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Smart-Accounts: Radically New Way to Use Money Online, for Selling Art and Information

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by John S. James, 2007-03-22

Summary

Online financial accounts could reproduce, creating “children” accounts that inherit their parent’s options and settings, for any number of capabilities provided by the server. Such “smart-accounts” could be born with hundreds of potential services, already customized in ancestor accounts and immediately ready for use. For example, newly created accounts could already be set up to sell downloads of particular music, videos, or other art and information; receive payment by various credit cards or other means; do business in each user’s choice of many different languages; let any account owner quickly set up customizable worldwide fundraising contests and games; do many automatic transactions under the account owner’s control; and restrict or allow such capabilities through permissions and other security settings.

These automatic accounts will pay sales taxes, royalties, charitable contributions, and other owner-authorized payments as sales are made, without human attention — send or receive emails, telephone calls, or paper checks automatically — save transactions indefinitely and provide up-to-the-moment accounting or other reports on demand — distribute personal, commercial, or public-service advertising targeted to people who like a particular song or other content — allow individuals to easily charge any amount including zero for receipt of email (for spam control, fundraising, or consulting) — and even negotiate prices and do routine business with other automatic accounts, without human involvement if the robots can reach agreement on their own.

For artists, smart-accounts will travel indefinitely through social networks as clickable, rechargeable, reproducing URLs, with no need for encryption no matter how much value they hold — generating income for the artist, fundraiser, or other owner as long as there is public or community interest. These traveling accounts will sell prepaid downloads, page visits, or other content access, usually in bulk to major donors/buyers/sponsors worldwide, who can share their access as they wish. Even end users with no account or money at all can click such an account to instantly pay the artists by the act of free downloading itself, with no need to ever register or log in — avoiding both payment-processing and social-class barriers. Sponsors will benefit by supporting the artists or a cause, creating gifts of free access to share, sending their own messages through social networks of their choice, and seeing their payment have immediate effect throughout the world — all in one. DRM will be unnecessary if sponsors can be found, as pirate copies must then compete against authorized free copies that do pay the artists, which fans will prefer. This system encourages sharing instead of criminalizing it — and pays the artists as well.

Account evolution: These accounts will reproduce through any number of generations, inheriting successive owners’ changes like mutations — allowing financial and other services to evolve in grassroots, community use, as the most popular services catch on and are modified further. In addition, any number of totally new capabilities can be added to the software at the server, even while the accounts are “live” in public use.

Easy Startup: Usually only the artist or other seller needs to use (or know anything about) a smart-account; end users will click to download free as usual, and buyers/donors/sponsors can pay by credit card, etc. as usual. Therefore this system will work for the first user, with no critical-mass barrier. Also, implementation will be easier because: this system is totally Web-based and compatible with almost all computers and browsers; the public can participate early; smart-accounts need never be “finished”; one server anywhere in the world can cross language barriers and support early users everywhere; and implementers can provide only non-financial services first if necessary (or limit money to nominal amounts), until they have thoroughly tested the system and received broad input and advice.

Financial transactions will be efficient, with an estimated processing cost under a tenth of a cent. Artists will set up global ecommerce through social networks with no initial expense and no more effort than starting a blog — and keep almost all the money paid for their work.

Next Steps: I have no proprietary claims for this design, and published it rights-free for anyone to use in open-source or other development. I am looking for colleagues, but do not need to be involved in any particular project.

Part I: Artists, Sponsors, and Prepaid Downloads

Instead of making every end user pay, sell sponsorships to anyone in the world, so most users can download free while the artist gets paid. (See “Incentives for Sponsors” below.)

Artists could sell one, hundreds, thousands, or any number of prepaid free downloads of their music, video, image, poem, or other work to a sponsor (often a major donor), who could then email or otherwise distribute a “smart URL” (Web link) giving the prepaid access to social networks of his or her choice. Those who like the work will be encouraged to share the clickable access link, and all downloads using that link will be free until the prepaid copies run out. Then (or at any other time) anyone who has the access link could replenish it, purchasing any number of prepaid downloads by paying additional money to the artist.

