Paying content creators with micropayments

A few years ago, I wrote about models to pay for content creators in this age where everybody wants to share content for free — except for the entertainment industry, of course, that seems to look upon 2012 as the year to come down with a legal jackhammer on top of anyone doing something that can be remotely called “piracy” or “content theft”, even if the Internet is destroyed in the process. Back then, I left the question open on how exactly to achieve that.

Two years later, I pursued this same topic, by showing how Second Life®’s economy model, based on micropayments, might provide an alternative source of income for content creators. Not because I “speculated” that it might be possible, but by just looking at the extraordinary amount of evidence from a virtual world whose economic furnace is driven by the Linden dollar, possibly one of the most successful model of micropayments ever devised. Two years ago, I challenged Linden Lab to extend the Linden dollar towards other non-SL services — not only allowing it to be used on OpenSimulator-based grids, but also to allow micropayments on webpages.

I wasn’t really expecting Linden Lab to listen, of course 🙂 Nevertheless, it didn’t come much as a surprise to me that not long after that article was written, a Swedish group (operating out of the United Kingdom) actually managed to launch that very same service. No, not an interface to Linden dollars which would work on the Web; they launched their own micropayment service. The company is known as Flattr.com and his owners include the (in)famous Swedish founder of The Pirate Bay, Peter Sunde, who joined forces with a venture capital company to launch a world-wide model of making payments to content creators.

The model is very similar to Facebook “Likes” or Google’s “+1” button, or, well, pretty much any kind of button you see these days on the bottom of blog articles, pictures, or similar media. The idea is that people are used to clicking on those buttons to show their appreciation of a certain bit of content they liked to see/read on the Internet, but with a twist: every time you click on a Flattr button, the content creator gets a bit of money. Just a few cents, but content creators can at least make something out of publishing their content for free.

“Flattring” (a deliberately misspelled, copyrighted word!) is really easy to understand as a concept. You register to their site and add some money to your “electronic wallet”. We’re talking peanuts here: €2 is about right. Then, every time you “flattr” some content, a few cents get deducted from your account and transferred to the content creators’ account. There are no complex logins and authentication services to go through like on a “donate” button (which was the closest we have had to micropayments in the past decade). Flattr.com also has a vaguely Digg-inspired frontpage where you can find more content to “flattr”, so it includes a community of content creators and their fans.

So why should you join Flattr? It’s not as if it’s “original”; many companies have tried similar approaches and failed. Flattr.com is not really a huge success yet, even though they got an agreement with Twitter that you can “flattr” fellow Twitter users even before they’ve joined. Being registered in Europe, and already having a license to deal with money transactions, this means they avoid the legal pitfalls of Linden Lab, who has to put strange “legalese” in their Terms of Service in an attempt to convince us (and eventual pursuers of lawsuits) that “the Linden dollar is a licensed token without value” (to comply with the US Constitution which forbids anyone to circulate a “currency” beyond the US$ inside its borders a possible attempt to avoid the many legal requirements of operating virtual currencies). They also support far more payment methods than the usual restricted assortment of PayPal or a credit card.

The major hurdle, of course, is to face a mentality change. People simply don’t want to pay for content they get for free on the Internet and most (except for the content creators themselves, of course) feel that it’s “alien” to pay for something they “ought” to get access for free. A Thinkers discussion on this very same subject shows how clearly the two groups are divided, and it’s not even a question of “ideology”: the split is between those that produce content (a tiny minority) and those that are merely content consumers (the vast majority). The first are supported by legal frameworks like the Universal Declaration of Human Rights, embodied in most constitutions of democratic countries, which guarantee that people have the right to get paid for the work; they support some sort of payment for their work and the right to be identified to what they did (even though many agree that the current copyright model benefits the entertainment industry, that is, the distribution channels, at the expense of the content creators themselves, who get the tiniest slice of the proceeding). The second group mostly views the “right to copy” (as opposed to copyright) as belonging to the consumer; it’s just a tiny minority among those that have an ideological view about “content should be free” and justify it with solid argumentation based on the principle that “duplicating content is not stealing but sharing”. Another small group will simply argue that the analogue hole effectively allows easy content duplication, so it’s pointless to forbid what is technically impossible to enforce. The vast majority, however, doesn’t get that philosophical about the subject. Content is on the ‘net “for the grabs”. If it’s available for free, one’s entitled to copy it; why should it be otherwise? If it’s not available, it soon will be, thanks to YouTubers and freeloaders at The Pirate Bay and similar venues, so it’s a question of time until it will also be available for free. I remember a lot of friends in the early years of this century that just joined the Internet “because of all the free content there” — not because they had any other use for it, but because they saw it as a free content distribution mechanism. Put it into other words: they were used to paying a small monthly fee to watch as much TV as they could. For another small fee they could get Internet access and watch as much “free” content as they could. For them, there is no difference between both models. They have no idea how TV network channels buy content and distribute it, and never worried about how those TV shows were actually produced and licensed for distribution. It’s beyond their ability to understand or worry about — “there is too much to think, I have no time for that”. The Internet, for them, is just the same. They pay for a service, and for that service, they get YouTube — so they assume that somehow their monthly Internet fee contributes somehow to get them access to content similar to the one they get on TV.

