.
From Wired.com:
On a busy corner in São Paulo, Brazil, street vendors pitch the latest "tecnobrega" CDs, including one by a hot band called Banda Calypso. Like CDs from most street vendors, these did not come from a record label. But neither are they illicit. They came directly from the band. Calypso distributes masters of its CDs and CD liner art to street vendor networks in towns it plans to tour, with full agreement that the vendors will copy the CDs, sell them, and keep all the money. That's OK, because selling discs isn't Calypso's main source of income. The band is really in the performance business — and business is good. Traveling from town to town this way, preceded by a wave of supercheap CDs, Calypso has filled its shows and paid for a private jet.
The vendors generate literal street cred in each town Calypso visits, and its omnipresence in the urban soundscape means that it gets huge crowds to its rave/dj/concert events. Free music is just publicity for a far more lucrative tour business. Nobody thinks of this as piracy.That is utter brilliance. Talk about seeing the potential of new technology, and figuring out how to USE it instead of fight it! The band has simply redefined the use of recorded music to suit its own ends. They know people copy CDs, so instead of trying to come down on their listeners, they use that very habit in their own favor. After all, performance is what musicians DO. The recording of music only started out as a way to promote performances, and it wasn't until the recording "industry" got up and running that records became their own commodity, eventually swamping performance as the point of the whole thing. It may be that the new technology will end up redefining music as, once again, a
performance career, rather than a sales career. Which is fucking FINE with me.
What's the relevance to the latest LJ hooplah? Well, I'll tell you...
The above is from
Free! Why $0.00 Is the Future of Business, an article at Wired.com. Excellent article about the overall change in business philosophy, from direct to indirect sales and income. They explore different "free" paradigms, such as the Freemium model, which is what Livejournal
used to be based on - the idea that 1% of users (Paid accounts) pay for the other 99% (Basic accounts). The reason this works is that the cost of storage and bandwidth has plummeted over the years to the point where it's so cheap it
might as well be free. (Think of Yahoo and how they've eliminated storage limits on their email accounts.)
See,
this is the real reason that dropping Basic Accounts is such a stupid, stupid idea - because the free users provide the content that paid users are here for. We all know that the accounts are not the reason we're here. We're here for
the other users, to read their journals and interact with them. Who would have an account here if there were nobody to talk to? Or if the other journals consisted only of commercial advertising, or weather reports, or whatever? No, we're here to read what others have written, others who are
not the staff of Livejournal. So, for all these years, Livejournal has essentially been getting the product it provides for free;
their contribution has been the means to get at the content. A peripheral to the main transaction, and a perfect example of third-party income generation.
What they're doing is akin to the stupidity and short-sightedness of record companies who fight against new technologies - it might make them some money
now, but down the line it'll come back to bite them in the ass. It's a dim-witted, silly decision, and it won't turn out the way they want it to, mark my words - and NOT because those already here will take their toys and go home. We'll stay on, but no business thrives on old customers. Take away the free accounts and LJ will end up
turning away the users who want them. Which is to say, all new users, basically. Would
you have opened your first account here if you had to deal with ugly ads all over the place? Neither would I. It's pretty damn simple, but they don't see it, because they're stuck in the old paradigm.
This is an important article, really. It lays out all the factors in how the web is changing the very
idea of money and how it's made. The concepts contained here are resonating throughout the world and will continue to do so in the coming decade. As the author says, Milton Friedman's "no free lunch" is now a thing of the past. We've come to a place where people
expect free lunch, because in so many areas, there's no reason to charge for one. It's an amazing paradigm shift, one I certainly couldn't have predicted.
Interesting times, indeed.
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