For example, if the artist set a price of $1. per download, and the average sponsorship is $50, then 98% of fans can download free while the artist still gets paid. It is easier to get one person to pay $50 than to get 50 people to pay $1 each. A $50 average should be doable, especially since sponsorships can be of any size, with big ones such as 5,000 downloads going a long way, while each free user only needs one of them. A few big sponsorships will mean that the average for all the rest could be much less than the overall target ($50 in this example). See the list of incentives for sponsors, below.

Since they can be replenished, these clickable access links can circulate indefinitely through social networks, as long as people are interested in the art or other information the link provides. The act of free downloading itself will instantly pay the artist (from prior payments by sponsors) — allowing even fans who have no money at all to participate, and materially support artists they like, both by free downloading, and also by sending the clickable access link (URL) to others who may be interested. The link will usually have free copies in it — and anyone who likes the work can support the artist by purchasing any number of additional prepaid free copies for others.

Artists will be able to sell their work globally in dozens of different languages — even if the artists, sponsors, and free end users are in different parts of the world. The payment-processing, music downloading, and other standard instructions will have been translated into all supported languages (see “International Sales in Many Languages,” http://www.replicounts.org/archive/archive2007/indy/index.html#languages). There will probably be no upfront expense for artists to distribute their work this way, since the more attractive business model will be to charge a percentage of sales. Artists will need to have an audience or be able build one through social networks, to reduce or avoid the need for paid advertising. These artists will keep almost all of the money paid for their work, probably over 95%, as smart-accounts service will be competitive and operating costs will be minimal. (For example, computer processing cost per financial transaction should be much less than a tenth of a cent.)

Sponsors could include a short message to be delivered with each download they paid for — giving them recognition or advertising, targeted to selected networks of people interested in a particular song or other art.

Note: for details of procedures and payment flows, see http://www.replicounts.org/archive/archive2007/indy/index.html.

Incentives for Sponsors

Why would sponsors pay for music, etc. downloads to be used by others? They will have many reasons, including:

  • meeting new business or personal contacts targeted through social networks attracted to particular art or information, and often reachable in no other way;
  • personal (they or their friends know the artist or the artist’s family);
  • political or religious (depending on the art of course);
  • artistic (supporting a certain art school or theme)
  • charitable (the artists are contributing some or all of the income to a public purpose);
  • business (giving clients and prospects gifts, which may also support a cause — and may carry the giver’s message as well);
  • creating gifts for personal friends, who can use them and still share them with others as gifts;
  • recognition of the sponsor in the social networks of his or her choice;
  • personal, political, or commercial advertising, as noted above;
  • knowing exactly what their sponsorship money pays for;
  • seeing a new addition to an existing, exhausted access link take effect immediately around the world, as the link that was not free a minute ago is now free everywhere;
  • seeing statistics on how their sponsorship is being used;
  • quantity discounts for large purchases;
  • social-network distribution (so major sponsors can routinely give away thousands of downloads, without needing to know thousands of people to give them to);
  • ability to take back money for unused downloads — or have it flow back automatically, if unused at any date and time of their choosing; and
  • sponsors may compete with each other to get their messages out ahead of rival sponsors’ messages (before an important election, for example) — creating bidding wars for priority that could greatly increase the income of the artists, who will ultimately receive almost all the money spent (bidding war or not).

Of course not all art or information can or should be sold through such sponsorships. But much can be.