This vast majority of Internet users will find it strange that they’d get a new mechanism on the ‘net to actually give some cents to content creators when they press a button that looks like a Facebook “Like” button. I mean, Facebook “Like” is free to use, right? Why should a “Like” button actually force a user to pay a bit — even if it’s just some cents — to watch something that is “already visible” for free? This is the biggest barrier for Flattr to become successful: it has to overcome the notion that the vast majority of Internet users are not ideologically conditioned to think in a certain way, they are not “content thieves”, and they have absolutely no clue about how content is produced, distributed, or paid for. The only thing they really worry about is how much they pay for their Internet fee every month, and assume that this fee they pay is what gives them the “right” to download whatever is on the ‘net. Because that’s the model they’re used to when they turn on the TV.

You can do that kind of experiment with your own friends, specially those that are not ideologically active and are just regular content consumers. Ask them how they think that a movie gets produced — where the money comes from, and how it gets distributed to directors, writers, and actors. If that discussion doesn’t bore them to death — it will in most cases — move to TV networks, and ask them how they think that they make money to be able to show you the TV series you like. Most will say that ads play a role in this, but if you press further and ask them why competing cable networks don’t show the same programmes, most will think it’s just because cable networks show the things they like. The whole business model is a complete mystery to them, and even the shortest explanation will make them yawn and quickly change the subject. It’s simply beyond them.

If you even try to explain how content gets into the Internet, then it will simply blow their minds. The problem here is how to model an analogy that is immediately understandable for everyone — the mainstream user with little knowledge about how the world actually works, except for having the duty to pay taxes and the right to vote. These people, specially in the pre-Internet days, were used to content sharing: you’d buy a book and give or lend it to friends for them to read. That was nothing special about it. The same applies to CDs and DVDs bought: you just get them on the shop and then you can listen or view them as much as you wish and lend them to friends, or invite friends over to listen/view with you. If you buy a sculpture or a painting, anyone entering your home can appreciate it; you can physically sell it anyone else like you’d sell a table, a chair, or even a computer. Public libraries accumulate lots of books and routinely lend them — sometimes for free — to as many people as they want. Blockbusters rent videos over and over again for a tiny fee, which you can share with anyone you wish, provided you return the physical DVD (or cassette tape) to Blockbusters after a certain period. Now this is the base assumption that the mainstream content consumer will understand: content is available for tiny fees, and once you pay them, you can pretty much do whatever you wish with it. The notion of content duplication simply didn’t exist in, say, the 1970s; but certainly the notion of content sharing was all-pervasive even by then.

That model has been around for 150 years and is so common that it’s hard to explain that it relies on the inability of people to duplicate and disseminate content to actually work. When these people, with this mindset, face the Internet, they just see it as a super-huge Blockbuster, where you pay a monthly fee for Internet access, but can actually get access to way, way more content. Like with books from libraries and DVDs from Blockbusters, you can share this content, but the cool thing about the Internet, is that there is no physical sharing. Still, from the perspective of the mainstream user, the problem is that they feel they’re actually paying something — their Internet monthly fee — and, like on all other types of content access, they feel  that this monthly Internet fee “entitles” them to copy as much content as they wish (some ISPs even used to advertise their services that way — “get 50 MBps for faster download of movies and music!”). Even the all-pervasive ads on the Internet are seen, somehow, as a way for people to make money in order to allow others to download free content; after all, isn’t that what happens on TV programmes as well?

Educating the mainstream user to explain that what actually appears to be like that is not the reality is something incredibly hard to do. And even on the non-ideological side of the discussion, most mainstream users would be baffled to understand the reality of what goes on in the Internet. It’s simply beyond their concept of how the world works. And this mentality cannot be changed overnight.

