The Inevitable Read online

  There are a number of other qualities similar to trust that are difficult to copy and thus become valuable in this cloud economy. The best way to see them is to start with a simple question: Why would anyone ever pay for something they could get for free? And when they pay for something they could get for free, what are they purchasing?

  In a real sense, these uncopyable values are things that are “better than free.” Free is good, but these are better since you’ll pay for them. I call these qualities “generatives.” A generative value is a quality or attribute that must be generated at the time of the transaction. A generative thing cannot be copied, cloned, stored, and warehoused. A generative cannot be faked or replicated. It is generated uniquely, for that particular exchange, in real time. Generative qualities add value to free copies and therefore are something that can be sold.

  Here are eight generatives that are “better than free.”

  IMMEDIACY

  Sooner or later you can find a free copy of whatever you want, but getting a copy delivered to your inbox the moment it is released—or even better, produced—by its creators is a generative asset. Many people go to movie theaters to see films on the opening night, where they will pay a hefty price to see a film that later will be available for free, or almost free, via rental or download. In a very real sense, they are not paying for the movie (which is otherwise “free”); they are paying for the immediacy. Hardcover books command a premium for their immediacy, disguised as a harder cover. First-in-line often commands an extra price for the same good. As a sellable quality, immediacy has many levels, including access to beta versions. Beta versions of apps or software were once devalued because they are incomplete, but we’ve come to understand that beta versions also possess immediacy, which is valuable. Immediacy is a relative term (minutes to months), but it can be found in every product and service.

  PERSONALIZATION

  A generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound acoustically perfect in your particular living room—as if it were being performed in your room—you may be willing to pay a lot. You are then not paying for the copy of the concert; you are paying for the generative personalization. The free copy of a book can be custom edited by the publishers to reflect your own previous reading background. A free movie you buy may be cut to reflect the rating you desire for family viewing (no sex, kid safe). In both of these examples, you get the copy free and pay for personalization. Aspirin is basically free today, but an aspirin-based drug tailored to your DNA could be very valuable, and expensive. Personalization requires an ongoing conversation between the creator and consumer, artist and fan, producer and user. It is deeply generative because it is iterative and time-consuming. Marketers call that “stickiness” because it means both sides of the relationship are stuck (invested) in this generative asset and will be reluctant to switch and start over. You can’t cut and paste this kind of depth.

  INTERPRETATION

  As the old joke goes: “Software, free. User manual, $10,000.” But it’s no joke. A couple of high-profile companies, like Red Hat, Apache, and others make their living selling instruction and paid support for free software. The copy of code, being mere bits, is free. The lines of free code become valuable to you only through support and guidance. A lot of medical and genetic information will go this route in the coming decades. Right now getting a full copy of all your DNA is very expensive ($10,000), but soon it won’t be. The price is dropping so fast, it will be $100 soon, and then the next year insurance companies will offer to sequence you for free. When a copy of your sequence costs nothing, the interpretation of what it means, what you can do about it, and how to use it—the manual for your genes, so to speak—will be expensive. This generative can be applied to many other complex services, such as travel and health care.

  AUTHENTICITY

  You might be able to grab a popular software application for free on the dark net, but even if you don’t need a manual, you might want to be sure it comes without bugs, malware, or spam. In that case you’ll be happy to pay for an authentic copy. You get the same “free” software, but with an intangible peace of mind. You are not paying for the copy; you are paying for the authenticity. There are nearly an infinite number of variations of Grateful Dead jams around; buying an authentic version from the band itself will ensure you get the one you wanted. Or that it was indeed actually performed by the Dead. Artists have dealt with this problem for a long time. Graphic reproductions such as photographs and lithographs often come with the artist’s stamp of authenticity—a signature—to raise the price of the copy. Digital watermarks and other signature technology will not work as copy protection schemes (copies are superconducting liquids, remember?), but they can serve up the generative quality of authenticity for those who care.

  ACCESSIBILITY

  Ownership often sucks. You have to keep your things tidy, up-to-date, and, in the case of digital material, backed up. And in this mobile world, you have to carry it along with you. Many people, myself included, will be happy to have others tend our “possessions” while we lazily subscribe to them on the cloud. I may own a book or have previously paid for music I treasure, but I’ll pay Acme Digital Warehouse to serve me what I want when and how I want it. Most of this material will be available free elsewhere, but it is just not as convenient. With a paid service I have access to free material anywhere, channeled to any of my many devices, with a super user interface. In part, this is what you get with iTunes on the cloud. You pay for conveniently accessible music you could download for free somewhere else. You are not paying for the material; you are paying for the convenience of easy accessibility, without the obligations of maintaining it.