Advantages of Selling Sponsored Downloads

  • Economic development. Artists even in the poorest countries and areas with no computers could sell their work this way in rich countries and worldwide — with a little help to record it, upload it, and find a core of an audience. If the contract gives part of the revenues to the artists’ community, everyone benefits.
  • No DRM. Usually there should be no need for DRM (digital rights management, meaning restrictions on downloads) and all the hassles it causes. Since one sponsor can and sometimes will buy thousands of prepaid downloads, and each end user only needs one, there will often be an excess of free downloads available. So pirate copies will have to compete against legitimate free copies that do pay the artist — easily promoted as preferable among the fans.
  • Powerful, flexible security. For example, clickable access links worth hundreds of dollars can be emailed with no encryption, and even published for all the world to see, because they can only pay the artist as intended (or be refunded to the sponsor if unused). The server controlling the accounts will never pay the money to any recipient not set up irrevocably in advance. (For more on security, see http://www.replicounts.org/archive/archive2007/indy/index.html#security.)
  • Receiving bank-card and other payments. These accounts can inherit the ability to have a third party accept credit cards, PayPal, micropayment systems, some alternative currencies, and some imaginary currencies from massively multiplayer online games. Any artist or merchant who gets a new account will already have these capabilities (if allowed), and immediately be able to receive many kinds of payment online.
  • Automatic payments. Accounts will be able to pay taxes, royalties, commissions, charitable donations, or other payments automatically, instantly as money comes in, if their owner checks a box on at the account’s control panel (dashboard), and provides required information like a payment account and percentage. (Every smart-account has its own control panel.)
  • Automatic accounting. Each account could itself keep all transaction records forever if desired, or until a chosen date or other sunset condition — and offer any number of different viewing formats, from traditional accounting reports to graphs to statistical business projections to multimedia displays. Account owners will not need to think about accounting in advance. Instead, an owner who needs a report could just ask for it at the account’s control panel, for any date range, and receive the report will be generated immediately. Account owners could put certain reports online for the public if they wanted to, for example in fundraising campaigns. These reports will always be current, reflecting transactions to within the last few seconds.
  • Sponsored Micropayment. Sponsorship with smart-accounts will allow very low prices if desired. Music, poems, articles, photos, videos, for example, could easily be sold for 10 cents a download, 5 cents, 1 cent, or even less than a penny. The low price only means is that the same sponsorships will go farther. The end user just clicks as if downloading is free, and does not even need to know there is a payment involved, let alone make any purchase decision (so there is no “mental transaction cost”). There will not be a noticeable delay if the accounting is handled on the same computer as the file download. Whether to charge a dollar per visit or download, five dollars, five cents, or less than a cent, is a marketing decision; the smart-accounts technology handles them all about equally well.
  • True Micropayment. This writeup emphasizes sponsored (100% subsidized) payment, because it means that the end user can just click to get a paid download (or other access) exactly like getting a free one, and does not need to have any account of any sort, or make any other preparation in advance. But if no sponsored access is available, an end user who does happen to have a smart-account can use it to pay, as an easier and less expensive alternative to PayPal, a credit card, etc. The same smart-accounts payment form that accept credit cards (mainly to buy prepaid downloads) will also have a space in which just one item, a smart-account name, can be pasted. The payer’s two major means of security will be (1) to deal with only a trusted server, as only the server and not the payee will see the smart-account name, and (2) to have only a small amount of money in the account, or have other irrevocable security options set, such as a small amount that this particular smart-account can pay each day. Note that a browser plug-in could check the domain name against a list of trusted servers, and warn the user about any other. The plug-in could also paste a default account into the smart-account field automatically, to save the buyer the trouble. And the buyer could even have the browser make certain small payments automatically, without any attention from the buyer (only if the buyer’s smart-account allowed them, of course), eliminating mental transaction cost. [In some cases (which we call robot negotiation), the accounts will negotiate prices with each other automatically, usually with no human awareness, and require a decision from the human buyer only if the robots do not reach agreement. Both robots (accounts) will have incentive to agree; the seller to get a sure sale, and the buyer to avoid troubling its owner. Most likely both parties’ negotiation strategies will be professionally written, and optionally turned on by account owners at the control panel.]
  • Easy startup, #1. End users will not need to have any account, know anything about this smart-accounts system, or make any other advance preparations. Instead, free downloaders will simply click, as with any free site — while sponsors use will credit cards, etc. as with any other ecommerce. Only the artist or other merchant will need to get a smart-account. This will greatly facilitate startup, as the system will be useful immediately even to the first artist who uses it — with no need to somehow assemble a critical mass of users before a new online tool is workable for any of them.
  • Easy startup, #2. The first smart-accounts server anywhere could offer smart-accounts service throughout the world, as long as volume is low. Later, different servers can be compatible (buyer on one and seller on the other can do business) even if not designed in advance for compatibility — as long as the organizations that run the servers can trust each other financially. Therefore smart-accounts do not need to wait until technical standards can be developed. Instead, different projects can just go ahead.
  • Easy startup, #3. Software implementation will be easier than it may seem:
    • Each account will be a record in a database, and account reproduction mainly consists of copying a record, and changing a few fields, such as the name of the account, and the amount of money it contains;
    • Since smart-accounts can add new services even while in public use, a server can start with only a few (which is easier to do). It will be adding new services indefinitely, in any case. Since smart-accounts systems will never be finished, there is no need to wait for them to be.
    • Smart-accounts can provide many useful non-financial services as well (the accounts never hold users’ money), so the system can be thoroughly tested before taking on financial responsibility.
    • The first smart-accounts server can be anywhere, and provide low-volume service in many languages throughout the world. Additional smart-accounts systems developed independently by other organizations can be compatible, as noted above.

