In this post I want to show how all the elements of this website will work together to help promote this new artwork, and a possible freeconomics model I’m looking at for selling the artwork.

Public documentation from the beginning of the project

Public documentation on my website

Firstly, I’ve been documenting the whole process in the Notebook section of this site.  The Notebook section is free open-source wiki software called Mediawiki - the same wiki software originally written for Wikipedia.

I chose to use wiki software because it meant I could simply log into it, create and edit pages, and cross-reference between pages very easily.  Unlike most wikis, I have turned off the ability for other people to edit it.  This is because I just want to use it as my notebook rather than as a collaborative tool.

I’ve also just started a thread in the discussion forum.  This only has an introductory post at the moment, but I expect that side of things to get busier as I progress with the project (I don’t expect to finish the artwork until around November/December 2008).  The discussion forum thread will enable people to ask questions, creating a dialogue rather than a monologue.

It’s important to note that public documentation starts the moment the project starts - it’s not something that is put together afterwards.  The Notebook section especially makes the creative process itself open and transparent.

Public documentation on Social Networks

As well as documenting the project on this site, I’m also documenting it on various social networks.  My DeviantArt profile was the obvious first choice—it’s an applied social network dedicated to artwork—so I’ve uploaded some of the initial photographs and text, and also explained the project in journals entries.

MySpace and Facebook are perhaps less immediately useful, but still important.

MySpace bulletins and blogs provide a space to explain the project and give updates, and images can always be uploaded to your MySpace photo albums (so long as they comply with MySpace’s somewhat restrictive photo policy), but linking out to your own website for further information is a grey area - MySpace seems to allow it for some sites, but not for others.

Facebook is also useful - and the ability to create groups and pages is something that should be investigated.

Using a Freemium model

I’ve blogged about Freeconomic/Freemium models before, but I’ve never suggested how they can be used to sell artwork.  So now I’m going to explain how I’m going to use them.

In the my blog post A Summary of Freeconomic Models I described the “multi-tier freemium” model used by the Trent Reznor’s band Nine Inch Nails:

Nine Inch Nail’s recent Ghosts release. 9 free tracks are available for download for free. The full 36 tracks are available for download for $5. Various limited edition high-(visual/tactile aesthetic)-standard production CD/DVD versions are available for higher prices (full details on Techdirt).

So, how do I apply this to a limited edition series of handmade artists books?

Well, having turned pale when adding up the costs of my materials so far, I am resigned to the fact that the thirty to fifty handmade artists books I create are going to have to be priced quite highly.  I’m not sure how much yet (because I haven’t finished spending), but for the purposes of this post let’s presume each one is going to be around £200 ($400 US).

Now, not everyone can afford that, or is willing to spend that much money on artwork, or—let’s be honest—likes my artwork enough to spend £200 on it.

So, here’s a possible multi-tiered freemium model I’ve been considering:

• A downloadable PDF ebook.  It’s not tactile, it’s neither handbound nor letterpress-printed by the artist, it’s not got the high production standards of one of the 30-50 books, it doesn’t even exist in hard-copy format (unless you chose to print it out on your printer) but it’s free.  This is for people who—for whatever reason—would never buy my artwork but quite like it.
• A print-on-demand hard-copy book.  Again, it lacks a lot of the high-(visual/tactile aesthetic)-standard production of an original piece of handmade artwork, but it’s printed by a professional print-on-demand publisher for around £25 (I’ve spent more than that on a round of drinks).  I need to do some research into the print quality of images in print-on-demand books.
• A Limited Edition series of thirty to fifty handmade artists books, finished to a very high standard, with photographs collaged in and the text letterpress-printed.  Each artists book will be uniquely and individually hand-bound by the artist.

I may slot some other options in there as well. How about a more expensive print-on-demand book, but with a limited edition set of postcards of some of the images?  Or just a set of postcards of the images as something people could buy separately?

By providing various options, from free to expensive via a mid-range of prices, I can not only get my artwork out to as many people as possible, but also make money as an artist.

Now, in terms of brands that combination is enough to make me vomit (I hate McFly and I hate the Daily Mail/Mail on Sunday’s small-minded right-wing bigotry), but putting my personal hatred aside, it’s got to be said that it’s another big step forward for the mainstream adoption of new business models.

Taking a (probably well-deserved) shot at their former record company, Universal, McFly said that “Setting up our own label allows us to rip up the rulebook and find new ways of reaching an audience.”