Now Flattr bases their business model on the notion that there are enough educated users that understand how content is produced and disseminated over the Internet. “Enough”, in this context, would mean something like “as many as Facebook or Google users”, for example, to give a good example. If close-to-a-billion Internet users would regularly “flattr” original content, even if just a few cents here and there, I’m pretty sure that we could replace the whole body of laws trying to restrict content distribution on the Internet, sweep it under the carpet, and forget these dark days of the early 21st century. Put into other words: a new mentality that creates a vast community of users willing to pay a few cents here and there for content they actually like and use would solve all the problems of contribution to content producers — they would certainly be able to live from that. I could even envision that ISPs, as part of their services, would add a monthly €2 “voucher” for “flattring” other people’s content: that would mostly mean that every month, €2 billion would be distributed among a vast community of content producers — which would be certainly a huge market that would solve most problems. Of course “popular” content creators would get the biggest share. Of course marketing agencies, used to promote artists to get consumers to buy the more “popular” CDs, would naturally engage in this business and try to promote their artists so that they get more “flattring”. This is a natural evolution of the model, and one that is not necessarily “bad”. And of course lots of people would not “use” their €2 voucher every month, or just spend on friends’ pages and YouTube videos, and so forth, but still, the conceptual idea is actually not a bad one, and it solves a lot of problems.

In fact, that model is the very same implemented in Second Life. Not everybody buys content, of course, but there are enough that actually pay for it to make it worthwhile for a few thousand content creators to survive — or at least to feel that the hours spent in creating content is worthwhile. Second Life residents, after a few days (weeks?) of running around the grid will soon appreciate how the business model works. Of course there is some content piracy, but it’s negligible compared to what happens on the Internet-at-large. Of course there is a lot of free content, too. But, in general, what people perceive is that there is a lot of paid content in Second Life, but it’s actually relatively cheap: just a few cents or the odd dollar or two for the privilege of getting access to high quality items. Tip jars on live concerts are not a requirement for attending, but they’re encouraged, and the model, while not perfect, is better than nothing. Again, putting it into simpler words: Second Life residents, even more mainstream ones, have been educated to understand that all the content they encounter in SL is not for free (some is, but most isn’t), but getting access to a copy of the content they wish to own is very cheap and won’t make a dent in their finances — we’re talking about cents, not hundreds of dollars.

But this will very likely be impossible to happen on the Internet-at-large, unless Flattr gets bought by either Google, Microsoft, Apple, or Facebook: the only companies that have a decent choice of creating a quasi-universal model where “almost everybody” on the Internet, beyond being content consumers, become content buyers. Nevertheless, there are a few hopes that this could, one day, become a serious consideration. If the many “anti-content-theft” laws start rolling out — there are so many initiatives right now from all legislating bodies everywhere on the Western world, some of which might not be stopped in time by eager protesters — then the ones first to be hurt will be Google and Facebook, because, far more than The Pirate Bay, RapidShare, Megaupload and similar venues, that’s where most content duplication takes place, in a very loose and careless way, and used by hundreds of millions of people every day. There are few friends of mine who, when humming a tune and noticing that they forgot the lyrics, don’t turn immediately to YouTube to watch a video for that music — because they know that YouTube has everything. There are few frieds of mine who carelessly upload whatever they can find to their Facebook Walls, because they don’t perceive this to “be wrong” (remember, they feel they’re already paying for Internet access which they believe to grant them the right to copy and share whatever content they find). When the “anti-content-theft” laws hit in full force, Google will probably have to shut down YouTube (and possibly Picasa too) or change its business model to allow only original content to be uploaded by the entertainment industry giants — turning it into a competitor of Hulu.com. Facebook might not “shut down” but they might remove the ability to upload content (videos, pictures, files) and share it, except, again, for the official pages of the entertainment industry corporations, and thus become as irrelevant as, say, Orkut, Google+, or MySpace… how will Facebook survive without that sharing ability? (Note that it’s impossible, from the perspective of a machine, to distinguish between what is a picture of someone holding their two newborn babies, and an album cover which was scanned — one being a legitimate use of an image taken by the user, the other a copyright violation. Wikipedia, and the WikiCommons, rely on Wiktators to voluntarily spend their time reviewing most of the submitted content to manually eliminate copyright violations)

So it’s actually in Google’s and Facebook’s best interests to either buy Flattr or create a similar model for their own services, e.g. associate the +1 and “Like” buttons to a small donation using micropayments. This still doesn’t solve all problems, of course: as soon as something like that is released on a massive mainstream scale without educating the public, what would immediately happen is that a lot of “clever” users would simply upload the latest Rhianna video to get “flattring” and make money from stolen content, thus aggravating the problem (but at least making it legally more clear that someone is illegitimately profiting from a content creator’s original work). There is no easy way to deal with this unless Google and Facebook employ battalions of “censors” and manually approve all content (and even so they will fail in some cases — the model employed by Wikipedia and other similar sites which have content pre- or post-approved is not 100% foolproof, even though they make a very serious attempt to come as close as possible to that).

