Comments for Business models for digital goods in the face of the ‘culture of free’?

In a world where music distribution has become faster and faster, and more free than ever, what creative innovations related to music have found their place and succeed, in a middle of a battle where benefits increasing only policies from labels from one side and listening more music for free from users from the other side seemed like a never-ending fight?

First of all, we have the online streaming platforms (such as Spotify, soundcloud, deezer …) where we have 2 different models : one which allows user to pay for getting some musics (soundcloud, Beatport, Apple Music), it’s a bit like music on demand (which looks like for some platforms a lot to video on demand platforms) and the other which puts ads in the middle of the listening (one ad every four music listened for instance). This system is benefit for two kind of artists : the one who is well known because he can get good incomes through this and his label also, and for the unknown one as well, because it can be a way of sharing his music for free, and, eventually, getting income too if a lot of people listen to it. But, as music creation never get to this level (no need of reviews for this, just go on a website like Soundcloud and you’ll get how many original songs are uploaded every day), how copyright’s infringements are avoided? Because, it is a reality, the more music is created, the more likely you risk to infringe some copyrights.

The term of “original song” tend to change his meaning nowadays with the development of electronic music. Nowadays, especially in subgenres like techno, house music and some EDMs, sampling isn’t only a way of making music, it’s a prerequisite. When you start creating electronic music, you need a computer, a software and a sound bank. Almost all of producers’ sound banks come from the internet, where you can download or upload yours (and if you have the rights, try to sell it). That’s one reason among many others why sampling in electronic music isn’t seem as a copyright infringement. But, there are a lot of contentions anyway. That’s why sites like soundcloud, the number one site for techno producers (new ones or famous ones), has decided to include the creative commons inside his uploading system. When you upload a song on their platforms, at the end, you can choose either if you want a standard copyright licence (all rights reserved) or a creative commons licence (and you can choose which one you want or don’t want), I know it because I used to do this.

Platforms, by using copyright (or copyleft) tools such as creative commons, can make a good arbitration between trying to stay profitable on one hand, and let the culture of free (like we saw it in electronic music producing) keep developing itself. Independent artists (no labels ones) are willing to use creative commons in order to impede creativity (even if it’s not 100% original) and labels are willing too (more and more but not every label) in a way that it doesn’t affect their benefits. The drawback is that, in techno music, we don’t observe a lot of originality, novelty in music creation from the last 10 years, as in the same time we never saw this amount of new music created everyday. If I’m sure that copyleft impede creations (and creativity), I’m not sure it’s impeding originality, and, it will be apply one day in economic tools like patents for example.

http://www.thedrum.com/news/2017/02/15/measuring-sound-how-data-and-streaming-impacting-the-music-industry

http://www.lesinrocks.com/2016/06/18/musique/sample-collage-underground-a-pratique-institutionnalisee-11846770/

https://www.varsity.co.uk/science/11929

According to the Entertainment Retailers Association in the UK, the amount of money that is spend on vinyl (£2.5m) in the UK overtook the amount that is spend on music downloads (£2.1m) in December this year (1).
This is in fact a reasonable development that fits into the framework of increasing Creative Commons-licensed work and low royalty payments for music consumption (as a consequence of an increased use of streaming platforms and illegal music sharing platforms as described in the video). Creative commons licenses help the artists to increase their popularity and give them the chance to sell premium versions of their productions. According to The Guardian the demand for vinyl has steadily increased in the UK (2). It is also interesting that a lot of the vinyl buyers don’t actually use the vinyl to listen to the songs.
It is questionable if this trend is only a kind of temporary fashion. But I think that it somehow shows that people are still willing to pay for the work of an artist if they feel attached to his or her music. If artists find new ways to monetize on their art, creative commons-licensed work could be a useful fundament.

(1) https://www.theguardian.com/music/2016/dec/06/tables-turned-as-vinyl-records-outsell-digital-in-uk-for-first-time
(2) https://www.theguardian.com/music/2016/aug/12/vinyl-destination-who-is-actually-buying-records

Creative Commons are a good way to facilitate the free (but restricted) distribution of certain types of contents while at the same time providing some (optional) protection for the intellectual property [1]. Indeed, we can see on the second chart that more than a third (34%) of the works are released under a non-commercial licence (NC) leaving the monopoly to the author to monetize their work [2]. Creative Commons should be seen as a way of accessing new people and opening new doors through licences facilitating the diffusion but not as a substitute for legal enforcement. Indeed, CC licences must be used as frameworks providing different possibilities to release the rights of a piece of work as it does not offer any form of automatic protection if someone else decides to override the licence (you still need to go to a court of law to defend your rights) [3].

Another issue is the non-retractability of the licence, after defining it and broadcasting the content, it cannot be changed afterwards to make it more restrictive. I do not believe that the media industry would be able to break-even when we look at today’s way of consuming media. Indeed, with such an abundance of produced content, we do not tend to re-play or re-read the same content multiple times (exc. music): we are more in a Download/Watch/Delete scheme. When we look at the music industry for instance, the new business model shifted from records as the main source of income to focus on non-substitutable goods (derived products and live performances f.i.) [4]. Switching to `freemium’ solutions, such as Spotify, does not seem to be viable at the moment for the artists with the relatively low percentage of paying users even though it represents around $1 billion for the US alone [5].

Behind the large increase of Creative Commons-licenced artworks, a major player is the Wikimedia Foundation (Wikipedia’s owner) who gave a large impetus by promoting CC-BY-SA (Attribution/Share Alike) as the default licence for all the artwork uploaded by their users [6]. The cultural ambience behind the Foundation is prone to similar values.

References
[1] http://www.pcworld.com/article/255602/how_to_protect_your_artistic_works_with_a_creative_commons_license.html
[2] https://stateof.creativecommons.org/2015/
[3] https://creativecommons.org/faq/
[4] http://www.rollingstone.com/music/lists/9-ways-musicians-actually-make-money-today-20120828/talk-show-band-19691231
[5] https://www.ft.com/content/5645cf6c-ce73-11e4-900c-00144feab7de
[6] https://meta.wikimedia.org/wiki/Terms_of_use/Creative_Commons_4.0

The development of the « culture of free » came with the rise of the internet and the infinity of information that became available to the people at almost no cost. This new technology also facilitated the distribution of copied goods.

Indeed, products ( music, movies, games) can be copied at no cost or just the cost of a storage device and at a relatively high quality. The copied contents are then made available to hundred millions of people for free. If music or movie producers were to reach that many consumers, it would cost a lot and this would reflect in the price.

