, the internet, cable, etc. supply is abundant, way overly abundant. 30 years ago there was only the local paper but now we have access to every media outlet on the planet with a click of the mouse. The solution is simple economics - lots of media outlet need to disappear. It’s inevitable with limited demand and overly abundant supply. No amount of openness, or iPad apps, or free content will change this.

    4.) News outlets who specialize in high value content that is not available anywhere else can publish their information on cocktail napkins and still have a viable business model. As long as there is demand and a limited supply, no one suggests the information should be free. An example is the WSJ. The problem with 99 of 100 content creators is that their content isn’t unique and serves only to further deflate the value of an already overly abundant supply.

    I'm a big fan of openness but I don't have the right to demand that you give your work product away - nor do I want anyone to have the right to demand that of me. Like Doctorow, I want to be able to pick and choose what I give away, and if that's nothing and I can make my business model work - so be it. And if I want to keep my content closed and as a result I go out of business that’s my right too.

    When I hear someone talking about illegally downloading mp3s, or how news or television shows should be free, etc. I just want to ask them what they do for a living, and then ask them to come by my house and do whatever that it is for a week or so for free. Why not? If they refuse then they must be a greedy bastard who only “seeks to maximize the amount of money” they earn from their job. Isn’t that the argument?
  • Matt, thanks for taking the time respond!

    My favorite part about writing this tiny blog is when I get to have serious exchange of ideas, so again, thanks.

    Would you consider an interview with me on this topic? If you're interested drop me a line andrew[at]wordpost[dot]org.

    If I came off as demanding that we open all content, or that I think we should give everything away, then I've miscommunicated here.

    If you don't want to give your works away for free, that's fine. If you want to charge a textbook publisher billion dollars for permission to use a photo you took, that's fine. It's your choice.

    But my argument is that A) it makes business sense to give *some* of our IP away and B) it's also better for society when we share our IP freely (the only caveat here, of course, is that we still have to be able to make money in the process).

    But the beauty of capitalism is that the market will select what works. Right now it seems to be going pretty well for Apple and the iPad. For society's sake though, I'm hopeful that the market will decide it wants open systems.

    But that again will be a choice, not a demand.

    But to address your points:

    1.) I think the answer that supports an open and free society and allows also allows us to make a living is in a careful blend of open and closed.

    I think this post may have made me seem like one of those "give everything away" crazies, but I don't think completely open everything is good either. I think Alex Payne did a great job of describing a few concessions that would make the iPad a better blend of open and closed systems (something better for everyone) here: http://al3x.net/2010/04/05/ipad-openness-moderates.html

    I also think that clever people with screwdrivers and h4x0rs out there that can make most closed things open…

    2.) I think that we have to strike a balance between what we give away and what we change for. This is what I meant by opening up our IP—to make money not just *with* our content but *because* of it. This "because effect" IMO is what we're striving for. If we give away carefully selected content we gain a wider audience as people freely share it. This is Doctorow's model—he makes money in print sales because he gives away his content.

    3.) You're right, openness alone will save publishers. But with the rise of abundance, we can't leverage Smith's economics in the same way we have for the last 100 years. We have to find a new way to do business in an economy that's no longer based on scarcity (supply/demand). This is what I was reaching toward, and I think openness is a key part of that.

    I know I asked for the interview first, but I would really covet a conversation with you about this at least, especially this economics part.

    4.) Yes.

    Thanks again Matt, and I really hope you'll drop me a line.



  • abbyannette
    What do I think? I think Apple is once again trying to take over the world. But seriously, I'm shocked at their "seeming" dominance of the industry - whether perceived or actual. I'm also shocked that the more technology grows, the more limited we become in many ways. The sad part is that consumers have grown used to the limitations within certain systems. I say this as an avid Apple user. Create a good product and the people will come - regardless of limitations. Create a half-assed cheap product and you'll find consumers looking for a half-assed cheap product. Or they'll switch - closed system or not.

