Thursday, February 5, 2009

Artificial Scarcity Fails As A Business Model

From Romenesko:
"This company should charge online visitors a small fee, maybe $5 a month, for our content -- which is copyrighted, then sue the pants off anyone stealing it," writes Stu Bykofsky. "Should Google 'pick up' (steal) our stuff, if we successfully sued them for $1 billion, two good things happen: 1) Our money problems are solved; 2) everyone else will stop stealing our content."

Good luck. Creating artificial scarcity of information in the digital age is not a workable business model. If you don't understand why, allow Cory Doctorow to explain it to you:

Before any newspapers head down the path Bykofsky proposes, they really ought to pay attention to how poorly a similar strategy has served the music industry. In the digital age, bits want to be free. This is an Internet feature, not a bug. Any business model that doesn't take this into account cannot succeed for long.

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