Intellectual Property (IP), like music and video content, intersects with Software as a Service (SaaS) in every meaningful way. It’s fascinating to see so many threads knitting themselves together in the headlines from one single week.
News about FinTech companies, like Jack Dorsey’s Square, is generally limited to the business section. In contrast, music streaming services, like Jay-Z’s Tidal, are everywhere but. Yet there is Jay-Z’s picture all over the Wall Street Journal. The Venn Diagram of those two worlds is usually like peering through a giant pair of blurry binoculars.
So what are we really looking at, anyway?
To gain clearer focus, we’ll need first to pan out and check in with Rolling Stone—and the latest on Kings of Leon’s recent album release. (Seriously!)
I’ve heard IT folks mention NFT’s before (“Non-Fungible Tokens”) but until this week I never paid attention. Turns out, digital media, from music to software to streaming video, presents a commercial challenge—no matter how valuable it is, it’s still too easy for people to copy. Years ago, Sony tried built-in “DRM” (“Digital Rights Management”) algorithms, but they never quite worked the way they should. Movie studios got Congress and the FBI involved, creating staggeringly large penalties for piracy—up to five years in federal prison and fines of $250,000—but, so far, nothing has really worked.
What does this mean to software companies and their customers?
Software vendors prefer “system audits” to grab folks after the fact, and charge them retroactively. Unfortunately, the confusing and frustrating compliance burden on honest, legitimate customers tends to hurt business as much as extra revenue helps, and it’s not going well. Now, Square acquiring Tidal, and Kings of Leon releasing their album via NFT, are pushing things in a new, more promising direction.
A little background—Sumner Redstone and Paramount+ are still behind the curve:
Years ago, broadcast TV sold commercials and didn’t worry because VCR’s hadn’t been invented yet. Yet, because commercials annoyed viewers like so many little 30-second spots of DRM, cable channels stepped in to monetize viewers’ preference to watch ad-free and pay a subscription for the privilege. Of course, likely because cable bills got so ridiculously expensive, Reed Hastings’ Netflix exploited an opening to offer by-mail DVD’s, and then streaming services, for far less money, and the whole game changed. Reed’s was such a good idea that now Hulu, Apple TV, HBO MAX, Disney+, Peacock Premium, Sling TV, Acorn, Amazon Prime Video, CBS All Access, DirecTV Now, Youtube TV, etc. etc. etc. , ad infinitum, have all jumped on the bandwagon. Unfortunately for us viewers, “the internet” doesn’t offer single all-you-can-binge billing like the cable company used to, so now we’re on our way back to the same exorbitant monthly cost, only in endless increments. Anyone want to guess how tough the sledding is going to be for Sumner Redstone and Paramount+ to be late to the party?
Somebody is going to have to sort this all out, and musicians have already taken a crack at it:
Musicians, with their endless multitude of songs, have been herded into streaming services that recall the old cable TV model—wherever you subscribe, chances are you can listen to just about anything you want. Of course, musicians aren’t making any money this way, so it’s easy to see why services like Tidal were created. So how do we ensure artists get paid, while consumers aren’t buried in paperwork?
Enter Jack Dorsey:
Imagine a world where digital content is made available to consumers via avenues that simplify both consumer billing and artist receipt, while protecting both security and publishing rights. Square would like to be such a conduit. If they’re successful, it’s easy to conceive of a day when you could pay as you go for your digital content much as we used to accrue charges for long distance calls on our single monthly phone bill. In a perfect world for consumers, this might eventually evolve back to an all-you-can-eat delivery model that retains much of the internet’s low/no cost advantages and makes everything simple again. (But, please, no commercials!)
Or, Kings of Leon on the coattails of Grimes and others:
With NFT’s, Kings of Leon, like Grimes before them, is putting a vote behind an entirely new way to convey value. Like individual streaming services, software vendors have tried the “App Store” route for one-off purchases, but larger contracts and payments still tend to be executed “offline”, and require negotiation, lawyers, contracts, and confusion. This all stands in the way of vendors’ attempts to streamline distribution, license validation, and reduce overhead. Distributing via crypto (like Kings of Leon is doing with their songs) may also solve licensing audit issues and a whole bunch of other things, in addition to streamlining orders, distribution, and collections. Consumers can just push a button to gain access and pay their fare without a second thought.
So what is Sumner Redstone missing?:
The opportunity for businesses to mimic these evolving digital models for their own distribution of goods and services is compelling. (Volvo even wants to sell you a car this way). Best of all, watching somebody else solve all the tough problems to be faced can yield insight on when to pull the trigger. Maybe Paramount+ will quickly catch on and catch up.
Step one is realizing something important is going on, and then tuning in.