    "still worship at the alter of copyright" - That is quite the statement. To talk copyright is to directly talk ownership. I know - OWNERSHIP, the "f" word of content. It is unrealistic to ask ownership to be taken out of the equation, it is also offensive. If I (company or individual) have created anything, I expect attribution, which was at least the initial purpose of copyright. Is that wrong (I ask this sincerely - should I not expect attribution)? With ownership comes finances. Sure the finances surrounding ownership have been abused - as everything is by one person or another for anything, but if you can't own your own work, then why make it (perhaps a crucial question for the creators)? Say whatever the hell you want about "sharing knowledge" and then see how you feel when your stuff is strewn about without attribution and what is your passion and livelihood is not bringing in revenue for you. If you want to talk copyright - then go talk to people creating and see how they feel - not just sweeping discussions about an industry. Where does copyright end and value of author begin (or, how intertwined are they/should they be?)? How lax have we all become in "borrowing" and calling it organic sharing of knowledge and thoughts? Open systems, sure, we all think that sounds like a great idea, but let's not throw the producers of the content out on the streets. We all have to live on something... So maybe the better question is how do we "manage" copyright and properly appropriate finances? Furthermore, maybe we should ask why we are all obsessed with owning things/thoughts/ideas anyway?
  • Abby, I always appreciate your thoughtful comments. You have an uncanny way of keeping me on my toes. :)

    First, I think the iPad is successful in large part because it is so closed, because there's only one way to do things, because it's simple and easy. No screws, no dangling wires, nothing. So the consumer in me is elated, bouncing up and down and begging my wife for the 3G model.

    But on a deeper, more philosophical level, I think Doctorow is probably right (from http://www.boingboing.net/2010/04/02/why-i-wont-buy-an-ipad-and-think-you-shouldnt-either.html ):

    "Gadgets come and gadgets go. The iPad you buy today will be e-waste in a year or two (less, if you decide not to pay to have the battery changed for you). The real issue isn't the capabilities of the piece of plastic you unwrap today, but the technical and social infrastructure that accompanies it.

    "If you want to live in the creative universe where anyone with a cool idea can make it and give it to you to run on your hardware, the iPad isn't for you.

    "If you want to live in the fair world where you get to keep (or give away) the stuff you buy, the iPad isn't for you.

    "If you want to write code for a platform where the only thing that determines whether you're going to succeed with it is whether your audience loves it, the iPad isn't for you."

    And regarding copyrights and ownership, I think I also have to point back to Doctorow, a science fiction author, one whose passion and livelihood is writing, one who gives away the full text of all of his books online under creative commons.

    And by giving stuff away, he's actually done very well in print sales. Better than many of his peers.

    He doesn't give everything away, but he gives away just enough.

    So I don't think the issue is that ownership has to go away, or that attribution should go away (that's why I have a creative commons notice on this blog).

    But I do think that we should take a more progressive view of copyright—one that doesn't try to squeeze every nickel out of every use, but earns income by virtue of scale. Not everything has to be free and open, but enough things do for the sake of our "technical and social infrastructure."
  • abbyannette
    I would like to hear your response, not Doctorow's :)

    I see where you're going with this though and you make good points, but I'm still not thinking they tell the whole story. Consequently, I think I need to do some more personal research.
  • Right, right. That's another blog post for another time. I'll make sure to credit you...again.

    Many of the good ideas posted here started with conversations we've had; I should just call you a co-author or something.
  • You said it: "First, I think the iPad is successful in large part because it is so closed, because there's only one way to do things, because it's simple and easy."

    Have you read the book 'Switch' ? It talks about how people perceive things and what makes people change. End result: People need to be told what to do.

    Give me one thing to choose and 98% or the time (false number) I will do it. Give me 2 things to choose from and that number gets cut in half.

    Like it or not... it is our brain and how people react.

    Great post and discussion btw...

  • wersmith
    Google and HP are in development of similar products, and with Google, you know it will be open sourced.

    When it comes to intellectual property rights, publishers do have a battle at their hands. I agree the publishers are running into issues trying to control this, but the fact is with digital media, there will always be encroachment on intellectual property rights.

    To make money publishers will need to change their business models around (especially with the advent of the iPad, HP Slate, etc.) Publishers seem to control their message now more than ever in a society where this control is transparent. People know what is happening, and I believe that is why sales are declining. Also, this change in new media is challenging the sales process that has been standing for the past 100+ years. Selling subscriptions is a dying form. An Ad revenue model may be more efficient if the company were to drop their hard print business, but this may cause even more of a backlash.