Part II. Online Magazines and Journals

Today the ways online publications try to “monetize” themselves are pathetic. Much better is possible.

For example, medical and scientific journals routinely outsource themselves to corporations that charge $30 or more just to read one article, if you are not a subscriber — and only major corporations and the biggest, richest universities can subscribe to almost all the journals their users are likely to need. That money does not pay for the research reported; usually taxpayers do. Universities have to ration access that costs nothing to provide, and probably a large majority of would-be readers who are non-subscribers just do without — making the entire medical and scientific enterprise less productive, for no economic gain to anyone. Advertising can be OK or even helpful, but many ads degrade the reader’s experience — by deliberately covering up the text they are reading, for example, or by making readers watch an ad for a car or other expensive item with no indication they are interested or able to buy. One major U.S. newspaper addressed its readers (using their computers’ speakers) about their presumed problem with male impotence and need for an expensive pill. “Free registration” is also problematic, since the main point of the Web is choice among thousands of sources, and managing endless free accounts becomes burdensome.

Smart-accounts will let anyone in the world (who can pay online) sponsor whatever online access they choose for anyone else in the world, either for particular groups and networks of their choice, or for the whole online public. Universities, for example, could give donors a menu of projects they might support with library access. Some people might want to donate this way: helping the university, the students, the library, the supported projects, the publishers, and the authors, all in one — and they could add their name, Web site, or other short message if they wanted. Projects not supported this way will still have their existing options, and will benefit because more money will be available there. Access could be provided by smart URLs that bypass the library software — or could be integrated within a system that searches out the best way to fulfill each student or faculty request. In either case the user will just click and get the article as if it were free, and the publisher or author would be paid. And any library user could click to donate access to any class or project they chose — in case of a shortage, for example.

For access to general articles in magazines and newspapers, third-party companies could negotiate bulk rates with thousands of publications, letting readers buy measured access that could be used at any of them — avoiding the need for individuals to have a separate account for each publication that sells online access. This is already done and smart-accounts are not necessary, but they could help by providing a low-cost, standard infrastructure. Alternatively, publishers could accept smart-accounts from a particular server of group of mutually trusting servers, and readers could pay individually at very low transaction cost, by pasting a smart URL into a form on the publisher’s Web site.

Schools and others could raise money for article access or other needs by sponsoring fundraising games (see below), in which teams compete to raise the most money, probably most of it from major donors.

Part III: Other, Very Different Applications

Here are a few other uses to illustrate the range of possible uses of smart-accounts. We have published details elsewhere.