Adapting a freemium model most famously championed by Nine Inch Nails, the band are giving away the basic CD to an estimated 3 million newspaper customers (for which the newspaper will obviously pay McFly a hefty lump sum), then selling a deluxe version of the album a month later as a CD, featuring four extra new songs, a bonus DVD and a 32-page booklet.

Obviously the record companies hate this (just like they hated the same newspaper’s free giveaway of Prince’s last album).

The BBC reports Music consultant and former Sony executive Neil Cartwright saying “The record industry invests in new artists, and if that money disappears you’re going to find it a lot more difficult if you’re a young band to find support. That really is the danger the industry faces.”

Well, yes, the record industry does face disaster if it refuses to engage with new business models (other than suing music fans), but musicians—both new and established—can easily continue to make money, and music fans can continue to enjoy new music.

It’s just the middle men who won’t be taking a big fat cut any longer (unless they start engaging with the internet and new business models in a positive way rather than ranting against them, and even turning against their biggest promotional tool - music radio).

Anyway, that’s far more than I ever wanted to write about McFly & The Mail On Sunday.

So, I thought I’d put together my ideas for a good start-up web strategy for a musician or band.

1. Create a website.

This is about getting your web presence set up.  For your own website I’d recommend getting some cheap (but not free) hosting space with your own domain name.  Hosting space will cost you less than £50 / $100, and a domain name is frequently thrown in for free in your first year of hosting.

You’ll need web space with PHP and MySQL because you’re going to need to install WordPress—the same blog software that runs this site—along with a couple of WordPress plugins created by Illinois developer Dan Coulter.

Dan has two “must have” WordPress plugins for musicians:

• The Discography plugin, which lets you upload your MP3s, publish a list of albums and auto-generate a WordPress page for each song, so that fans can comment, save links to your songs and share them with friends, and
• The Gigs Calendar plugin, which lets bands and musicians manage and display a calendar of their gigs within WordPress, even managing venue data complete with mapping and ticket links.

The normal “blog” section of your blog should be regularly updated to keep your fanbase up to date on forthcoming gigs, progress on new tracks, inside info on the writing/recording etc.

Some sort of email newsletter plugin is also required.  I don’t have any recommendations for a particular plugin here - just one recommendation for strategy: don’t spam anyone.  The only people you want to receive your email newsletter are the people who want to receive your email newsletter.

When you’ve got all this set up (it’s about a 1 hour job for your neighbourhood geek) then you need to get a decent theme for your site - there are plenty of free themes on the WordPress Theme Viewer or you can get one designed specially for you by a decent web designer.

You’re now ready to upload all your MP3s and make them available for free on your website - you’re not going to make any money selling compressed digital files so set them free.  To quote Tim O’Reilly: “Obscurity is a far greater threat to authors and creative artists than piracy“.

2. Create associated social network profiles.

The next stage is to create a MySpace band profile page, a Last.fm profile…  There are other good social networks for music - I hesitate to name them here because in 6 months my list will be out of date.  Search them out and get on them.

Andrew Dubber has some very good suggestions for what to do on your MySpace page, as has Wired magazine.

Your aim (at this stage, anyway - perhaps always) is not to be able to afford a guitar-shaped swimming pool, but to get 1000 True Fans. Or perhaps it’s 500 or 5000 true fans - whichever figure is correct, the point is that you’re looking at an achieveable target, not a dream of superstardom.

3. Keep making music & playing gigs.

No matter how cool your website, how interactive your blog, or how many friends you have on MySpace, you need to keep creating music and making it available as free MP3 files on your site.

Keep playing gigs.  You could try giving away CDs at gigs (make sure your website address is clearly mentioned on the CD or case!) - I wrote about this strategy back in February explaining the rationale behind it.

4. Your first pay-for product.

Now, apart from getting paid to play gigs—and let’s face it, the money you get for paying gigs at this stage barely covers your gig overheads—you’re not getting any money from your music yet.

I think that a good starting strategy is to put together a good CD.  Spend time and money on the packaging (I love card-stock digipacks - they’re so much more appealing as objects than jewel cases).

Seek out local artists who might be prepared to create artwork for your CD.  Seek out graphic designers to put the artwork together with the text.  You might think you can do these things yourself, but the work of a good artist and a good graphic designer makes the difference between something that looks OK and something that looks great.

