The battle over content - or the struggle to get paid over what you create
As the Hong Kong government fusses around trying to set up a new bureaucracy for the innovation and technology industries, many businesses that are actually engaged in this sector are rather more concerned over how to get consumers to pay for their work, especially at the creative end of the spectrum.
The central irony of today’s situation is that the very people responsible for creating all kinds of software and intellectual content find that there is a pronounced disconnect between their efforts and their rewards. This stems from a widespread belief that there is no need to pay for all manner of software plus music, films and other forms of entertainment and, indeed, news and other types of information.
This has proved to be especially damaging in the music industry where performers now expect to earn practically nothing from their recordings, which are freely available via the Internet. Instead they largely rely on income from live performances. Filmmakers, meanwhile, live in dread of their product seeping out on the Internet before it lands in cinemas and so increasingly turn to product placement and event sponsorship to earn money.
Newspaper, magazine and book publishers lack options of this kind and are desperately searching for ways to monetize their content. They initially thought that Internet platforms would boost readership to such an extent that on-line advertising would make up for the loss of physical sales. However this income model has proved to be disappointing.
One reason for advertiser’s lukewarm response was a feeling that readers were not only ignoring their ads but also installing software (free, of course) designed to skip and block ads. Germany’s mighty Axel Springer Group has responded to this by blocking access to its publication’s websites for users who have ad-blocker software on their devices. If nothing else this demonstrates the pace at which conflicting technologies are able to cancel each other out but leaves open the question of how to turn these developments into folding notes.
Another approach to monetizing internet readership is more straightforward and involves taking publications behind pay walls, or, as in the case of this newspaper, behind partial pay walls, This too has proved to be problematic. Even the newspaper empire controlled by Rupert Murdoch has been forced to retreat from its bold pay wall policy, stipulating that payment was required for all access. However now its best selling British tabloid, The Sun, has been put back on the Internet for free.
People at the hardware end of the technology business have less to worry about but no wonder a mood of gloom hangs over the creative industries that appear to have made the singular achievement of embracing new technology, helping it to develop while at the same time failing to profit from their work.
It is tempting to describe this as a unique set of circumstances but there are precedents, not least in the performing arts. Before theatres, concert halls and other entertainment venues were even conceived performers would roam the streets and perform in front of crowds who were asked but were not obliged to reward them with money. It was a precarious way of making a living but as the performer’s quality and sophistication improved it became possible to move their activities into buildings where an entrance fee could be levied.
There were still outriders on the streets performing for free, indeed some remain there, but the public learned to understand that they needed to pay for quality.
Does this not a ring a bell in current circumstances? The answer is yes and no. On the one hand there clearly are consumers who will pay for premium content and applications but there are many others who believe that there is enough free stuff on the Internet to satisfy their needs.
The collective madness of furnishing the Internet with free material will probably not last forever. However forever is a long way away, in terms of history the Internet is still very much in its infancy. The fact is that this seemingly mature communications device only really attained global status two decades ago and attempts to make it profitable are even more recent. These attempts are not entirely in vane as financially viable high quality Internet businesses are emerging.
Profitability in this area is highly unlikely to be addressed by the government’s new technology bureau however it could have a role in tackling online copyright theft and, at the very least, may help preventing other parts of the government from flexing their dinosaur muscles in response to new technology.
So let the bureaucrats do their worst while the people at the sharp end of new technology businesses will get on with applying the principles that apply to all business, meaning that if what they offer is good enough, customers will pay.
Stephen Vines runs companies in the food sector and moonlights as a journalist and a broadcaster