Technology has changed the way people consume digital product, especially with the presence the network effect for goods such TV shows and music where everybody want to see “the” show that everyone is talking about for a very low cost. It allows to reach much more potential consumers without paying for a lot of advertisement or allows to just make advertisement online. Therefore can take advantage of it and not see it as a source of revenu loss. For example, in the case of TV show industries a lot if the channels have understood the importance of the network effect and allow viewers to watch episode online on their website in streaming and then post comments about it on Twitter or Facebook. And by making their product easily available, it allows producers to have control of their content and make copies product less attractive. And I think that is the reason why there is more commons-licensed.

I think that the reason why streaming companies such as Netflix and Spotify are so successful is because they allow very easy access to a large number of authentic products. It’s easier than copying when people have to search between numerous of various files before downloading the right one. This access is not free, but people are willing to pay for the ease of use. And also discovering new music, movies and Tv shows is much easier with the profiling that these websites do.

This video illustrates the considerably change in the people’s consumption of the CD during the last two decades. Technology is always evolving and our consumption’s behaviours need to be adapted to this change. That is exactly what the funders of Napster understood and wanted to implement. By using the benefit that internet offers they wanted to give people the opportunity to access to a larger panel of music’s. Their idea was to allow people to share music not only with their friends or family but with more and more individuals. In that way, Napster started to change the tradition business model of the music distribution to a new one. Therefore, there were important consequences on this industry like the closing of many record store because at that time stores were the only place where people could purchase music. Even if Napster lost the legal battle, the idea was still present which created a real revolution for the music sector.

Through this comment, I would like to transpose the case of Napster to the Films as well as the Video Games through two examples.

Nowadays the movie sector is facing an important change in the way people watch films as well as TV series. Indeed, like the case of the music sector the technology has changed the consumer behaviours. In a legal way, some platforms like Netflix appeared by offering consumers access to many films with an abonnement. In only three years, the users of Netflix increased from 23 million to more than 80 million (https://www.statista.com). Moreover, Internet also allows people to obtain a huge amount of films without paying for them thanks to an illegal way which is the piracy. These two new methods show that the movie sector is knowing the same change as the music did. As consequences the closing of most of video libraries and DVD shops. Actually, most of the new laptops do not provide a disc reader anymore which illustrates well the transition of the DVD to others way to watch films and series.

Furthermore, the world of the video game highlights a good example of the “culture of free”. The 27 October 2009, the editor “Riot Games” released its completely free (except the fact players are able to purchase items to develop their characters) video game called “League of Legends”. According to Riot Games in 2014, more than 27 million people played daily this game and their revenue raised to $1.6 billion. Two years later, more than 100 million of people play every month which is currently the most popular online games. In the same mentality of Napster, the developers of League of Legend wanted to provide a free game for people. The idea was to attract people with a free game and then finding other way to make money rather than selling the game at $60-$70. Riot Games analyses very good the behaviour of the players in order to attract them. Revenue come from different methods like organising tournament with huge sponsor like Coca Cola or Korean Air, letting people purchase extra items, the creation of an application …

To my view the digitalization world are going to evolve more and more. Industries should be
aware of the importance of the technology evolution and always be prepared to change the way they provide their products instead of trying to keep more traditional methods.

https://www.statista.com/statistics/250934/quarterly-number-of-netflix-streaming-subscribers
http://fortune.com/2016/09/14/league-of-legends-100-million/
http://uk.businessinsider.com

On my humble opinion, I think that successful downloading sites as Napster are one of the consequences of a property right system which did not adapted itself fast enough to the digitalization and more generally to the evolution the technologies and consequently to new innovations.
As we saw in the video, produced by RetroReport.org, summarizing the recent events in history of the music industry, even if the lobbies of CD manufactured industry won their lawsuit against Napster them did not succeed to stop the other rising Peer2Peer filed sharing programs.
Indeed, thanks to the digitalisation Napster made a huge innovation and change the business model of music industry. With the help of the high-speed internet people are now able to access music in quickly, freely and without displacement costs ways.
How could the old CD industry companies compete with that? Definitively not with their old business model.
Because after having tasted free music, a lot of people will not want to go back to buy expensive CDs anymore and furthermore for many people the advantages of downloading site were sufficiently advantageous in comparison with its disadvantages (illegality, feeling of guilt after an immoral act, risks link to the opening of their hard drive, quality…)
Furthermore, the London School of Economics and Political Science report shows that punitive enforcement strategies are not as effective as the entertainment industries claim. [1]
So even if it is true that Napster’s business model is legally punishable, it is difficult to punish those downloading firms through the traditional system of intellectual property right protection, consequently there were a need of innovation in this legislation and this is where Creative Commons are important, but I will come back on them later.
So as downloading and sharing files can have a positive effect on the entertainment industry thanks to digital sales, subscription service, streaming and life performance which compensate the loss of revenues from the sale of CDs, big entertainment company should try to develop business model to use this change to earn money, namely thanks to marketing.

So, as I mention it before, there is a need for more suitable copyright licenses and that’s is the goal of Creative Commons licenses.
They are developed by an American non-profit organization which wants to increase the range of creative works available to other in order to develop them legally and to share them.
These licenses allow creators to communicate which rights they give up for the benefit of other creators and which ones they reserve for themselves.
One of the innovation of this creative commons licences is that they are developed in a particular way. Indeed, each license begins with a traditional legal text but as most of non-jurist people do not understand this specific language, these licenses also have a readable by “normal human’s” version, which summarize the most important terms and conditions.
Furthermore, the license is made in a way which enable the internet to read these licenses. [2]

So according to me, as they are taking into account, not only lawyers but also normal people and the machines, these new licenses are well adapted to deal with the digitalization of the industry in general and as there were a real need for them this explain the increase of their use.
Consequently, they will help to develop those kind of business model in other industry facing digitalization.

These licenses allow to increase the use of the innovation which is really good for the social welfare and they are more suitable than the previous legislation which is good for the innovators.
Furthermore, I think that the number of these Creative Commons licenses will continue to rise and that they can become one of the most crucial factors in the development of future laws and technologies.