Small Limited Editions are almost a necessity (after all, you probably can’t afford huge print runs) so make a feature of it.  Hand-number them as limited editions, make the packaging really, really attractive, and sign them all to make them special.

5. Make more music and play more gigs.

You can’t sit back and just wait for your CD to sell.  You need to get out there, make more music, play more gigs, get on the latest social networks and music sites…

Don’t wait for your CD to sell out before you make the next one - otherwise it never will. The more CDs you make, the more opportunities you have to sell both your frontlist (your new CD) and backlist (your previous CDs).

Today ACAP is completely dead in the water.

Google, Yahoo and Microsoft (see those links for details) today jointly announced their backing for the existing Robots Exclusion Protocol (REP) which comprises robots.txt, the Sitemap protocol, and individual page meta elements.

The people behind ACAP are probably still claiming that they have the backing of the world’s 4th largest search engine Exalead, but in the words of Bill Hicks “Yeah, maybe, but you know what, after the first 3 largest armies search engines, there’s a REAL big fucking drop-off.”

The decision by the three big search engines to back the existing REP standard—and to clarify exactly how they implement it—is a great example of these three competitors working together to the benefit of both website owners and searchers.

UPDATE - 4th June 2008: I just heard from a colleague that the whole ACAP debacle could have been avoided.  ACAP was primarily conceived as a way to convey rights/permissions metadata when feeding data from one partner organisation to another (for example, from a publisher to Amazon).

For some unknown reason the people behind ACAP decided to try to roll it out as a website technology.

This was obviously a huge strategic error, and it backs up my belief that the people behind this technology just don’t get the web. As a protocol for communicating permissions information from a publisher to Amazon or Google Books (not Google Search!) in a data feed it’s probably fine.  But ACAP has no place on the web.

What prompted the people behind ACAP to try to force it onto the web is unimaginable.  This ill-conceived idea was doomed from the start, especially when combined with their secretiveness (they have a forum on their site, but it’s hidden from view and they only give out logins to selected partners) and their attitude when replying to the tidal wave of criticism they received from bloggers.

I’ve seen those annoying cut-and-paste JavaScripts to attempt to disable the right-click functionality (as well as a lot of other useful and legitimate functionality) to prevent visitors from saving the small digital reproductions of the artist’s work, in the process crippling visitors’ browsers and pissing them off.

I run things slightly differently - I agree with Tim O’Reilly’s seminal post “Piracy is Progressive Taxation, and Other Thoughts on the Evolution of Online Distribution” where he stated:

“Obscurity is a far greater threat to authors and creative artists than piracy”

To me the small digital reproductions of my artwork that I display on my site are not my artwork - they’re my marketing.  And if they’re viral marketing (i.e. visitors want to download them and use them as their PC wallpaper or—even better—distribute them to other people on their MySpace pages) then I’ve been even more successful.

My artwork—as you’ll know if you’ve taken a look at my galleries—consists of collages, assemblages and drawings, with a few photographs.  It doesn’t consist of the small digital images of those pieces of artwork.  So when people take those images and use them for their own non-commercial purposes then it isn’t theft, it’s other people doing my marketing for me.

Now, you could say that because I don’t watermark my images then how can it be marketing - how can someone seeing one of my images on someone’s MySpace account possibly help me when the image can’t be attributed to me?

It’s simple - people like being Mavens. When asked “Wow, where did you get that image from” (OK, it’s probably more likely to be phrased as “OMFG!!111 - WHR DD U GT THT PIC FRM?!!”, but you get the idea) then the person can show off their knowledge by pointing the amazed newcomer in the direction of the originating website - my website!

Sure, in that situation some idiots may claim that they made it themselves, but that doesn’t cost me anything so I don’t care.

Sure, it costs me a tiny bit of bandwidth if people are too lazy to host it themselves, but if that’s the case then AWStats—my stat-tracking software—will tell me where it’s being used (because the referring page will be logged), which lets me see who likes the images of my artwork and how they’re being used - which is incredibly valuable information.  And the bandwidth cost is neglible - my £100-a-year web-hosting package gives me 150GB bandwidth transfer per month and I only use a fraction of that anyway.

There’s just one exclusion to the above.  I specified people using these images for non-commercial purposes.  Commercial usage is an entirely different matter, and for commercial usage money should change hands (from their hands into my hands!).

