Xanadu vs. the web: Part III - Xanadu the business model

Any publishing scheme has to solve two basic problems: How do you get the content out to people -- or perhaps more importantly, how do you get people to the content -- and how does everyone, particularly the creators of the content, get paid.  Granted, there are any number of reasons people will create content for free (as with most blogs, for example, this one very much included), but to get anything going on a serious scale there will have to be money involved at various points.

Technology has steadily made it easier to disseminate content, to the point where any random blogger now has a potential readership in the hundreds of millions, but it hasn't made it any easier to find readers.  Most blogs have a readership considerably below a hundred million.  Finding readers requires editing, to choose what to publish and make sure it is of good quality, and marketing to make people aware of what you're publishing and try to get them to read it.  Publishing is a different thing entirely from printing.  Publishers, in this broader sense, have to exist in any viable system, whether the web or something Xanadu-like.

To my knowledge there are two main ways of getting people paid: Advertising, and direct payment, whether one-time or subscription.  Xanadu proposes to provide direct payment by means of transcopyright and micropayment.  Micropayment is already in use in various forms, so let's assume it can be extended to the level that Xanadu requires.  The more interesting concept here is transcopyright.

Transcopyright is a license agreement, meant to be enforceable under existing laws, that allows use of content so long as the content is not actually copied, but instead presented as a link back to the original context.  So far, this seems much like what we have on the web, except we usually just make a link and don't actually quote the text.  But Xanadu posits that you pay for paid content when you chase the link (more accurately, the first time you chase the link).

To this end, the (draft) transcopyright license stipulates that the content must be held on the author's servers.  To work on today's web, the exact wording would have to be adjusted to be more cloud-friendly, but that doesn't seem insurmountable, nor does it seem inconsistent with the overall picture.  Storing redundant copies in places other than the place of origin is explicitly part of the Xanadu model.

Nonetheless, I can think of two reasons why this may not work.  The first is the pay-for-access model in general.  There are any number of highly motivated major players -- record labels and movie studios come to mind -- who have been trying very hard to control access to content.  I've written at length on why this is fundamentally a losing battle (see the DRM tag in general, or this attempt at a pithy summary).

In practice, access can only really be controlled under special circumstances, for example in the case of cable pay-per-view where the cable company owns the box, and even then the control doesn't mean much.  If people want to pirate, they can and will.

On the other hand, it's clear that people will pay for content even if they could get it for free.  My guess is that it's some combination of people by and large not wanting to break the law and people understanding that if no one's getting paid, no one will, say, make blockbuster movies.  This is actually good news for the Xanadu scenario.  Most likely, in such a scheme, if it existed at all, people would be willing to pay, even if they could pirate -- and of course they could.  But that leads me to my second point.

People don't mind paying for content, but they do mind hassle and uncertainty in payment.  For example, many people hate hate hate having to watch their cell phone usage to make sure they didn't wander through a roaming area or go over their minutes and will pay a premium in order just to know what the bill will be every month.  They'll actually pay more for a less transparent pricing system.

Paying per access can be fine in some cases.  I'm fine with going through a little payment ritual for an on-demand movie because 1) I know up front what I'm paying for and how much it will be, and 2) It doesn't interrupt my viewing of the film.  I may be missing something in the Xanadu scenario, but as far as I can tell the pay-per-first-retrieval model means either an obtrusive taxicab-style meter showing how much you're spending as you browse, or the uncertainty of finding out later how much you've paid (or being interrupted by a "please deposit another $X" message at random intervals).

Instead, what we have outside limited contexts such as on-demand video, mp3 audio and smartphone apps, is advertising.  You can think of advertising as a sort of indirect micropayment system.  When you view content with ads in it, you "pay" by having to watch the ad and potentially being influenced to buy something.  However, the actual exchange of money is between the advertiser and the creator (and various intermediaries).  The advertiser gets paid back, assuming the ad campaign worked, when you decide to buy something, which you will do with high enough probability to justify the expense.  Advertising revenue correlates with volume of access.  The more people access your content, the more traffic the ads get and the more money the creator gets.

It seems worth noting here that the advertising model has little if anything to do with quotation and copyright.  I don't have to enter into a licensing agreement with you for you to be able to read this blog or for me to be able to (hypothetically) run ads on it.  Copyright matters mainly in preventing someone from, say, mirroring a popular blog and running their own ads on it.

In short, we don't need a new concept of copyright to make online content widely available and make sure creators can get paid.  We just need to put up with ads [of course I would say that, considering my employer, wouldn't I?].