[1] https://torrentfreak.com/piracy-isnt-hurting-the-entertainment-industry-121003/
based on https://fr.scribd.com/document/172985274/LSE-MPP-Policy-Brief-9-Copyright-and-Creation
[2] https://creativecommons.org/licenses/?lang=en
[3] https://stateof.creativecommons.org/2015/

The first resource goes over the evolution of the music industry since Napster, the first large scale peer to peer file-sharing program, was created. Its launching was the first step to how Internet revolutionized consumption habits of music buyers. From there, more and more website and torrent allowing the download of files for free appeared online.
Napster was founded thinking that it would bring artists and fans closer together but big names of the industry saw it as a threat. Some tried fighting it; others such as Steve jobs took advantage of the spread of this new technology. That is how ITunes was born. This new application allowed clients to download files legally. This led later on to the appearance of online streaming platforms.
The video portrays two different points of view on the impact of online piracy on the music industry. On one side, some people think that it initiated the slow downfall of sales and irreversibly hurt the market. Some think of it as a lack of respect and recognition of the work of the artists.
On the other side certain consider that, with the invention of Internet and the world becoming more and more digitalized, it was the natural evolution of the industry. It was necessary for it to adapt to the new ways of consumption.

The second resource represents the growth in the number of creative commons-licensed works. A creative commons-license is a license applied to a work that is protected by copyright. It gives the public the right to distribute freely the work of another. By filing a CC license, the author of this work gives to anyone the right to share, use and modify it. Of course the creator has the right to include conditions and limits to the use of its piece.

We see that the number of creative commons-licensed works increases throughout the years. We could think of it as a solution to the problems mentioned in the first resource. By using CC licenses, authors could take advantage of the Internet, which is the cheapest, most effective distribution service they have access to. This way they could share their work and reach this constantly growing community with very little marketing expenses. Sharing websites such as YouTube even allow users to monetize their work through the use of advertisement.

https://creativecommons.org/about/history/
https://en.wikipedia.org/wiki/Creative_Commons_license
http://www.workmadeforhire.net/the-rest/whats-the-difference-between-copyright-and-creative-commons/

The main purpose of this comment regarding the article above is to express my opinion about the culture of free, specifically in the field of music industry. I will then comment profitable business models based on creative commons licenses.

In 1999, the music industry has radically changed with the launching of a file-sharing program known as Napster. The software founded by an 18-year-old college permitted computer users to swap and share their tunes, and led to a generation of people who expect their music for free. It is clear that digital music revolution could not be stopped. I must say that I agree with the reaction of Vivien Lewit, Director of Music Content Partnerships at YouTube. She raised the fact that there are two parts to this phenomenon: the revolutionary of the music industry and the destruction of the record industry. (1)

In the light of Napster’s success, getting music off the Internet became simple and reliable. I am convinced that it hugely expanded everyone’s musical horizons because the digital distribution permitted any unknown artists to perform and possibly become famous. “By the summer of 2000, Napster had dramatically expanded and about 14.000 songs were being downloaded every minute”(2). Before Napster, anyone with enough money could make a record but it did not guarantee that the song would go to store (which was the only place where people actually bought CDs). On the other hand, this new technology disrupted the power of music business distribution. No longer did artists have to go to record company to be heard.

Turning now to the question of “who controls what artists create”, Dave Stewart of the Eurythmics raised the fact that “[Napster] makes artists ask why they are not in control of what they are doing. Artists of any worth or strength will rise up and take control of the situation”(3). To my mind, creative commons licenses could be a means for artists to control their work and provide licensing tools that are free to use. Creative commons licenses can help people to share and download digital content legally and inform people that they can reuse personal work. Actually, this kind of licenses includes several license elements and I decided to define some of them. Attribution (BY) involves that product can be reused, shared or derived by someone else only if the person acknowledges the author. Non-commercial (NC) means that no one else but the author is permitted to make money from the product. No derivative (ND) entails that the author prohibits any derivatives of the product. Share-alike (SA) requires that new creations using the product have to carry the same license. It is worth noting that there are many combinations of these elements that make up creative commons licences. (4)(5)

We may indeed ask ourselves if artists can still make money from a work they make available under a creative commons license. The response of CC Wiki staff is yes. In fact, they want “to encourage creators and rights holders to experiment with new ways to promote and market their work”. A possible way of doing this could be using an non-commercial license. (6)

The most crucial point made so far is that the rise of digital distribution became a real challenge for many companies from several traditional retails. Consequently, organizations have to face new consumer needs and should adapt their business models to satisfy them. To put it another way, they must take into account innovative directions, such as creative commons licenses or copyleft, in order to stay profitable and competitive.

SOURCES

(1) Napster. s.d. “Napster: then and now”. Online. http://iml.jou.ufl.edu/projects/spring01/burkhalter/napster%20history.html. (Page consulted on February 8, 2016)
(2) Lamont, Tom. 2013. “Napster: the day the music was set free”. Online. http://www.theguardian.com/music/2013/feb/24/napster-music-free-file-sharing. (Page consulted on February 9, 2016)
(3) Napster. 2011. “Artists sound off”. Online. http://www.singsing.org/files/causacivile/napster/. (Page consulted on February 9, 2016)
(4) Creative Commons. s.d. “Creative Commons Kiwi”. Online. https://creativecommons.org/videos/creative-commons-kiwi/. (Page consulted on February 10, 2016)
(5) Wikiwand. s.d. “Creative Commons”. Online. http://www.wikiwand.com/en/Creative_Commons. (Page consulted on February 10, 2016)
(6) Creative Commons. s.d. “Frequently asked questions”. Online. https://wiki.creativecommons.org/index.php/Frequently_Asked_Questions#Can_I_still_make_money_from_a_work_I_make_available_under_a_Creative_Commons_license.3F. (Page consulted on February 10, 2016)

The internet was a game changer that left current regulations and companies ill equip to deal with the change. The reason that the music industry was hit so hard was because the distribution of music became dramatically easier over the internet which was most the publishers add value. This left them fighting for an obsolete system with a generation of consumers on the opposite side. And since then the trend has only continued (blockbuster going bankrupt). To me the internet is a double edged sword, on the one hand it makes it much easier for people to get your product for free, but it is also a tool that can get word of your product out to millions of people faster than was ever possible before. I think It is the responsibility of companies and government regulators to adapt to this changing environment. For governments, to write laws that reflect the current reality of the industry and environment, and for companies, to find where the value lies in what they create. There are many companies and artists who have adopted this reality and still manage to succeed and even thrive. Including companies like Netflix, and HBO (despite game of thrones being the most pirated TV shows of all time) with the success of there subscription model. And an additional example is Rooster teeth productions, a company based out of Austin Texas that releases almost all of the content that it generates online for free.

http://business.roosterteeth.com/
http://www.forbes.com/sites/insertcoin/2015/05/12/game-of-thrones-again-sets-piracy-world-record-and-hbo-is-to-blame/#29feb85d760d