So, let me start with a quote from my previous article stating my position:

I’m sure this isn’t just because I’m an anti-social bastard, but it seems like the big social networks have absolutely no purpose to an individual user. The signal-to-noise ratio is ridiculous - it’s just marketers (whether they be bands or brands) hitting you incessantly with really bad marketing. It reminds me so much of UseNet in the late 1990s it hurts. It’s like being forced to listen to Barry Scott shouting at you about the benefits of Cillit Bang, on a continuous loop.

You see, social networking shouldn’t be the raison d’être of a site. It’s a feature. Add social networking to a site that already has a purpose and you might add value to that site.

When a new concept or technology appears on the internet everyone wants it on their site. Or worse still, everyone wants their site completed devoted to it. Then after an initial—huge—adoption of these new sites, interest—and therefore usage—starts to decay.

This is not a bad thing. The massive adoption of MySpace, Facebook, Bebo, Orkut, FaceParty et al. introduces people to the essential concepts: adding friends, creating and maintaining your profile, adding applications, deleting 99% of those applications when you discover they’re pointless, etc.

As you’ll probably have guessed, my prediction is that usage of Pure Social Networks—sites whose only purpose is “to be a social network”—will start to tail off, and sites which use social networking models as a means to an end (which I’m classing as Applied Social Networking ) will increase thanks to easy adoption of the new tools because everyone’s learnt the ropes on MySpace and Facebook.

I’ve used this example before, but it’s a good one: deviantArt is a prime example of an an Applied Social Networking site - it uses social networking tools as an integrated part of a multi-artist gallery site. It’s not perfect, but it’s on the right path.

MySpace has caught on and has been moving from Pure to Applied over recent years - it’s evolving into a music-orientated site, connecting bands with fans.  Networks such as Flickr and LinkedIn had a purpose from the start (although LinkedIn probably needs to do some work on making itself more useful).  Facebook, however, doesn’t have a purpose yet, and if I were Facebook I’d be worried about that.

JavaScript that disables right-clicking (to prevent people “stealing” your images) is wrong on so many levels. But it’s such a prevalent mistake that I feel the need to tell you why it’s wrong:

Small screen-sized digital images of your artwork are your most basic form of marketing, and (thanks to the wonders of the internet) can be reproduced and redistributed at no cost. If you think that trying to stop people from distributing your marketing material is a good thing then you need to rethink everything from scratch.

It doesn’t work anyway - anyone can disable JavaScript in a matter of a second. Which means I’ve still got your images, but now you’ve annoyed me as well, so I’m less likely to rave about (i.e. promote) your artwork.

2. Flash websites

Now I know this one tends to get Flash evangelists in a tizz, but I hate Flash websites. Part of the reason is that they often completely fail to work on my PC (I’m running 64-bit Linux, and there’s no official flash plugin for 64-bit Linux, so your “website” is rendered as an inactive 800×600 pixel dead-grey rectangle).

Flash websites are also favoured by linear-minded control freaks to dictate how a visitor views a website - they restrict choice. For example, they restrict the visitor from entering the site on anything but the “front” page (which invariably contains a painfully tedious animation that I’m forced to watch before the “enter” link appears).

They also seem to be used as an over-engineered “solution” to people attempting to help market your artwork (in that they prevent you from right-clicking and saving an image). Again, it doesn’t actually do anything but slow your visitor down for a matter of seconds (print-screen will capture that images easily) whilst pissing off your potential customers.

The worst Flash artists’ websites always seem to say to me “I’m a self-important wanker who demands that you see things my way - you will not deviate from the true way to appreciate my artwork” (in 8pt type that I can neither read nor resize). I know I’m ranting here, but it’s a pet hatred of mine.

I should add that I’m not opposed to small bits of Flash embedded within an (X)HTML website, where rich content or animation needs to be delivered, such as using YouTube’s Flash embedding to drop a video into a webpage. That’s fine - that’s what Flash is for.

3. Tiled wallpaper behind the artwork

Galleries have plain walls so that the viewer’s attention isn’t distracted from the artwork. Your website should too. It’s just visual noise that gets in the way of your artwork.

4. Arty Navigation

While I may be inclined to spend my valuable time analysing and building an understanding & appreciation of your artwork, I’d rather not spend that time analysing and building an understanding of your website’s navigation/menu - I don’t care enough and I’ll just go somewhere else.