    The great thing about Social media is that we can listen to our customers through their dialogs. Many companies have done this, and have thrived. Letting the customer control the meaning will allow companies to tap into market potential never seen before.

    Just a few thoughts. Hopefully this helped, I look forward to any questions you may have about my thoughts.

    -Wesley Smith
    -Twitter: wersmith
  • Thanks for the reply Wesley.

    Thanks also for mentioning the other, more open alternatives to the iPad that other organizations are building. Perhaps I should have mentioned them in the post too.

    For what it's worth, here is my two cents about a few of the things you mentioned:

    With IP, I'm not sure that we're always doomed to encroachment. For example, this blog is licensed under the creative commons copyright—meaning that you can take anything I've created on this blog and share it with whomever you'd like as long as you credit me with the original content and aren't using it for commercial gain (and you follow the any special copyrights of images I post).

    So really, the only way you could encroach on my copyright is by passing it off as your own or selling it without letting me know. This I think is reasonable.

    Re: control and transparency—these are certainly important issues, but I don't think they're the culprit behind sales declines. I think the ubiquity of quality, free and open content is. Because don't want to pay Rupert Murdoch for a subscription to WSJ.com, I read the news on NYT.com where I can still get it for free.

    I think ad revenue is an alternative, but a stop-gap measure at best (I'll spare you and just link my argument on this one: http://wordpost.org/2010/02/on-shifting-business-models/ ).

    You're right that social media allows us to listen in ways that we haven't before online, but *how* does a company let the customer control the meaning? What does that look like? How will we change the way we collect revenue to fit it? These, I think are the big fish we have to fry...

    What do you think?
  • wersmith
    One thing I think a lot of business men, and people in general are getting wrong is the fact that they are looking for an exact *how* in the search for social media use. Each individual company works differently, and that is only magnified through social media use. Just taking a 10 step process and slapping it into a business will not work most of the time. These 10 steps could actually lead to organizational failure. How do you use social media to listen to customer's with out having the workers listen to the other thoughts. In other terms, co-creation (co-authorship) can exist in social media due to this instantaneous collaboration (google wave *if you haven't used it, it is amazing*). Also, other issues such as a comment against a product or service, does a company cover it up, or openly answer those issues?

    One issue I thought of in terms of publishing industries I thought of was hypertext. Society demands hypertext. An example of this is Google search. You can search, and find articles. Instead of reading through those articles, you can just read that part and find what they want. Does this force an author differently? Can authors adapt? Do you ignore the societal process and write so moving from chapter to chapter is the only way to make sense of the work?

    Changing the way revenues work is definitely needed, but in terms of me having an answer, I do not. I think it would take a lot of brainstorming to come up with a new business model. I think the thing I like about this new media is the way it challenges every business process. I think exploring revenue sharing similar to what Google uses can be a starting point.

    Hopefully this makes a little more sense. Let me know what you think.

    Wesley
  • Thanks for engaging with me on this one Wesley. These conversations are really important!

    But I disagree with your first point. :) I think we can enumerate *how* we use social media pretty well. In fact, as a community manager a big part of my job is figuring out how to apply social tactics to achieve our corporate objectives. Some of those how pieces, I think, aren't just good for my organization but for our industry.

    Recently the Altimeter Group released a report that described 18 use-cases for Social CRM: http://www.altimetergroup.com/2010/03/altimeter-report-the-18-use-cases-of-social-crm-the-new-rules-of-relationship-management.html

    Regardless of what you think of the advice in the report, it does help us think closer to "how" in 18 ways.

    On hypertext, I like where you're going. I am convinced that we need desperately to find a way to produce content in a way that is separate from its form (just like the textual "content" of this blog is separate from the style contained in the CSS). If society really demands it, then those who are able to produce it will win.

    Consequently, I think the answer is as simple as XML. But that's another topic for another time.

    Thanks again for stopping by and offering your ideas!
  • Dang,

    I just learned a lot from your comments. Thanks.
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