  EMBODIMENT

  At its core the digital copy is without a body. I am happy to read a digital PDF of a book, but sometimes it is luxurious to have the same words printed on bright white cottony paper bound in leather. Feels so good. Gamers enjoy fighting with their friends online but often crave playing with them in the same room. People pay thousands of dollars per ticket to attend an event in person that is also streamed live on the net. There is no end of ways to counter the intangible world with greater embodiment. There will always be insanely great new display technology that consumers won’t have in their home, so they need to move their bodies somewhere else, like to a theater or auditorium. A theater is more likely to be the first to offer laser projection, holographic display, the holodeck itself. And nothing gets embodied as much as music in a live performance, with real bodies. In this accounting, the music is free, the bodily performance expensive. Indeed, many bands today earn their living through concerts, not music sales. This formula is quickly becoming a common one for not only musicians, but even authors. The book is free; the bodily talk is expensive. Live concert tours, live TED talks, live radio shows, pop-up food tours all speak to the power and value of a paid ephemeral embodiment of something you could download for free.

  PATRONAGE

  Deep down, avid audiences and fans want to pay creators. Fans love to reward artists, musicians, authors, actors, and other creators with the tokens of their appreciation, because it allows them to connect with people they admire. But they will pay only under four conditions that are not often met: 1) It must be extremely easy to do; 2) The amount must be reasonable; 3) There’s clear benefit to them for paying; and 4) It’s clear the money will directly benefit the creators. Every now and then a band or artist will experiment in letting fans pay them whatever they wish for a free copy. This scheme basically works. It’s an excellent illustration of the power of patronage. The elusive connection that flows between appreciative fans and the artist is definitely worth something. One of the first bands to offer the option of pay-what-you-want was Radiohead. They discovered they made about $2.26 per download of their 2007 In Rainbows album, earning the band more money than all previous albums released on labels combined and spurring several million sales of CDs. Th
ere are many other examples of the audience paying simply because they gain an intangible pleasure from it.

  DISCOVERABILITY

  The previous generatives resided within creative works. Discoverability, however, is an asset that applies to an aggregate of many works. No matter what its price, a work has no value unless it is seen. Unfound masterpieces are worthless. When there are millions of books, millions of songs, millions of films, millions of applications, millions of everything requesting our attention—and most of it free—being found is valuable. And given the exploding numbers of works created each day, being found is increasingly unlikely. Fans use many ways to discover worthy works out of the zillions produced. They use critics, reviewers, brands (of publishers, labels, and studios), and increasingly they rely on other fans and friends to recommend the good stuff. Increasingly they are willing to pay for guidance. Not too long ago TV Guide had a million subscribers who paid the magazine to point them to the best shows on TV. These shows, it is worth noting, were free to the viewers. TV Guide allegedly made more money than all three major TV networks it “guided” combined. Amazon’s greatest asset is not its Prime delivery service but the millions of reader reviews it has accumulated over decades. Readers will pay for Amazon’s all-you-can-read ebook service, Kindle Unlimited, even though they will be able to find ebooks for free elsewhere, because Amazon’s reviews will guide them to books they want to read. Ditto for Netflix. Movie fans will pay Netflix because their recommendation engine finds gems they would not otherwise discover. They may be free somewhere else, but they are essentially lost and buried. In these examples, you are not paying for the copies, you are paying for the findability.

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  • • •

  These eight qualities require a new skill set for creators. Success no longer derives from mastering distribution. Distribution is nearly automatic; it’s all streams. The Great Copy Machine in the Sky takes care of that. The technical skills of copy protection are no longer useful because you can’t stop copying. Trying to prohibit copying, either by legal threats or technical tricks, just doesn’t work. Nor do the skills of hoarding and scarcity. Rather, these eight new generatives demand nurturing qualities that can’t be replicated with a click of the mouse. Success in this new realm requires mastering the new liquidity.

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  • • •

  Once something, like music, is digitized, it becomes a liquid that can be flexed and linked. At first glance, when music was initially digitized, it seemed to music executives that audiences were drawn online because of their greed for the free. But in fact, free was only a part of the attraction. And maybe the least important part. Millions of people might have initially downloaded music because it was free, but they then suddenly discovered something even better. Free music was unencumbered. It could merrily migrate to new media, new roles, new corners of the listeners’ lives. Thereafter, the sustained rush to download online music came from digitized sound’s ever expanding power of flowing.

  Before liquidity, music was staid. Our choice as music fans 30 years ago was limited. You could listen to the set sequence of songs the DJs chose to play on a handful of radio stations or you could buy an album and listen to the music in the order the songs were laid on the disk. Or you could purchase a musical instrument and hunt for a favorite piece’s sheet music in obscure shops. That was about it.