I want a menu on every page of the site with the main menu items should be in writing and not icons/symbols/images whose meaning I can only deduce by clicking on them and seeing where I end up. I don’t care how “clever” they are.

5. Splash pages with “enter” links

I used to make this mistake many years ago. I had a splash page with an impressively large image and an “enter” link.

It comes from an over-extension of the analogy that an artist’s website is their personal gallery—with a door through which you enter—but that analogy is wrong.

A website is a gallery—and much more—where all the artwork is hung on the exterior walls facing out into the world, rather than being contained in a space for which there is only one entrance (this is a mistake frequently made by aficionados of Flash websites).

For the purposes of this summary I’m ignoring products or services that are free because of government grants or funding. I’m also ignoring models which claim to have a free component, but the free item can’t be gained without paying for another product/service (for example, phone companies that give you a free mobile/cell-phone so long as you sign yourself into a minimum-duration contract). Finally I’m excluding “free sample” offers, because it’s a non-sustainable temporary discount rather than a long-term model.

The Freemium Model

Description

In this model, the basic service or product is free. The majority of people will be happy with the free version. Production/service cost-retrieval and revenue come from the minority of people choosing the premium paid-for version(s). The word “freemium” was coined by venture capitalist Fred Wilson.

Examples

• Simple 2-tier: Flickr - the basic service (with a limited monthly upload) is free, but an enhanced version (with no monthly limit) is available at a cost.
• Multi-tier: Nine Inch Nail’s recent Ghosts release. 9 free tracks are available for download for free. The full 36 tracks are available for download for $5. Various limited edition high-(visual/tactile aesthetic)-standard production CD/DVD versions are available for higher prices (full details on Techdirt).

The Cross-sell Free Model

Description

In this model, one service/product is free and one or more different—but related—service/products are available at a cost. A percentage of the people who enjoy the free product will also want to have the related non-free product(s).

Examples

• A band makes all their recorded songs available for free on the web in order to attract people to their (pay-for-entry) gigs. Additional non-free products available might include merchandise.
• An author blogs about a subject over time & in depth (free content), then publishes the same content—edited into book format—as a paid-for hardback/paperback book.
• A piece of software—e.g. a Linux distro—is free, but a technical support contract is available at a cost for those that want it.

The Sponsorship/Ad-Supported Free Model

Description

A product is given away free, and the creators make their money from adverts embedded in or around the product.

Examples

• Mozilla Firefox - the Firefox browser is free, and Mozilla receive about $72 million from Google for making Google’s search facility the default search engine in the search bar at the top of the browser.
• Google - Google’s search engine is free, but is supported by adverts running on Google’s AdSense advertising network.
• The free newspaper I read on the bus on the way to work - the cost of the newspaper is paid for by adverts throughout the paper.
• Commercial terrestrial television channels.

The Patronage-supported Free Model

Description

The product is free, but people are encouraged to financially contribute. Reasons to pay might include goodwill/appreciation, or some more tangible “reward” (e.g. being visibly acknowledged as a financial contributor or having some input into the final product).

Examples

• Radiohead’s “pay what you want” release last year. Although strictly not free (the credit card processing fee was obligatory) fans could choose how much they wanted to contribute. The average contribution was $5.
• Wikipedia—or rather the Wikimedia Foundation—is mainly funded by public donations who are listed at http://wikimediafoundation.org/wiki/Benefactors

Instead of money, the bottleneck becomes the time required to find content they’re interested in - this is where Google leads the field by providing an ever-improving and expanding search facility for finding the content, whether it’s webpages, books, news, academic articles, images etc.

Free distribution of digital content is slowly being embraced by—and will benefit—creators (artists, musicians, authors etc.) because it allows their work—and reputation—to be distributed to a much wider audience.

Musicians such as The Charlatans and Nine Inch Nails are making headlines with new ways to make money while giving away MP3 files of their music for free (and unsigned bands have been doing it for years).

Authors such as Suze Orman and Dan Solove are giving away free ebook versions of their books, in the knowledge that the wider distribution this gives them helps to sell more paper copies of their books.

So where does this leave publishers? The book publishing companies and music companies seem to have been left out of this equation. You could argue that they’ve left themselves out of the equation by desperately attempting to pretend that the business model of content creation hasn’t changed while vainly suing fans for the crime of being early adopters of a new economy.

