Scarcity vs scale

Posted on January 14, 2008

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“Musical” blokeI’ve been finishing off the openness paper this week (taking me a long time to get my ideas together at the mo..) and doing some thinking around how you manage to still make money in this brave new world of free, open, readily available everything. Actually, let’s not call it making money but creating value, either in a financial or social sense.

Ian Rogers (Yahoo), who had posted before about the music industry tendancy to ostrich the very obvious problems of their industry (today highlighted by the EMI news of 2,000 redundancies) has written a looooooong but very insightful post about where it all goes from here.

The article is really worth taking the time to read in its entirity, but the bit which really caught my eye and got me thinking in terms of the whole commercial – value – assets – openness debate was the opening phrase, and title of the presentation:

“Losers wish for scarcity. Winners leverage scale”

Think about the importance of what is being said here for a minute: In the traditional world of marketing, selling, commerce, the value of something is largely determined by scarcity. This is still the way of the [physical] world in many ways today. We buy diamonds because they are rare; we phone a plumber because he has unique skills and knows how to fix the boiler better than we do; we go to museums to see things which we can’t see anywhere else.

The problem that the music industry has – and the cultural sector – is that once you move these endeavours online the entire equation changes shape, radically.

Whereas Amazon or other retailers with “real” product sit on top of the pile by increasing value both by leveraging scale (number of visitors buying books increasing incrementally as traffic increases) and scarcity (they are the ones who ship the books, which are themselves a product, and hence valuable by their scarcity..), the ones who have to think harder are those who have content as their product. That’s EMI, iTunes, The Guardian…and museums. Why? Because as soon as you put something on the web, it can (and is) duplicated, copied, downloaded, mashed and borrowed…

To date, the general response to opening museum content up – and yes, *gasp*, maybe making it free has been, understandably, “er. what? our images [other stuff] – free? certainly not”.

Let’s unpick this a little bit more. Instead of free, substitute “more free” – think about museums actively encouraging people to “borrow” images with “embed this in your blog/myspace page” links next to any assets displayed on page. This is effectively what web browsers (and certainly Google Images) do anyway, with a simple right click / copy-paste. Extend it and you’ve got an API model – “use this content on your website”. We as a sector know very very well that this happens already – I’ve talked before about the 9% referral figure we used to get on the Science Museum website from MySpace: all from embedded images. The point here is that people are doing this already whether we like it or not.

This is a limited example, but the point is that some kind of disruption is required to make this new market work for us. In the music industry, companies like Amie Street are breaking valuable new ground by defining new business models for (music) content. In this example, music tracks start off cheap/free and get more expensive the more they are downloaded. It’s a brilliant and highly respected model.

For museums, one of the first barriers to overcome is understanding what value the long tail has – when no museums carry on-page advertising (correct me if you know of one), we’re hard pushed to ascribe value to a page view. We’re still as a sector struggling with the basic notions of how to measure success, let alone confident enough to suggest that the commercial models we have might be wrong, or at least flawed.

I’m not (at the moment!) suggesting that we should close all our picture library operations: what I am saying is that the historical tendancy to be closed, guarded and scarce simply doesn’t work. It’s not just that users “abuse” this already (and we’d be spending a LOT of futile time trying to prevent the MySpace 9% from embedding our images), it’s that there is something really rather important going on here. Museums – we’ve said it before – are completely at home in the long tail.

Somewhere along the line we’ll understand the importance of embracing rather than denying the proliferation of copying, pasting, borrowing. To get there we need to be better at understanding what value is, and that’s hard.

[* image: curious 1950’s bloke outside Bath Habitat with a wicked foot-cranked guitar-playing machine and violin. Bet he hasn’t considered music rights.]

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