Piracy however is still a rampant problem in the music industry and also in the video game industry. In the video game industry, it is not uncommon for illegal copies of games to be online days after their initial release. However, something fascinating is currently happening. A recent game called Just Cause 3 was released in December 2015 still has not been cracked by hackers (Chinese hacking group 3DM admits defeat), now this does not mean that it will never be hacked however a large portion of game sales come from the initial release so a games protection during this time is very important. Some are now speculating that the piracy of video games could be a thing of the past if current trends continue. However, many have called into question how much piracy actually does affect video game sales and weather all the piracy that companies quote as lost sales in reality actually convert into sales. In fact, the same hacking Chinese hacking group 3DM is saying that they are suspending current activities to measure the impact that piracy actually has on sales (weather or not that is there true reason is still up for debate).

http://gamerant.com/video-game-piracy-damage-opinion/
http://tech.firstpost.com/news-analysis/game-piracy-may-be-at-an-end-says-3dm-announces-suspension-of-activities-298471.html
http://gamerant.com/piracy-sales-impact-test-336/
http://www.cnbc.com/2016/01/14/can-video-game-piracy-be-stopped-in-two-years.html

The emergence of CC seems like midpoint between copyright protection and the culture of free. While the internet has created an explosion of creativity and information sharing, it makes sense that a new form of copy right protection would reflect the reality of the sharing culture.
You could say that this is the exact opposite of laws what has occurred on the legal side with copy right laws in the US. In 1998 in the U.S laws were changed to extend copy right laws well beyond what they were before. This led to a significant reduction in the amount of works that have entered the public domain since then. This means that this is the first generation that legally cannot add to works from the past the same way that we have before.

https://www.youtube.com/watch?v=SiEXgpp37No

But in the end what this is all about is access to information. The internet is the most revolutionary development in mankind’s ability to access information since the invention of the printing press. And to a generation that has grown up with access to the internet, sharing every picture they take on Facebook and sharing every thought they have on twitter, the sharing culture and culture of free will only continue to grow.

https://dadimadesign.wordpress.com/2012/10/16/internet-vs-printing-press-impact-on-society-by-alido-rodriguez/

Technological advancement provides increasingly affects a growing number of industries such as the e-book, movies and music markets. In the reportage published by the New York Times on the founding, fall and aftermath of an online file-sharing platform highlight theses effects. The title ‘Napster: Culture of free’ discusses the issues the music industry faced when their main revenue sources (their extensive distribution networks) was challenged. In this comment I will discuss a similar trend in the book/e-book market and whether or not this development allows for profitable business models.

Around the end of the last decade (2008-2010) e-book sales really took off and contemporary book stores and publishers feared their future in the market. Although e-book sales increased drastically in the years from 2008-2010. As data from Statista supports, e-boom sales are to surpass print book sales in 2017 reaching a revenue of approximately US$8 billion. At the same time the data provided illustrates a decreasing number of Print and audiobook sales in the United States down by 50% from around US$16 – US$8 billion. (2) In the light of these numbers it seems rather strange the New York Times (NYT) titled one of its articles “The Plot Twist: E-Book Sales Slip, and Print Is Far From Dead”. The author states, “the digital apocalypse never arrived, or at least not on schedule. While analysts once predicted that e-books would overtake print by 2015, digital sales have instead slowed sharply” (1), which is actually supported by our data from Statista. Another graph provided by Statista exhibits an increasing number of book stores in the United States. The data was compiled from 2009 to 2015 and shows an increase from 1.401 to a projected 1.712 book stores in the US, which represents an increase of roughly 22% over the six-year time-frame. (3) Rather than following the previous hypothesis that decreasing book sales will lead to a decreasing number of book stores we observe the opposite trend. Possible answers to these questions lie within consumer behaviour and the increased efficiency of another sector – logistics.

An industry executive summarized the apparent resilience the book publishing industry boasts to have: “People talked about the demise of physical books as if it was only a matter of time, but even 50 to 100 years from now, print will be a big chunk of our business”, exclaims Markus Dohle from Penguim Random House (1). While some critics might describe the statement as wishful thinking, publishers have actually adapted to the increased competition from e-books. Penguin Random House for example relies on massive collecting to make projections and recommend book vendors amounts of books they should buy to decrease the number of books having to be sent back to publishers on their costs. Another possible reason for the stabilization of hard-copy book sales is the publisher’s recent renegotiating of terms with Amazon. As “paperback editions of some popular titles […] are several dollars cheaper than their digital counterparts […] [paperback] sales rose by 8.4 percent in the first five months of this year”. (1) So in the short-run it seems like publishers have levelled the playing field. This development, however, could drastically change in the future as new methods of publishing are developed.

Take for instance Amazons self-published e-books., “which often cost less than a dollar.” (1) In 2013 Amazon CreateSpace, a self-publishing platform, published roughly 185.000 titles, followed by 85.500 works published by Smashwords. (4) The data visualizes another apparent trend in today’s economy. A decentralisation of producers and artists. We can draw comparisons to YouTube, which allowed individuals to upload their own remix or “original” music tracks on their platform to receive revenues from the subscriptions to their channels and from advertisements. In a similar fashion the self-published e-books allow authors to evade publishers and directly place their products with the consumers. This trend also allows to relativize the relative decrease of e-books to hard-copies, as “publishers do not account for the millions of readers who have migrated to cheap and plentiful self-published e-books”, which is why “at Amazon digital book sales have maintained their upward trajectory”. (1) Furthermore, as with the music, Amazon has allowed customers to pay a monthly fee in order to access over a million titles. Hence, multiple trends and changes in consumer behaviour do not allow for a pre-emptive conclusion on the future of the publishing and hard-copy book markets.

The infographic mentioned in the article above by Prof. Dr. Belleflamme provides some further insights to the current developments. The graphics found under https://stateof.creativecommons.org/2015/ illustrate the increasing number of works published under creative commons licenses. Around 48.4 million texts, articles and book have been made available through their licenses. Another infographic shows the increase from 141 million to over 1.1 billion creative commons licenses. (5) With authors making their articles, books and texts readily available to the public the question remains to which extent this trend will proceed in the future. Out of the 48.4 million texts, articles and books licensed under creative commons, merely 1.4 million were research journals/articles and only 76.000 were educational resources. (5) The vast majority of CC licensed goods are documents and the such and are nowhere close to whole books published under CC licenses.