  • Fundraising games worldwide. The same smart-accounts could also manage global fundraising games in which teams compete to mobilize their major donors to raise the most money within a certain challenge interval — like the walkathon-type events but focused directly on large donations, and with no physical overhead. All funds could reach their final destinations instantly and in full public view, for transparency and accountability; for example, seconds after a credit card is charged, over 95% of the donation amount could arrive at the account of a relief organization on the ground in a disaster area, and be used immediately to order supplies. Once a good fundraising game is programmed into a family of smart-accounts maintained on a particular server, the technical infrastructure for a new worldwide fundraising campaign might be set up by one person in an afternoon, in a process much like starting a blog. Then organizations can focus on their people and on building constituency, and not be diverted into making the technology work. And the games will let fundraisers use competitive, deadline-based appeals, as well as need-based appeals.
  • Micropayment-supported Web sites. Some popular sites are now maintained by a dedicated expert and webmaster, at personal financial hardship. Instead, the site might charge 5 cents a visit; if there are 10,000 visits a month, that’s $500, to be paid by sponsors. Anyone could contribute any amount to sponsorship and open the site to free use accordingly; in this example $50 would pay for traffic for about 3 days, and sponsors could include their own short message if they wanted (it would reach 1,000 people in this case). If the nickels run out, visitors will see a page explaining the situation and requiring a donation of at least 5 cents to proceed — a minor emergency that fundraisers can use to help supporters pony up (especially since they can see the need for and result of their donation instantly, worldwide). There might also be a warning if the prepaid visits run low. Basically this system will give the webmaster a graceful way to insist that supporters need to help, as the site can no longer be provided by one person alone. (And if there are no supporters, then this system will have successfully highlighted another problem to address.)
  • Digital event tickets. The same accounts that sell music, videos, writing, journal access, and other art and information through free downloads could also provide paperless, fully digital movie or other event tickets. Each paperless ticket (a code or passphrase) could admit an individual or a group of any size arriving at the show either together or separately. Friends will be able to buy and share these digital tickets by mobile phone, even from inside the event if calls or text messages are allowed — for example, to admit friends who are waiting outside. An optional pricing and bidding system that ramps up very rapidly when seats are about to sell out could assure that seats will always be available, at a price. So those with the money to spend can just go regardless of whether the show is sold out, and pay whatever price is necessary to get in; theaters will make more money than now as they will collect part of the high bid price if there is a sale, and audience members who signed up could get a text message with the price before or after they enter the theater, give up their seats if they choose to, and make good money as well.
  • Digital collectibles. Also for fundraising, archival smart-accounts could record donations of money or volunteer time to organizations or causes that may become historically important later — in which case the donation records (authenticated by account access and displayed publicly if the owner wants by clickable access links) could have value as digital collectibles. Therefore routine donations (of money or other support to an important organization, especially if its importance is not recognized at the time) could become personal investments for the donor as well, creating an entirely new incentive to give. Digital collectibles may seem implausible, but they will have scarcity, as well as historical or entertainment value. And they already exist, at least for children’s trading cards; see http://www.tokenzone.com/, where you can collect Harry Potter, cartoon penguin, and other cards. Unlike the old bubble-gum trading cards I grew up with (baseball players, state license plates, etc.), digital collectibles can have video and sound attached. Organizations can tell the story of the campaign for which the donation is used, including short interviews with participants, and information that may not be otherwise released to the public. In some cases, donors could have exclusive or shared-exclusive custody of the only copy certain information; they could choose to release it publicly, release it to a closed group, destroy it forever, or do nothing, preserving the choice for later. The point, of course, is to provide new, additional incentives and motives for donating in the first place.
  • Spam control. Since smart-accounts can receive and forward email, individuals will be able to use this system to charge for receipt of email to a special address — perhaps a penny per email from strangers not on a white list (to stop most spam), a dollar or more to receive donations for a cause, or any amount offered to an expert as a bid for grassroots, spot consulting. Correspondents can pay by any means, and get codes to include in their emails to these special addresses; one code could work for all such email addresses handled by the server. These codes will be restricted to pay only for emails, and owners can set limits such as number of emails per day and maximum amount, to control abuse in case spammers get someone else’s code. Also, stealing someone else’s code and using it to spend their money would be clearly illegal — an additional tool for spam control.
  • Restaurant rating. Smart-accounts could include a service allowing restaurants to instantly self-rate their good and bad days by phone, so diners could check the Web or call an automated phone number for the rating, and arrive only for the best food, and not when a key person is sick or something else has gone wrong (and the restaurant might want fewer customers anyway). The accounts will report grades “on the curve” — so if a restaurant rates itself best every day, diners will soon see it rated average every day. Unless the immediate need for money is desperate, it will be in the restaurant’s interest to rate its quality truthfully. This little innovation could improve food quality, and overall experience of both the diners and the staff, with no down side. Note that this is a non-financial use of smart-accounts (as the accounts never need to hold money). These accounts will have considerable infrastructure to offer, only some of it is financial.
  • International language experiment. It would be fascinating to explore what could be done with very simple systems for universal online communication regardless of language — to get the low-hanging fruit, with no attempt to be able to communicate everything. We already have the ten digits in common, and some standardization on pictures, such as symbols for some public signs. Some tourist concepts are partly standardized, like taxi and hotel. A few other symbols could be selected for emotional states, or for standard common dilemmas that people deal with — based on cross-cultural research such as studies of facial expressions, or emoticons in common use. Standard thumbnail photographs or representational drawings could convey other ideas. Cross-cultural studies of conversations could offer leads to other meanings that should be included to make conversation work well. A handful of grammar rules would be included (designed to be easiest and most familiar to most people). And where no existing picture or international symbol could work for a needed concept, a word or phrase would be selected by the team in each of several major langauges, to thoroughly specify the intended meaning; then volunteers could use those examples to write each similar word or phrase in another language that volunteer wanted to support. Such a system could be an optional feature of any smart-accounts. End-users would select the language of their choice ( see “International Sales in Many Languages,” http://www.replicounts.org/archive/archive2007/indy/index.html#languages). A printed palm card could label the pictures in each language — for beginners, and also for face-to-face communication by pointing when no computer is available. The goal would be a simplified, computer-assisted international language, especially an emotional language, that people could pick up and learn to use in an afternoon.
  • Response to events. Owners could use the control panel to instruct a smart-account release messages, money, or public information in the future, either at a given date or time (such as January 1, 2021), or in response to personal or world events (such as five years after the death of the account owner — or a century in the future — or one month after a nuclear war). Smart-account owners would buy these services by contributing to an endowment to maintain the accounts forever, to the extent possible. Only certain contingencies would be available for testing by the accounts, as it would cost to maintain forever a secret, redundant team that would resolve ambiguities, follow agreed procedures, and update the server accordingly. (It should be secret to avoid undue pressures on members.)
  • Education. There’s a lot of push to teach schoolchildren about business and investment. With smart-accounts, they could invest their pocket money, maybe from five cents to some maximum like $25. They could invest in a fixed-interest account actually offered at a local bank, an index fund, Euros, gold — even some derivatives, like calls. They could move their money online between investments — either at no cost, or at a cost selected for its educational value. They could put in or take out cash at certain class banking hours, and have complete records of all their actions and results. While an investment of five cents might take a long time to reach six cents or four, every child could also see results of their actions for a standard imaginary investment of perhaps $1000, to show changes in value more readily. For both the actual and imaginary investments, the managers of this system would enter the real prices at least once a day, and could hedge in financial markets to protects themselves if necessary, against loss due to fluctuations in the cumulative investments of thousands of children.

