The Economics of Online Commons

What happens when video, music and information can be distributed for free, or nearly so? Well, we’re about to find out—and many of our largest, most capitalized institutions are going to feel the repercussions. Many barriers that once kept information artificially scarce—things like copyright law, digital rights management, and limited bandwidth and computing power—are under siege, if not collapsing. Some people are predicting that copyrighted works will experience a “Bear Stearns moment” in the future, when prices of copyrighted works plummet. An IP bubble, as it were.

Which leaves us with the question…. so how will creativity and information be financed in such an environment? The world can’t survive on the amateur talent of bloggers and remix artists.

These are some of the concerns addressed by a conference that I recently attended, Economies of the Commons: Strategies for Sustainable Access and Creative Reuse of Images and Sounds Online. The gathering in Amsterdam had a distinctly Continental flavor, with representatives from several national archives and a sprinkling of Americans like myself.

The focus of many presentations was how to organize the production and distribution of new creative works in a world where free/cheap digital transmission is the norm. It turns out that many established institutions—if they are going to come to terms with the Internet—are going to have to seriously transform themselves in order to survive.

If you want to see the future, one of the best places to look is the freeboot innovators of the underground. They are always the ones who tried out the new ideas that later ripen into market opportunities. Think how hip-hop emerged from record-scratchers in Brooklyn basements and how the hobbyists of the Homebrew Computer Club pioneered many of the early innovations in computing.

At this conference, Jamie King, a British copyfighter, told how the self-styled League of Noble Peers produced Steal This Film, a series of documentary films that describe the file-sharing movement and the fight against excessive copyright protection. Since it release in 2006, the film has been downloaded (for free) more than four million times. Its sequel, Steal This Film II, has been downloaded one million times since January 2008.

The first film—which includes lots of “found footage” taken from Hollywood movies, anti-piracy propaganda, and interviews with people in industry and government—has been a hit on the film festival circuit as well as online. Despite its prominence through distribution on Pirate Bay, a major site in Sweden for both illicit and legal file-sharing, Steal This Film has not received a single “takedown notice” from copyright holders, said King.

The first impulse upon hearing such stories is to situate this story in the familiar “Hollywood versus the pirates” narrative. But for those with the eyes to see it, the message of Steal This Film is about a new paradigm for creativity and culture—a paradigm whose contours are still emerging. King puts it this way: “Digital reproduction and networks solve the problem of media scarcity. By doing so, they also commence the disintegration of media as property.”

The idea of “culture without property” seems just too radical and counter-intuitive for some folks to get (or they get it only too well, because it jeopardizes their established business model). But this is not actually such a radical vision. There are already all sorts of profit-making enterprises that are building business models around open, non-proprietary platforms. IBM’s embrace of GNU Linux, the open-source operating system, is one of many prominent examples. So is Flickr, the photo-sharing website.

King said we need to learn to “love abundance. Stop trying to keep people away from your work. Didn’t you make it to be seen?” King believes that the new distribution models are immensely appealing because you don’t have the compromise your artistic vision—unlike commercial television or film distribution, which forces producers to squeeze their creativity into specific demographic pigeonholes. He also believes that most existing pay models are ultimately doomed because they won’t be able to compete with free distribution. The point is to develop a business model that exploits free distribution, rather than trying to defend an indefensible bulwark of artificial scarcity.

So what will rise up in place of current media distribution models? That’s a much larger and complicated question, of course, but one answer is new types of commons. Just as academics are paid by their host institutions, freeing them to interact as commoners within their disciplines, so artists might be paid via institutions that employ them. The institutions might then reap money through selling services, advertising or licensing its trademark. This is a model used by Trama Virtual, a Brazilian online music platform. Trama Virtual has established a social cachet by attracting cool new music; it then licenses its trademark to marketers and sells advertising on its website.

Jamie King hopes to prove that online commons might establish their own digital “tip jar” to remunerate online creators. He is working to develop a software system that he calls “VODO,” which stands for “voluntary donations.” The idea is to put unique digital fingerprints on video and other content distributed on BitTorrent and other peer-to-peer file-sharing networks. This will enable a work to be reliably connected to the creator, despite the free and unrestricted sharing of the work on the Internet. VODO would enable appreciative fans to send donations in an easy, frictionless way to creators—more conveniently than PayPal, for example. It would begin to help finance a new commons-based sector of production. (For more on VODO, go to.)

But would people actually donate? King said that Steal This Film—without any VODO system—received donations of about 0.1 percent (1 in 1,000 viewers) in the first two months after its release. Donations were mostly in the $15 to $40 range. When the band Radiohead released its album under a “pay what you want” scheme, about 30% of downloaders voluntarily paid some amount—enough to exceed the revenues the band would have received through a traditional record label deal. King hopes that VODO will result in donations of 10%. To help boost the viral effectiveness of the scheme, third party websites that implement VODO would get a small cut of the transaction.

Mind you, VODO is still an idea, not a functioning system. But it is an intriguing model for financing the commons, or augmenting the vitality of already functioning commons.