Synoptically, we can see that the trend to digitalisation has evolved in the book market and that publishers are having increasing difficulties to cope with the structural changes in the industry. At the same time the decentralisation of publishers is made possible through platforms such as Amazon CreateSpace and Smashwords, which allow for self-published books to be sold digitally often for a lot lower price than works stemming from large publishers. Creative Commons licenses and the free public licensing have yet to emerge in the market. Until then, writing books and publishing then will remain a profitable market even though payoffs are shifted between publishers, authors and online platforms.

(1) Alter, Alexandra. “The Plot Twist: E-Book Sales Slip, and Print Is Far From Dead.” The New York Times. The New York Times, 22 Sept. 2015. Web. 09 Dec. 2015.
(2) Richter, Felix. “US Ebook Sales to Surpass Print in 2017.” Statista. N.p., 6 June 2013. Web. 9 Dec. 2015.
(3) American Booksellers Association, and Website (gizmodo.com). “Number of Independent Bookstores in The United States from 2009 to 2014.” Statista – The Statistics Portal. Statista. 09 Dec 2015. http://www.statista.com/statistics/282808/number-of-independent-bookstores-in-the-us/
(4) Bowker. “Largest Self-publishing Companies in The United States in 2013, by Number of Titles Published.” Statista – The Statistics Portal. Statista. 09 Dec 2015. http://www.statista.com/statistics/249043/largest-self-publishing-companies-in-the-us-by-number-of-titles-published/
(5) “State of the Commons.” State of the Commons. Creative Commons, 2015. Web. 09 Dec. 2015.

First of all, it is important to establish the basis of my perception about the evolution of the digital world : the consumption of goods and content has moved towards a very ephemeral model. It is as if people wanted to rent everything, even content. They want to listen to music streaming (via YouTube, Spotify, Deezer, Pandora, etc), watch movies & TV shows on streaming platforms (Netflix, Hulu, all the illegal streaming platforms), Video clips, etc.

Recently, the streaming platform Twitch.tv has gained quite a lot of popularity. It allows gamers from all around the world to stream their gameplay. It might be from professional players from eSports teams, from amateurs or even game editors themselves! For example, Riot Games is streaming their “League of Legends” game weekly and the viewership from their “worlds finals” is in tens of millions. The business (supported by ads, partnerships and optional subscriptions) is quite a success, as Twitch.tv has been bought by Amazon for nearly $1 billion last year.

The point I want to make is that people don’t want to buy physical copies of the digital goods they consume. Furthermore, they might not want to pay anything at all sometimes. The reason I insisted on Twitch is because it is, in my opinion, the future model of online services. It offers the basic service to anyone for free (the ability to watch people play games, draw, or even watch old paintings shows with Bob Ross) while commenting in the chat room. However, it allows streamers to earn money through various systems : first of all, they can choose whenever they broadcast ads (both the streamer and Twitch earns a share of the revenue). They can also allow viewers to “subscribe” to them for $5 a month, which allow users to have extra features such as new emotes, the ability to talk more, etc. The entire process is of course free advertising for game publishers, and they can even partner (in private, subject to fees) with “famous” streamers to have their games played and promoted.

So how can this business model be applied to other entertainment industries? Pandora & Youtube both understood that free streaming simply wasn’t possible without a counterpart for the content creators. For every song streamed, Pandora pays a small fee to the owner. Youtube is pushing content creators by allowing them to activate ads in their videos, allowing them to earn some money for each ad viewed. Spotify uses a monthly subscription system. In the movie industry, Netflix and Hulu also use a subscription fee. Amazon uses the Kindle tablets, that have an eInk display which “emulates the comfort of reading on real paper” (source: kindle.amazon.com).

What is the link between this (the evolution of the digital goods in the “culture of free”) and the Creative-Commons licensed works? Well, it goes back to the main idea : people don’t want to own digital goods anymore, they want to use it. The Creative-Commons license allows some of that. While it allows users to use the licensed content, it keeps it in a regulated environment. Furthermore, it provides the original creator some credit thanks to the “CC-BY” license (and its variants).

Overall, the internet is heading towards a very free world, where content creators still get rewarded one way or another; either by sharing a part of the streaming revenues, for example, or by getting free advertisement through the diffusion of their products or artistic work, while getting credited for it.

Alistair Barr, Ben Fritz. (2015). YouTube Seeks Streaming Rights to TV Shows, Movies. The Wall Street Journal. Online http://www.wsj.com/articles/youtube-seeks-streaming-right-to-tv-shows-movies-1449104356, consulted on December 5th, 2015.

Eugene Kim. (2014). YouTube Seeks Streaming Rights to TV Shows, Movies. Business Insider. Online http://www.businessinsider.com/amazon-buys-twitch-2014-8?IR=T, consulted on December 5th, 2015.

Creative Commons. (2015). About licenses. Online http://creativecommons.org/licenses/, consulted on December 5th, 2015.

The globalization of the economy has changed the way we use internet. Without going too much into details, the main subject here is about sharing creative world protected by copyrights. Now with the dawn of illegal download (with is basically someone somewhere uploading something for some-other-one to somehow download it) there have been some disturbance whether it is about the music industry that pains to make revenues, new creator using illegally previous work to edit it without asking or new ways to promote and share piece of work. The invention of copyleft (personalized copyright) and Creative Commons (organization specialized for art work) have changed the way we build a business model around digital goods (1)

It’s important to take into account that there is at least 2 types of community. The first one suggests that music sales is about money and revenue and places art free progression in the background (those are the ones fighting fiercely YouTube, Napster or any other piracy platform). And then there is the opposite, Common Creative organization and copyleft followers that want to promote creativity and progression of a certain industry. In my mind, people seem to favour Common Creative licences work and thus progression of free works based on the graph (from 50M liscences to 1,1B in 9 years)(2)(3)

In my opinion, there are two obvious stages in an artist’s life. In the first one, he wants to gain popularity, he wants his talent to be discovered and appreciated. Nowadays, with technological progress it is possible to record good quality songs and with sharing platform such as YouTube it is an ideal environment to spread your work(4). But then arrives the second stage where you are supposed to make a living out of it and you don’t really care whether or not someone recreates your work as long as you get paid.