All these uses could be done without smart-accounts — but much better and more easily with. Smart-accounts will provide a uniform, compatible financial infrastructure, payment-processing, accounting, and user interaction for all these applications. Smart-accounts will also offer a steady stream of new applications, as they are programmed into the server in response to public demand, even while the accounts are live in public use. Once the application somebody wants is available, setting it up (at an account’s control panel) will be much like setting up a blog. Then the new account can be open for business around the world, with payment-processing instructions in dozens of different languages. Probably there will be no upfront cost at all to get a smart-account with all these services available. Instead, a small percentage will be charged automatically as sales are made and money comes in.

You can ask questions and I will try to answer them.

Part IV. Money, Poverty, DRM, Audience, Superstars, and a Path Forward

The U.S. and most other economies are failing to provide a comfortable, dignified life for more and more people. As the title of a book on youth crime said, “murder is no accident”; and it seems that poverty is no accident either. Human societies tend to have outcast roles and force many people to fill them — a major factor, we believe, in some of the greatest public problems, including war, poverty, racism, crime, and the prison state. In most of human history such pathology was driven mainly by resource scarcity; but today poverty is largely engineered, even in the absence of scarcity. Ultimately the most productive interventions may start with an understanding of why there is not enough dignity, respect, and money to go around. What is this process that demands outcasts and human sacrifices of various sorts? What are its rules, what can we do with them, and how?

