WHY EMERGING BUSINESS MODELS AND NOT COPYRIGHT LAW ARE THE KEY TO MONETISING CONTENT ONLINE

Abstract

The multimedia Internet is here to stay. Rich media – including videos, music, podcasts, and flash animation – is already a key feature of the Internet experience, and will only grow in diversity and importance. As Internet users increasingly crave – and technology increasingly enables – multimedia content delivered on demand over broadband connections, the number of songs, videos, and other media online will increase exponentially to feed the demand. As online media consumption increases, so will expectations for its capacity to generate revenue for content owners and creators. Analysts boldly predict a bright future for the entertainment industries, especially in Asia, with broadband Internet cited as a key growth driver.1 The main point of contention in the 2007 Hollywood writers’ strike was compensation for media streamed or downloaded over the Internet.2 Yet, to date, the vast majority of music and video acquired or consumed online is free and uncompensated. Despite the rising expectations for monetising content on the Web, no clear sustainable, scalable model for monetising content has emerged that compare to the level of revenues copyright owners have enjoyed in the “physical” (as opposed to online) market. This chapter considers the primary strategies that the international music and film industries have employed to date, namely lawsuits and technological protections, and why these strategies have failed to produce a viable path to long-term revenue generation. I argue that content owners should not hold out hope that using law (in the form of copyright infringement lawsuits against individuals) or technology (in the form of digital rights management encryption software) will unlock the Web’s potential for monetising their content. Instead, successful monetisation of content online will come through business models that can harness and monetise the current behaviour of Internet users. There are three emerging such models, each of which has significant potential and challenges: retail online content subscriptions, ad-supported content, and voluntary blanket licensing. The following discussion is mostly broad, outlining circumstances facing copyright owners globally, and some emerging potential solutions. Nevertheless, I make a point throughout to highlight the situation in China in particular. Why? China is a challenging but dynamic Internet and digital media market, and is in fact the first market in the world where all three of the emerging models discussed in this chapter are actually being deployed in an effort to jumpstart the digital creative economy. China is an important market for the rest of the world to watch regarding emerging monetisation models. Lastly this chapter is not meant to be a comprehensive overview of the many innovative ways that musicians, filmmakers, and other creators and companies are using the Web to make money from their content. Undoubtedly the Web has empowered many small and medium-sized content owners to distribute their works and connect with their fans in exciting and unprecedented ways. The purpose of this chapter is to explore the Web’s potential for generating wide-scale, significant, and sustainable content revenues for the entertainment industry, including minor and major content owners.