Computer programming is in some way similar to music industry. In order to be protected it also uses copyright (remember in the patent lecture, software and other computer programs cannot benefit from patents). Nowadays, it is common to illegally download Microsoft office licences or programs like that. However, some great programmer considered that a software in order to be developed had to be updated by a whole community and therefore free of access. Copyleft made that possible without losing control of the initial idea/creation. (3)

But programming and music industry affinities with illegal download is not comparable. Music industry led to other problems such as distribution collapse. However this is just the result of progress and whether or not you pay to download, it’s much easier to download a song than buying it in a record store. When it comes to the music industry it will be hard to track down every piracy platform to shut them down. Piracy and the ‘culture of the free’ is and always will be part of our community until it is replaced by something better. So one must take advantage of it instead of fighting it. At the second stage of his life, the artist will have to think of an innovative way to earn money knowing people will illegally download his songs. There will always be the thrill of seeing your favourite band live on stage, outstanding video clips from your favourite artist to watch on YouTube. It is up to the artist to contract with sponsors and other brands and agree on commercials to earn his fair share etc. So in my mind there will also be money even if piracy consumes a big share of the cake.

sources:
(1)https://www.youtube.com/watch?v=8YkbeycRa2A
(2)https://stateof.creativecommons.org/2015/
(3)http://www.thembj.org/2013/05/the-copyleft-tradition/
(4) https://vimeo.com/113949334

With the emergence of the Internet, many industries (music, movie…) once protected by copyright faced a drop in their sales: Copyright is no more sufficient to protect them from people getting their content for free. Indeed, the 90’s have seen the birth of software allowing users to download music, movies, games and so on for free. Therefore, these industries have to reinvent themselves and find other ways to create cashable value.

First, let’s take the example of the music industry. Because of these changes, it had to find another way to survive than selling records. Now, musicians and singers make most of their money by performing. Only the most famous of them have the privilege of earning significant revenues from their record selling activities. At the beginning, firms from the music industry tried to fight this illegal sharing of digital contents, but the phenomenon was too large and impossible to stop. Hence, it was better to try to find a way to get something out of it, rather than endlessly and pointlessly try to go against it. And what they gained, in my opinion, from the wider spreading of their content is visibility and free advertisement for their artists. Now, the Internet is a place where you can discover an artist for free, thanks to YouTube for example. Also, owing to the Internet, artists can make a name for themselves and become famous without having to find a big label to support and broadcast them. Yet, being famous is what gives artists (and thus their record label) market power. For instance, the singer Adele chose to release her long-awaited new album “25” only in stores, forcing its fans to buy the CD version. And it worked: 2,3 million copies were sold during the album’s first weekend. In my opinion, what convinced people to go physically buy it is not only that it wasn’t available on the digital market (people can still illegally download it) but the attachment Adele’s fan have for her and her music, to which the internet contributed a lot. Moreover, this huge success could only be achieved through the buzz created by the release of the first hit of the album, “hello”, on the Internet a few weeks before the rest of the album. Here the Internet thus permitted to “prepare” the public, make it impatient for the new album, freely of charge for the record company.

I also believe that streaming companies like Spotify or Netflix are a good mean for records selling companies to regain a little of their lost profits. Indeed, instead of downloading illegally but for free, these firms offer consumers the possibility to legally stream their content for a monthly subscription fee. Afterwards, they redistribute a part of their profits to the copyrights owners of their content. To convince consumers to pay for their platforms, they offer benefits (compared to illegal downloads) such as high quality videos and music, many playlists for Spotify and film selection for Netflix, huge amount of content (Netflix still has to work on that in Europe), gain of time (all is on one platform, no searching time or long downloading time)… And it works: Spotify went from 0,5 millions paying subscribers worldwide in July 2010 to 20 millions in only five years! To see the graph, surf on: http://www.statista.com/statistics/244995/number-of-paying-spotify-subscribers/

Also, I wanted to point out that, yes illegal downloading disturbed greatly the music industry, but is it really a bad thing? Indeed, thanks to the digital revolution, the once very closed music industry opened up, creating more competition by letting new entrants in. The market is thus more efficient. Nowadays, it is way easier to create one’s own label since huge and powerful actors no longer control the distribution channels. It has also other perks such as the enhanced cultural diversity and affluence since many more artists can diffuse their art in a broad way without having to be supported by a big label. For instance, the website Jamendo allows unknown artists to be downloaded for free using the creative commons licenses. Creative commons allows artists to give samples of their work for free, as vendors do with perfume samples in their perfumery. Therefore, for me, Jamendo is an other way provided by the Internet to become known by the public in order to later be able to sell one’s music. Jamendo is thus a profitable business model working on the creative commons licenses, using them to become a kind of new advertising actor for new unknown artists, and gets money from it by selling commercial licenses.

To end, I think that the industries concerned by this matter will still see a lot of changes in the years to come and have to continue trying to find ways to take the best from it, and not try to keep things as they are. Change is inevitable. Therefore, they’d better embrace it.

References:

Cox, J. (2015, December 4). Adele’s 25 is going to set another record with its second-week sales. Retrieved December 6th, 2015 onThe Verge: http://www.theverge.com/2015/12/4/9851878/adele-25-second-week-sales-million-copies

Statista. (2015). Number of paying Spotify subscribers worldwide from July 2010 to June 2015 (in millions). Retrieved December 6th, 2015 on Statista: http://www.statista.com/statistics/244995/number-of-paying-spotify-subscribers/

In this comment regarding the business models for digital goods in the face of the “culture of free”, I will express my opinion on the “Free or fee” options by going trough several changes that occurred across time and by assessing today’s situation in the music industry.

The Napster short story started in 1999, when an 18-year-old college student set up a file-sharing program allowing computer users to download, share and swap files stored on a centralized server, all of this for free. He could not anticipate that this innovation would completely change the music industry.

The demand from music lovers for making music available for free in an MP3 format was (and still is) huge. However, because of this massive demand, there was inevitably liability for facilitating copyright violations. Not surprisingly, Napster faced a lawsuit from the Recording Industry Association of America (RIAA) in 2000 and was charged with tributary copyright infringement. Napster was actually not accused of violating copyright directly, but of encouraging other people in that direction. When Napster lost the case, it also faced severe restrictions as they were imposed to stop all activities in 2001. Napster went bankrupt and was purchased by other companies in 2002 while the brand itself survived.

Nevertheless, the need for getting free services was born and the media-coverage of the Napster case actually provided a huge marketing effect. The company saw its customer base and followers dramatically increase. The “culture of free” phenomenon could not be stopped.

I think that not any business model can be set once and forever. Customer needs, technologies and environment evolve all the time and companies need to adjust their business to all kind of industrial revolutions. It happened in the music industry and beyond the for free aspect already in 1982, when Sony and Philips together launched the compact disc. After a period of reluctance, customers progressively switched from vinyl’s to CDs and bought appropriate CD players. Although initially restricted to classic music lovers who could appreciate the increased sound quality, CDs invaded the whole music industry.