In conclusion, the problem of the Internet is that it doesn’t work like Second Life 🙂 I’m not saying that the permission problem is perfect, because of course it’s impossible to technologically prevent the analogue hole — there will always be some content theft in Second Life. But it’s far less than people think. In general, content creators wishing to profit from their content are able to do so. In general, too, SL residents will quickly understand the underlying model and realise that most content in SL is not free, but it’s up to them — the resident — to choose to view/own only free content or spend a few cents to get some paid content. This means that SL residents are educated to understand the content creators’ legitimate right to be paid for their work if they wish to do so — content creators are able to enforce how their content gets distributed, and content consumers have the option to either pay for desired content, or to look for free alternatives when they exist. This model, if it could be implemented on the Internet, would solve the problem once and for all, leaving just the borderline cases — the few that will always exploit the analogue hole — to be under close scrutiny, but leaving the rest of us, legitimate users, in peace.

Of course that Linden Lab required to implement a lot of things to be able to “enforce” this model, but they can do it because the SL grid, even though it seems to be large enough (with I don’t know how many billions of objects for sale…), it’s actually tiny compared to the Internet-at-large, and there is a single entity — Linden Lab — that controls it all. For example, LL is able to restrict — to a degree — that only third-party viewers respecting the permission system are allowed to connect to their grid. This restriction is not 100% efficient, but it works well enough. Now imagine the same happening on the two-billion-user Internet, with dozens of millions of operators, and dozens of billions of websites. How can anyone — any organisation! — coordinate all that? In my mind, the Internet is too unruly and too uncentralised (by design!) to allow for something like that to emerge…

One could technologically imagine that certain popular Web browsers would have an embedded “permission system” — in the best interests of the companies creating them — and that the most popular Web sites would require one of the “approved” Web browsers to be used exclusively on those Web sites. Imagine an Internet Explorer that would only upload images, videos, and other types of content that had an explicit license stating the freedom of distribution (this is possible to be embedded in most media file formats), and that Facebook required all users to use IE (or any browser supporting the same content) to connect to Facebook. If that happened, there would immediately appear “cloned” browsers which would work “just like the official ones” but with the ability to strip down the licensing information on the media files and allow upload to Facebook, but present themselves as a legitimate browser. To avoid this required complex cryptographic systems where Facebook (the company) would emit special keys for Microsoft to retrieve and embed on IE, and where each Facebook user would also require a pair of keys to be allowed to connect to Facebook. This extra complexity would, of course, make Facebook users give up — it’s too complex to use! What if you buy a new computer and don’t know how to transfer your legitimate access keys between browsers and/or operating systems? And, ultimately, it would be imemdiately subverted. After all, Windows still remains one of the more pirated software in the world (not to mention expensive applications like Photoshop), even though they have complex keys and algorithms to enforce “genuine” usage — we all know how easily those get subverted by hackers every day, to the extent that sometimes installing a pirated copy of Windows is easier than a legitimate one! No, let’s face it: these mechanisms will just make the life harder for legitimate users (and legitimate websites), while still allowing illegitimate users to proliferate. In effect, the more “valuable” something seems to be, the more likely it will be subverted by hackers — i.e. if accessing content on YouTube for free using a hacked browser becomes “valuable”, then more hackers will work on the task of allowing that access in spite of any “protection”.

Perhaps like in earlier articles I will be accused of not really proposing a valid, implementable solution (because I don’t really believe there is one!) but just pointing out why existing models — legislative or technical  — simply won’t work. Second Life is an oddity that provides a model that actually does work, even though it’s not perfect (because you cannot overcome the analogue hole), but certainly is a huge step ahead of what we can actually implement on the Internet. But more importantly than the legal/technical issues, Second Life excelled in the much-neglected aspect of educating users about the issues surrounding payment of work done by content creators, and implementing a micropayment model to allow that payment not to be a huge burden on residents but still make content creation worthwhile in SL for many thousands of creators. Things like Flattr.com and similar easy-to-use micropayment systems for content creators, no matter how successful they might eventually become, are perhaps the early skeletons of a “bridge” that can cross the education barrier (even if they won’t “solve the problem”), by creating a habit of paying content creators a few cents for their hard work, and by making the general population understand that content creators have a constitutional right to be paid for their work (which overrides the illegitimate “right” of being “allowed” to copy whatever is available on the ‘net), and that what is usually viewed as “the Internet access fee” paid to operators monthly does not entitle people to copy whatever they please, because that fee — unlike the cable network fees — does not contribute towards any kind of payment to content creators.

This is for me the fundamental issue that gets so easily forgotten in these dark days of legislative wars go suppress consumer rights. In essence, legislators are side-stepping the educational issue of explaining to citizens why under the current model the rights of content creators are not being upheld; and the whole dirty business is just seen by an uneducated population as a war between the entertainment industry giants, governments, and citizens, where greed dictates laws — thus polarising the whole world against the “monsters” that wish to destroy the Internet (which is exactly what they’re doing) by giving the wrong solutions to the problem. I can only sigh and shake my head in disgust, and at least make my few meagre attempts, here and there, to try to explain what the important issue really is.

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