Actually, there is a role for clued-up skills-rich publishers. It’s just a slightly different role than they’re used to. The clues can be found when you examine the new business model summarised above and look for the holes. That’s what I’m going to try to do now (but not exhaustively - I’ll leave that to people much smarter than me).

Publishers can provide instant attention

As mentioned above, one of the biggest benefits to both creators and consumers is that content is more widely distributed and available to all. But in a world where a huge amount of digital content is free, finding that content is hard - it’s like finding a few choice needles in a field of haystacks.

Obviously search engines provide front-end interfaces for finding that content, but that’s not enough. Search engines such as Google need to interpret the searcher’s requirements and display the most relevant results first. Google’s algorithm relies on correctly interpreting the relevancy and reputation of each piece of digital content in order to give their users the right results.

Publishers can provide a huge amount of relevancy and reputation because Publishers’ old-business-model reputations have been translated into high rankings for their websites.

A record company specialising in hip-hop music has already built-up a reputation and many incoming links from hip-hop-orientated websites, whether they’re sites belonging to hip-hop musicians, fan-sites, hip-hop forums, etc.

A publishing company specialising in a particular niche—whether it’s an academic subject area, a particular genre such as science fiction, or a particular service such as news & current affairs—will have built up a reputation (and the accompanying relevant incoming links) from other websites in their particular niche. If I was publishing this blog post in the Freakonomics column of the New York Times then the chances are that it would get a lot more attention!

This reputation and the resulting links are incredibly valuable because they’re both numerous and extremely relevant, and can take years to build up. So Publishers are already well-positioned to take on the role of distributing instant reputation and relevancy to creators. After all, that’s one of the things they’ve been doing for centuries.

So publishers need to revalue their business models so that the bestowal of reputation and relevancy (and therefore attention) is seen as a major service that they can offer to creators. In order to better leverage this service, publishers need to work closely with relevant communities. That means actively engaging in conversations with their niche communities on email lists, discussion forums, social networks, and blogs (and in the non-digital world at conferences, gigs, book-signings, etc.).

Publishers can provide quality control and specialist technical expertise

Creators are not perfect, and most are grateful for help.

An author’s work frequently benefits from the skills of their editorial team, which is why you’ll often see the editor thanked in the author’s acknowledgements in the front of their book. The book production team use their amassed knowledge of design and typography to turn a word-processed manuscript into a professionally laid-out book that is a pleasure to read.

Musicians benefit from the editorial and technical skills of the producers & engineers who spend a huge amount of time coaxing the best performances from them, then expertly mix the raw sound into a polished—or artfully unpolished—finished track.

Moving back to the web, authors or musicians are unlikely to be their own web team. I’m not just talking about being able to throw a website together, I’m talking about a full web team consisting of ecommerce programmers, web developers, web designers, SEO experts, and emarketing strategists. Sure anyone can put a small website online (and that’s one of the great things about the web) but as the web has evolved the skills necessary to create and maintain a good website have both multiplied and increased in their complexity.

Any content creator—author, musician, or artist—can’t be expected to have all these expert skills, and hiring them individually (and project-managing the coordination between them) would be expensive and a huge consumption of valuable time and effort that would be far better spent doing what the creator actually excels at: writing, composing, playing, or painting.

That isn’t to say that the author or musician shouldn’t be directly communicating with their fans - they should. But managing the framework that enables and amplifies this communication is a job for a dedicated team.

So, publishing companies should be positioned to provide services that greatly enhance both the book/music and the online presence of the author/musician.

Again, this is already something that publishing companies do, but they need to emphasise this aspect of their service and market it as a suite of valuable services that they can provide to creators.

But publishers need to make money

Obviously publishing companies will want to be paid for providing these professional services - they need to make a profit. At the moment they get this money by charging for content, but as more digital content becomes free then this particular revenue stream will start to dry up.

I think that paper copies of books will continue to sell, as will CDs & DVDs. Returning to Nine Inch Nail’s recent release of Ghosts, even though Trent Reznor made the first 9 tracks available free of charge, he also released various paid versions from a full digital download of 36 tracks for $5 to a $300 ultra-deluxe limited edition package.

The $300 Ultra-deluxe limited edition package has already sold out, despite there being multiple cheaper (and even free) versions available. This utilises the generative of “embodiment” coined by Kevin Kelly which I’ve already talked about in a previous blog post. Hardback bindings of paperback books are another long-standing example of this strategy.