In 2013, Blockbuster, the well-known DVD rental company, closed 300 stores in the US as they did not anticipate the success of online video content distributions and did not adjust their business model. The content was switching from one support to another, more user friendly one that met customer needs. As soon as in 1998 Netflkix, on the other hand, understood the DVD rental industry turnaround (people did not want to go to DVD rental stores anymore but requested a direct service, from home) and launched an unlimited DVD rental system on the Internet. Spotify is an equivalent service provider focusing on music content. More particularly, this music-streaming platform has mentioned to grasp the business potential behind the “culture of free”. Indeed, the “deal” is quite simple: customers can listen to music “freely” provided that they listen to advertisements now and then. Getting rid of these ads (and enjoying some extra features) then comes to a more common cost: money.

More recently, Youtube launched “Youtube Red” at the end of October based on the same ad-removal business model as Spotify. Users can now ad-freely access the video platform by paying a monthly subscription.

In my sense, as firms have been able to spot the business behind it, the “culture of free” has now proven that it is rather becoming the “culture of almost-free”. Its cost: advertising and/or access to customer data.

It is very easy for me, as a computer user, music lover and video watcher, to put myself in the shoes of a “culture of free” partisan. On a daily basis, I expect from a music or video platform to provide fast and free quality services.

With today’s culture of free, one must acknowledge that media content itself is not anymore the main source of revenues. Successful artists and companies know they can benefit from the “for free” appeal to reach customers. It is all about using this appeal right away. They first create a buzz on Internet, direct the spotlight to their creation, and thereafter only create money.
Artists now say they stopped the fight against free music content available on Internet platforms. Indeed, Karavoulias managed to gather the opinions of well-known musicians illegal music downloads one of which I will directly quote from the website:

” “Lars Ulrich (Metallica):
Remember the band that took down Napster back in 2000?

“It is sickening to know that our art is being traded like a commodity rather than the art that it is”

However, in 2008, Lars was a bit more supportive:

“Listen, we’re ten days from release. I mean, from here, we’re golden. If this thing leaks all over the world today or tomorrow, happy days. Happy days. Trust me. Ten days out and it hasn’t quote-unquote fallen off the truck yet? Everybody’s happy. It’s 2008 and it’s part of how it is these days, so it’s fine. We’re happy.”” (Karavoulias)

From Artist’s side, it is thus now all about creating THE piece of music that will drag attention, the one thousands, millions of people will listen to and speak about in communities and on social networks. Artists acknowledge that they now prefer to “give” their music for free and rely more on concerts to make money, which is also the business they really like, with direct contact with their audience and real, life art.

“Lady Gaga:
“You know how much you can earn off touring, right? Big artists can make anywhere from $50 millon for one cycle of two years’ touring. Giant artists make upwards of $100 million. Make music–then tour. It’s just the way it is today.”” (Karavoulias)

From the internet platforms side, it is about using the buzz to sell the information behind customers’ clicks on music, video or information content to companies willing to pay for such data for the development of their own business.

What is true for music content on Internet is thus also true for videos, information, etc. Consumers’ preferences and profiles do not stay private anymore. Free content and customer privacy do not get along but it is the price to “pay” in the culture of free world. As our economy and salaries do not evolve as fast as Internet technologies, we cannot afford paying for all the content we want to download. We can however understand systems where free content is available for customers who accept that some of their information is used, while the same content is be available upon payment for other computer users who are more restrictive on their privacy.

To come back on Spotify mentioned earlier, this is the kind of solution they propose to customers who are upset with the advertising that interrupts every 2 min the music they are listening to or downloading. The same content and service are available without advertising … but with a minimal fee.

We cannot stop today’s evolution of technologies, new ways of doing business and emerging needs. Free or fee? I think both solutions must exist with transparency for customers about how their personal information might be used in each case. No doubt customers can be selective and decide what they are ready to pay for: content or privacy. It’s their choice.

SOURCES:

Minot , J., & Frantsvog, D. A. (2012). All Rights Reversed: A Study Of Copyleft, Open-Source, And Open-Content Licensing. Contemporary Issues In Education Research , 5 (1).
BBC News. (2013, December 12). Blockbuster to close remaining stores. Consulté le December 8, 2015, sur BBC News: http://www.bbc.com/news/business-25345257
Google. (2015). Join YouTube Red. Consulté le December 8, 2015, sur Youtube: https://support.google.com/youtube/answer/6305537?hl=en&ref_topic=6305525
Ingram, M. (2015, October 22). YouTube Red: Google wants to compete with Netflix and Spotify at the same time. Consulté le December 8, 2015, sur Fortune: http://fortune.com/2015/10/22/youtube-red-netflix-spotify/
Karavoulias, T. (s.d.). Artists Speak Out On Music Piracy. Consulté le December 8, 2015, sur Up Venue: https://www.upvenue.com/article/1590-musician-stances-on-music-piracy.html
https://www.youtube.com/watch?v=YL9RetC0ook

This video illustrate perfectly the real change internet brought : the ability for the users themselves to give to the world a content, without going through the classical distribution model. Today, a lot of creative commons licenses are produced thanks to this amazing tool and we have the ability to entertain or inform ourselves as much as we can with other medias, just with content that are not concerned by profit consideration.
This said, I would like to focus on the music industry, which was one of the first harmed by the piracy problem. The core issue was of course that peer-to-peer was free, but also that it was simple. That’s why the response of Itunes (which was even simpler that installing a software and understand and believe in peer-to-peer system) was quite relevant. But today, people have way more knowledge about the system, and the music industry needs to tackle this issue differently.
It could take the form of an promoting utilization of creative commons licenses : by using a music/episode which would be given for free, content creators could make a little add about new models of content distribution. For this latter I’m thinking software like Spotify, or Netflix system. But those system could have a strategy to differentiate themselves from a simple download : by creating services to the customers by examples : interviews, documentary, exclusive pre-release informations,… all of that could be an added value to convince the consumer to pay for those kind of new “distribution model” rather than just keep downloading the content with illegal ways.
The key here is to find a way to add value to a purchased content in comparison with a pirated content. And in a market where digital becomes the only distribution canal, services to customers looks pretty relevant rather than other digitalized goods, who can be pirated.