  Liquidity offered new powers. Forget the tyranny of the radio DJ. With liquid music you had the power to reorder the sequence of tunes on an album or among albums. You could shorten a song or draw it out so that it took twice as long to play. You could extract a sample of notes from someone else’s song to use yourself. Or you could substitute lyrics in the audio. You could reengineer a piece so that it sounded better on a car woofer. You could—as someone later did—take two thousand versions of the same song and create a chorus from it. The superconductivity of digitalization had unshackled music from its narrow confines on a vinyl disk and thin oxide tape. Now you could unbundle a song from its four-minute package, filter it, bend it, archive it, rearrange it, remix it, mess with it. It wasn’t only that it was monetarily free; it was freed from constraints. Now there were a thousand new ways to conjure with those notes.

  What counts are not the number of copies but the number of ways a copy can be linked, manipulated, annotated, tagged, highlighted, bookmarked, translated, and enlivened by other media. Value has shifted away from a copy toward the many ways to recall, annotate, personalize, edit, authenticate, display, mark, transfer, and engage a work. What counts is how well the work flows.

  At least 30 music streaming services, far more refined than the original Napster, now provide listeners a spectrum of ways to play with the unconfined elements of music. My favorite of these is Spotify because it encapsulates many of the possibilities that a fluid service can provide. Spotify is a cloud containing 30 million tracks of music. I can search that ocean of music to locate the most specific, weirdest, most esoteric song possible. While it plays I click a button and find the song’s lyrics displayed. It will make a virtual personal radio station for me from a small selection of my favorite music. I can tweak the station’s playlist by skipping songs or downvoting ones I don’t want to hear again. This degree of interacting with music would have astounded fans a generation ago. What I’d really like to listen to is the cool music my friend Chris listens to, because he’s much more serious about his music discovery than I am. I’d like to share his playlist, which I can subscribe to—meaning that I am actually listening to the music on his playlist, or even to the songs that Chris is listening to right now, in real time. If I really enjoy a particular song I hear on his list—say, an old Bob Dylan basement tape I never heard before—I can copy it onto my own playlist, which I can then share with my friends.

  Naturally, this streaming service is free. If I don’t want to see or hear the visual and audio ads Spotify displays to pay the artists, I can pay a monthly premium. In the paid version, I can download the digital files to my computer and I can start to remix tracks if I want to. Since it is the age of flowing, I can reach my playlists and personal radio stations from any device, including my phone, or direct the stream into my living room or kitchen speakers. A bunch of other streaming services, such as SoundCloud, operate more like an audio YouTube, encouraging its 250 million fans to upload their own music en masse.

  Compare this splendid liquidity of options with the few fixed choices available to me just decades ago. No wonder the fans stampeded to the “free” despite the music industry’s threat to arrest them.

  Where might this go? In the U.S. at this time, 27 percent of music sales are from the streaming mode, and this mode is equal to the sales of CDs. Spotify pays 70 percent of its subscriber revenue to the artists’ labels. Despite this initial success, Spotify’s music catalog could be bigger because there are still major holdouts, artists like Taylor Swift, who are fighting against streaming. But as the head of the largest music label in the world admitted, the streaming takeover “is inevitable.” With flowing streams, music goes from being a noun to a verb once again.

  Liquidity brings a new ease in creation. Fungible forms of music encourage amateurs to create their own song and upload it. To invent new formats. New tools, available for free, distributed online, allow music fans to remix tracks, sample sounds, study lyrics, lay down beats with synthetic instruments. Nonprofessionals start making music the same way writers craft a book—by rearranging found elements (words for writers, chords for musicians) into their own point of view.

  The superconductivity of digital bits serves as a lubricant to unleash music’s untapped options. Music is flowing at digital frequencies into vast new territories. Predigital, music occupied a few niches. Music came on vinyl; it was played on the radio, was heard at concerts, and in a couple hundred films made each year. Postdigital, music is seeping into the rest of our lives, attempting to occupy our entire waking life. Stuffed into the c
loud, music rains on us through our earbuds while we exercise, while we are vacationing in Rome, while we wait in line at the DMV. The niches for music have exploded. A renaissance of thousands of documentaries per year demands a soundtrack for each one them. Feature films consume vast quantities of original scores, including thousands of pop songs. Even YouTube creators understand the emotional uplift gained by a soundtrack for their short spots; while most YouTubers recycle prior art without pay, a growing minority see the value in creating custom music. Then there’s the hundreds of hours of music required for each big video game. Tens of thousands of commercials need memorable jingles. The latest fashionable media is a podcast, a sort of audible documentary. At least 27 new podcasts launch every day. No decent podcast is without a theme song and, more often, musical scoring for its long-form content. Our entire life is getting a musical soundtrack. All these venues are growth markets, expanding as rapidly as the flows of bits.

  Social media were once the domain of texts. The next generation of social media is conducting video and sound. Apps like WeChat, WhatsApp, Vine, Meerkat, Periscope, and many others enable you to share video and audio—in real time—with your network of friends and friends of friends. The tools for quickly making a tune, altering a song, or algorithmically generating music that you share in real time are not far away. Custom music—that is, music that users generate—will become the norm, and indeed it will become the bulk of all music created each year. As music streams, it expands.