Trent Reznor: 'So you want to make money on the Web'
(Credit:
Doigy Media)
For those who have yet to grok the Open Core business model, Trent Reznor of Nine Inch Nails fame will sing it to you. In a series of forum entries, Reznor explains exactly how to build a music business on the Web and, in the process, classically defines Open Core, the primary business model for open-source software, too.
Forget thinking you are going to make any real money from record sales. Make your record cheaply (but great) and GIVE IT AWAY. As an artist you want as many people as possible to hear your work. Word of mouth is the only true marketing that matters. To clarify:
Parter with a TopSpin or similar or build your own Web site, but what you NEED to do is this--give your music away as high-quality DRM-free MP3s. Collect people's e-mail info in exchange (which means having the infrastructure to do so) and start building your database of potential customers.
Then, offer a variety of premium packages for sale and make them limited editions/scarce goods. Base the price and amount available on what you think you can sell. Make the packages special--make them by hand, sign them, make them unique, make them something YOU would want to have as a fan. Make a premium download available that includes high-resolution versions (for sale at a reasonable price) and include the download as something immediately available with any physical purchase. Sell T-shirts. Sell buttons, posters...whatever.
Having trouble following that? Well, the excellent TechDirt simplifies it:
Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model
In the software world, "Connect with Fans" is the community download. It's the software made freely available for anyone to download, tinker with, and share (if they wish). As noted in a recent MindTouch post, word of mouth is an open-source project's best friend, and word of mouth depends upon giving people something to talk about.
Unfettered discussion. Highly usable code. These are the key ingredients to driving word of mouth.
As for Reznor's "Reason to Buy," that is the enterprise version. Importantly, it's not really about lock-in so much as it is about (temporary) lock-out: Open Core, just as with Red Hat's licensing model, isn't about forcing customers to stay so much as giving a convenient, compelling reason to buy. Once the customer is in the door, every open-source company I know makes it easy to leave and depends upon a subscription offering that forces the vendor to deliver continuous value to earn the customer's loyalty.
Community is for the geeks: it's all about code, code that average consumers could not possibly care any less about ("I thought that obsessing about an OS in 1993 was depressing; why are we still doing it in 2009?").
Enterprise is for users who just want to get on with their day, and want software to be part of that day without consuming the day.
You need both but, as Reznor accurately describes, you must have a compelling reason to buy. Charitable urges don't count.
Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay. 
His value adds are all about adding value in unique packaging, but the music is always freely available to everyone.
Still, I think there's a lot of similarity between what Trent's trying to do and open-source. Since he's a software geek too, that doesn't surprise me too much... =)
0. Music and software are not the same.
1. You provide no evidence to support your claim that Open Core is "primary business model for open-source software". Nobody will accept as evidence anything that you wrote years ago.
2. Trent says "give your music away as high-quality DRM-free MP3s". If music were just like software (which it's not, see point zero) then this would map to giving your software away with all the features intact. The software that open-core vendors give away is more analogous to DRM-free MP3s that are mastered with the bass and percussion removed. The fan is free to approximate those parts in GarageBand and re-export, but it's easier just to pay for a DRM-encumbered version with all the instruments present and played just as the artist intended.
3. Trent says of the pay-for extras, "make them by hand, sign them, make them unique". This maps to nothing in the open-core model -- selling software licenses is inherently about making the software one time and selling the right to use many identical copies. A pure services business model is much closer since every training class, every support ticket, and every consulting engagement is unique.
4. Also of the pay-for extras, Trent says, "make them something YOU would want to have as a fan". Here you imply that a fan's motivation to buy is substantially similar to a software user's motivation to buy. The two are actually very different. A fan feels a connection to the artist or his work and buys the premium nicknack because of its emotional value. A software user, as you say, "just want[s] to get on with [his or her] day", and buys the premium version because of its utility value.
5. Red Hat does not sell licenses. I believe you're thinking of the packaged binaries and convenient and timely access to support and updates that make up the bulk of RHAT's revenues. If you don't understand what the Red Hat model is, then you really should not be representing yourself as any kind of authority on open-source business models.
6a. Open-core vendors make it easy for customers to leave? Bull excrement. If your pay-for feature was compelling enough for me to pony up the dough, then that means I couldn't find a suitable free (libre) alternative. Since the subscription-licensing model means that the software stops working when I stop paying, I'm pretty much over a barrel until somebody else makes a free (libre) alternative or you deign to bestow the pay-for feature upon the community.
6b. Reiterating: Under the subscription-licensing model, the software itself stops working if the user stops paying. This catch removes the user's freedom to pay once and use the version she paid for forever. I broke this point out separately because so few people seem to understand it. I was talking to a journalist last week who's extremely technically savvy, but he did not get this concept until I pointed it out to him. It's not that he didn't understand it; the idea was just so appalling that it never occurred to him.
7. Your practice of citing Gartner for reasons other than comic relief shows just how tenuous is your grasp of the principles of free / libre / open-source software and the motivations of those who use it and defend its definition against those who would muddy it.
Asides:
- On point 2: I've never heard the MTV Unplugged session that NiN did, but I'm sure it was awesome. Johnny Cash's cover of "Hurt" was great too.
- If music is as similar to software as you imply, and if the average software user really does not care about code, then please explain the profusion of video games with ersatz musical instruments for controllers.
If I pay for an open source application, I can do anything I want with it, including switch vendor support, support it in house and add anything I want to it.
"If music is as similar to software as you imply, and if the average software user really does not care about code, then please explain the profusion of video games with ersatz musical instruments for controllers."
That makes absolutely no sense. Most people don't care how music is recorded, and don't care that Trent releases it in raw form so others can remix it, neither do people care how software works, in fact they don't have the background to understand either. They just care if their stupid plastic guitar is working.
anyone who never got those deals and money- broadcast fame want to tell us how much they ACTUALLY made giving AWAY free products?
just more meme myths from cnet. OWNED by CBS.
Sorry, Trent, but Derek has you beat...
Nice try on the self promotion
http://newmusicstrategies.com/ebook/
But, I left the article thinking, "pfffffft, Reznor's model will never work." He's got a million times the recognition in music than the average musician. Even if he is making more money with this new model than he was with the old model of selling music in the industry, there's no way of knowing that it could be reproduced by people who didn't have the advantage of making it enormously big with the old model.
The case that it could be made to work, that's the article I'd like to read. None of this hand-waving over what someone who's already a celebrity has been trying to achieve.
http://www.musicthinktank.com/
Read through those a bit, see which small bands are succeeding and which are failing. I've been seeing this with small bands for years, excellent bands failing while mediocre ones succeed because they know how to promote themselves.
- by spais1 July 29, 2009 11:12 AM PDT
- There are loads of ways to make easy money online. I found free sites like
- Reply to this comment
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(12 Comments)http://theinternetcashcow.blogspot.com/
helpful when I set up my blog. If someone asks you to pay for their advices then its probably a scam.