The Berkman Center for Internet & Society has released "Content & Control," a paper looking at "four business models representative of current and emerging attempts to generate viable revenues from digital media." The paper analyzes models ranging from "from Apple’s iTunes to innovative projects like entertainment ‘co-ops.’"
The digital environment can reduce costs and alter or eliminate certain functions. Traditionally, the high costs of creation were accompanied by high costs for physically manufacturing the media, marketing the work and distributing it, from packaging to shipping to retailing. In the digital environment, new production technologies have dramatically lowered the threshold for creating music content, and, to a substantially lesser extent, in films. The cost of manufacturing each additional digital copy is practically zero. The online environment provides myriad, potentially cheaper and better targeted opportunities for marketing. Finally, the Internet enables low cost distribution among content creators, retailers and consumers, perhaps eliminating the need for retailers altogether. [P. 7]
The following part of the passage I am excerpting is particularly interesting, since it relates to what I wrote earlier on capital raising and content production. Unlike the writers, I still see a strong role for content aggregators and editors. The greater the amount of content, the greater the need for consumers to find a way to navigate through the ever larger sea. Lower friction distribution systems will actually commoditize a lot of the news and entertainment that is produced, raising the threshold–both in standards and pricing–for more premium content. Case in point: the impact of the Internet on stock photography and royalty-free sales. That said, however…
These changes may enable greater independence for content creators as well as increased content diversity. Recording artists and film creators might improve their negotiating position with labels and studios if the upfront investment needed was less substantial. In some cases, it may enable content creators to act altogether independently of the traditional intermediaries. Moreover, the class of content creators who can achieve financial viability might also be larger given the reduced revenues needed to see a profit. In particular the Internet may help make creators in niche genres more sustainable. The online environment can help creators and consumers find one another and execute transactions that in the past would have been infeasible. The degree to which these possibilities may be realized is different for the film and music industries, of course, due to the generally significant greater costs of creating films. [P. 8]