So higher-quality (higher revenue) non-digital formats are one revenue stream that could be added to sales of non-digital content in “standard” formats (paperbacks, CDs etc). This strategy can also be expanded to cover revenue from supplementary material such as subscription elearning software for textbooks or t-shirts and posters of musicians. Again this is something that is already happening (especially within the music industry) so the groundwork has already been done.

But to offset this, expensive traditional marketing (direct mail advertising, broadcast television ads) is going to have to be drastically reduced. I can’t think of any way to recoup the huge amounts of money spent on direct mail and mass-market broadcast ads in this newly emerging marketplace - it’s just not viable. Certainly not when you can better reach a more carefully-selected market (i.e. with a much greater percentage of potential customers) by spending much less money online.

The traditional marketing model of throwing a huge amount of cash—in the form of TV ads, billboards or direct mail campaigns—at an undifferentiated mass of people can only be sustained when you (artificially) control the scarcity of your product. When your product loses that scarcity (i.e. it can be easily copied and redistributed online) then you simply can’t keep following this old dogma. I’m not going to go into more detail about this because it’s been explained before by the likes of Chris Anderson, Kevin Kelly, Michael Masnick, and Umair Haque (amongst many others).

Unfortunately this is where many companies in the publishing and music industries “don’t get it”. They do understand the ideas of new revenue streams and the benefits of free content, but they can’t imagine not having to shovel vast amounts of cash into the raging furnace that is the traditional (obsolete) marketing system - they don’t understand that the potential cost of their marketing is plummeting for exactly the same reasons of efficient distribution and connectivity.

Once they accept this (and realign their marketing strategy accordingly) then the equation will balance and they’ll see the profit.

Underpricing, they say, devalues the products (because, as Chris Anderson pointed out recently, they make the mistake that “the only way to measure value is with money”).

This “underpricing=bad” argument might have some mileage for products made of atoms, but when your products are made of ones and zeroes it becomes obsolete. That’s why it’s a nonsense to charge the same price for your ebook as you charge for the paperback (or, even worse, the hardback).

Of course, the ultimate underpricing is to make something free. Making something free doesn’t devalue it. I find a lot of value in Google, Flickr, Slashdot, numerous other websites and blogs, the Kubuntu installation on my computer, Mozilla Firefox, the WordPress software this blog runs on, PHP5 & MySQL, the NHS, Channel 4, free-entry to the collections at the Tate Modern (where I can gaze, without paying, at the Bacons, Picassos, Matisses…), even the free copy of the Metro newspaper I read on the bus every morning on the way to work. I value these things.

Telling people that you believe some things should be free can generate some aggressive criticism (as you’ll know if you’ve ever read the comments on, for example, Chris Anderson’s Long Tail blog). You can feel like you’re being accused of being a communist/hippy idealist with no idea about business models in the real world. I’m sure that those naïve hippy idealists at Google—who are making a killing with their business model in the real world—would disagree.

Why is it that so many people who see themselves as “traditional hard-nosed business” types are completely clueless when it comes to the internet, especially the more recent trends in social networking?

Because they’re desperately trying to impose yesterday’s business models on today’s business. Umair Haque points to the twin obsessions of “product” and “monetization”:

When you try and “monetize your users”, you accept the almost obscene assumption that people are meant to be pimped out, sold to the highest bidder, resources to be slashed, burned, and exploited.

Umair is certainly not against businesses making money. In fact he highlights the fact that many businesses’ attempts to make money on the internet can’t make any sustainable income (because they are so clumsily contemptuous of their customers in the pursuit of profit).

Actually he summarises his argument most succinctly while replying to a comment on that same post:

as for figuring out how to capture value - the point of the principle is that when we figure out how to capture value, we must do it in a way that doesn’t destroy any value we create.

How long would Google remain the search engine of choice by such a huge margin if it sold out its users and “monetised” its clean, clear, front page (which must be the primest piece of real estate on the net) by cluttering it with ads?

Meanwhile earlier this week Trent Reznor just grossed $1.6 million in the first week of sales of Nine Inch Nail’s new album. My friend Barry examines the pricing policy in more detail, but the pertinent point here is that Reznor gave away a 9-track download of the new release for free.

$1.6 million says that his fans didn’t think that the free tracks devalued his music…