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Paying for content and the honor system

At this point, I think paying for music is essentially based on the honor system. And as a lover of music, I’m happily paying my share for music. I pay for it in many ways right now – Rhapsody, Pandora premium, Spotify, Amazon and iTunes. In the world of music, DRM is dead. 

I happily pay for music although I can get it for free the wide range of free torrents or invite only torrent aggregators. 

In addition to paying for music and consuming it on the services I mentioned above, I rarely discover new music on those pay services. Instead I discover it on blogs, on twitter, on tumblr, on the hype machine and more recently on Ex.fm. Then, when I find a song or artist (or when they find me), I buy it. It’s an honor system and it works (recent example, I blog about a new album that I love and it leads to a purchase from a someone that checks out my post as you can see in the comments). 

It turns out that in our household we pay for a lot of video content too. We pay hundreds of dollars a month to Verizon for FIOS TV. We watch live sports when we can, and DVR a bunch every week. I usually get around to watching 1 or 2 shows a week time permitting. That’s about it. We are also loyal Netflix subscribers. It turns out we are also highly profitable for Netflix – I just returned 3 DVDs yesterday that was sitting in our kitchen for well over 3 months.

In August we were gone for 3 of the 4 weeks in the month. And that experience leads me to believe that video is quickly moving to an honor system business model as well. If I didn’t want to pay for video content we could basically replicate the content we purchase from Verizon and Netflix for free over the web. It’s available right now but it’s not legal.

Not only would that video be free but it’s much more convenient. The pirated stuff is available within an hour after the show airs on TV. There are cloud based torrent services that will transcode to .mp4 and stream beautifully to your Mac, iPad and iPhone. I can’t get that from my cable or telco provider today no matter how much I want to pay. 

But I’m going to continue paying for our video content. But in a world where “premium” content, like video, is moving to an honor system, the challenge is higher to deliver better user experiences to keep the economic viable for all parties.

(i wrote this post in a hurry. sunday night is my night to make dinner and I need to run and get my act together. But this post was in my head last week and I had to write it down. I’m sure I left out key points, so I’d welcome your comments and perspective and I’m sure it will allow me to clarify a few things. Thanks as always)