It is obvious that the sales of recorded music declined with the entry of Napster and large scale file-sharing systems. Indeed, Naptser just cracked the key success factor of the traditional music industry, as mentioned Greg Hammer (Managing Director at Red Bull Studios) : “(…)In stores, which was actually the only place where you could buy a record. That was the power of music business : the distribution !”.

In my opinion, the music industry just had to face the consumer’s behaviour changes of the Internet bubble. As people no more buy books in library but through Amazon.com (on e-book format sometimes); people go to the iTunes Store or download by Torrent to listen their favourite records. Concerning the music industry, we have seen that when the physical CD sales were falling; the live concerts venues skyrocketed. Stein-Sacks (2006) identified the use of advertising and sponsorships, and the selling of additional products and services as key driving factors today.

In the same sense, Mortimer & al. (2012) came also to the conclusion that: “To the extent that content in these industries becomes available to a larger potential customer base, some of the decline in revenue from traditional sources may be offset by increased demand for complementary products (NDLR: live concerts and other revenues like Spotify Artists”. (see the excellent “Spotify Explained” article here : http://www.spotifyartists.com/spotify-explained/ ).

In the same idea, the various costs of bringing music to market have come down substantially since Napster, as an artist can make his song available on iTunes for $9.99..

A second example, in order to link the Creative Commons infographic and the RetroReport video, could be the rising number of so-called “Internet stars” and their awareness. The creative commons rules and related worldwide platforms like YouTube or Flickr helped an incredible number of young talents to rise and sometimes become professional artists or photographers (e.g.: Justin Bieber, Norman or Mackelmore).
In fact, as Waldfogel (2011) said: “Record companies have traditionally made consumers aware of their products by promoting their new releases on radio. Even prior to the Internet, the labels produced more music than radio stations could air, so the labels paid the stations to promote their music”.

The need for a change in the music industry is present. It begins, in my opinion and the Mortimer (2012) one’s by “a ‘loss leader’ approach to some of its music products in order to gain revenues from others, a theory also supported by Glynn (2001; cited in Fox, 2004)” In addition to use, through the Internet substantial opportunities to engage more and more the consumers in the activities of their favourite artists.

Nevertheless, some business models already exists like the Opsound label which consider consumer like artists and enforce the cooperation between their community (see http://goo.gl/ouO6zZ).

Finally, I personally think we should continue to support the Creative Commons and more widely the open access as it is obvious that it leads to more innovation in different sectors (music, videos,..) but we don’t have yet the perfect business model…

Bibliography:
1) Julie Holland Mortimer, Chris Nosko, Alan Sorensen. (2012). Supply responses to digital distribution: Recorded music and live performances, Information Economics and Policy, Volume 24, Issue , Pages 3-14, ISSN 0167-6245, http://dx.doi.org/10.1016/j.infoecopol.2012.01.007
2) Waldfogel, J., & National Bureau of Economic Research. (2011). Bye, bye, miss American pie?: The supply of new recorded music since Napster. Available at http://www.nber.org/papers/w16882
3) Fox, M., 2004. E-commerce business models for the music industry. Popular Music and Society 27 (2), 201–220. DOI:10.1080/03007760410001685831
4) Stein-Sacks, S., 2006. The Canadian independent music industry: an examination of distribution and access. Prepared for the Department of Canadian Heritage, Sound Recording Policy and Programs Directorate. Available at http://publications.gc.ca/collections/Collection/CH44-81-2006E.pdf

The revolutionary large scale distribution of free media content initiated by Napster in the music industry is only one side of the ongoing free digital content revolution: not only the music industry, but also the newspapers, movies and books industries are undergoing dramatic changes.

In this small essay, I will argue that the movies/series industry has no choice but to open its eyes to this new reality and accept the fact that it will never be able to force consumers back to the old, yet very profitable model of centralised distribution of digital content in physical stores. Instead, the modern challenge for this industry is to find creative ways to monetize its content in this new environment where most consumers (especially among the younger generations) will get their movies and series freely from illegal sources (e.i. online streaming sites, peer-to-peer platforms).

In this context, one successful strategy has been to offer an alternative to illegal download of digital content by offering cheap, unlimited streaming subscriptions (e.g. Spotify in the music industry).

This is where the example of Netflix is particularly interesting. The California-based company completely changed its business model from a physical DVD rental to an online movie streaming service in 2007. In essence, what it did was to apply the Spotify business model to the movies/series industry.

It decided to offer its users unlimited video streaming, charging them a subscription rate of around $10 per month. This was extremely low compared to the traditional ways of acquiring video content (i.e. renting physical DVDs for $3 a piece or buying them for around $15 each), to the point that millions of consumers subscribed to the service despite having easy access to free, illegal downloading or streaming platforms (Netflix now has 50+ millions users across the world).

The success of this business model as a credible answer to the mass-scale illegal downloads issue has led it to conquer more and more industries. One example of this phenomenon is Amazon’s kindle unlimited subscription for eBooks (less than $10 per month).

Digital content publishers can draw three lessons from the success of Netflix and Spotify’s innovative business models.

Firstly, consumers do not care about being owners of the digital content they consume as much as before. If they are offered a low price, they will accept to pay a fixed monthly subscription just to rent unlimited amount of media (music, movies, series, etc.). Indeed, when subscribers of these services stop their subscription, they are not allowed to keep any of the content but it does not seem to bother them.

Secondly, rather than focus on the bad side of these new online distribution models (e.g. lower prices charged), firms must look at the new opportunities they offer: with marginal costs close to zero to distribute movies or series on the internet, your costs are really low and you do not need to charge much to make good profits. Instead, the major part of the costs of such streaming companies are license fees paid for the content they offer on their platforms. Another major opportunity offered by a streaming-based business model is an instant access to a huge amount of potential consumers.

Finally, firms cannot justify a charge on digital content just because they provide it, as nowadays users can access that content for free very easily. The key is to offer distinctive features related to the consumption of digital content that the users are ready to pay for: Netflix has very well understood this and has developed a very efficient movie recommendation system on its platform. Other ideas for such distinctive features might involve enhanced social interaction among users (e.g. promoting discussion among users with roughly the same tastes on what they have just seen, allowing users to create and share playlists or to make playlists as a group of users, etc.).

Sources:

Chevallier, M. (2014), Netflix : la révolution attendra, in Alternatives Economiques N°338, Septembre 2014, pp. 32-34

https://www.amazon.com/Kindle-eBooks/b?_encoding=UTF8&*Version*=1&*entries*=0&ie=UTF8&node=9578129011&pfShowFeatures=&redirect=true