Part of the issue involves the creative community, especially popular art and entertainment. Most popular arts are afflicted by a superstar system where a few public figures get fabulously rich, while most who are equally good cannot make a living at their work. Part of the superstar dynamic seems to be almost mathematical, a function of the average audience size. Only a limited number creators can each be known to tens or hundreds of millions of people; many more are constantly competing to get into that circle, so the public mind space is filled up with as much stuff as cadres of smart, committed professionals can jam into it. Mass culture is pushed further by mass personal communication, as people throughout the country and soon the world are talking with each other routinely over great distances, and need common characters and events (real, fictional, and mythical) to talk about. So local culture increasingly loses out.

One way to advance is to find alternatives to corporate publishers, who strongly push the superstar model. Increasingly the central goal of major publishers is to get best sellers, where the corporations will make most or all their money. Everyone else is most likely a throwaway, a financial loss once it appears that they will not be a prized best seller.

We believe that a main driver of the superstar system is an unhealthy approach to “intellectual property” — which has a baleful influence for reasons that may not be obvious at first. Today, in the U.S. and wherever its empire reaches, someone who buys a commercial song or book usually has no good, legal way to share it with friends and associates who live far away and who might or might not be interested. If they are on an email list of 50 people around the country or the world, of whom maybe 10 will be interested but there is no way to predict which 10, they could ask everyone for their physical mailing address, buy up to 50 books or CDs and mail them all; 40 would end up unused, a major waste of effort. Or they could mail their copy to a friend, who would listen and mail it back — too much hassle to happen very often. In short, there is no good way for music especially to spread horizontally by word of mouth, except in special cases like within a family, or a carpool. In most communities, even when people are together in a restaurant or most other public places, they can seldom play their own choice of music there. Note that the cultures more tolerant of boom boxes are generally the ones that care more about music — and that music does develop significantly in local scenes, with different styles frequently named for different cities, because within a city people can much more easily hear music together, in clubs or sometimes outdoors.

Otherwise, the law strongly discourages most word-of-mouth about music, the most effective kind of selling (because it’s hard to tell people about a song they have never heard) — except in one case. Once the artist is a star, and the music is heard from radios and everywhere, then fans can discuss it with their friends, who probably will have heard it by then. Grassroots word of mouth becomes available for promoting stars — while for artists starting out, it is unnaturally blocked. So usually the only way to be commercially successful is to be a best seller. (“Cult” fandom alleviates this problem somewhat by creating separate worlds that can have separate stars. Still there are not nearly enough roles to just sell well, and earn a middle-class living as an artist.)

Smart-accounts music and other digital-art distribution will strongly encourage sharing, instead of criminalizing it. Sharing the smart URLs will only help the artist or publisher (whether or not they contain any prepaid downloads at the time). The person who wants to share with an email list of 50 will be able to buy a new smart URL with a few prepaid downloads in it, and easily email the URL to the list. Those copies are first-come-first-serve, and if they run out, anyone on the list can buy and add more — or buy them and put them into another new URL for their friends only. Word of mouth, the best and most natural way to sell, will return even on a small scale.

This grassroots distribution system will have more paying roles for different artists than corporate entertainment does. There will still be superstars, because of the mathematics of public attention as noted above. But independent artists will find much more middle ground to develop a paying audience of dozens, hundreds, or thousands. Artists will have more opportunity than today to make all or part of a living. And art can develop more deeply within social networks, outside the confines of corporate monoculture.

Part V. For More Information on This Project

Part VI. Related Links

  • Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity, by Laurence Lessig, 2004, http://free-culture.cc/. Also see the international student movement, FreeCulture.org, http://freeculture.org. And for a list of some of the DRM music incompatibilities as of November 2005 (often wrongly described by the companies’ customer support), see “The DRM Grinch Who Stole Christmas” by David Berlind, http://blogs.zdnet.com/BTL/?p=2157.
  • “Hear No Evil,” The Economist, September 15, 2005, http://www.economist.com/displaystory.cfm?story_id=4368092 Good article on Magnatune, http://www.magnatune.com, a new kind of record label; you can listen for free with high quality, and pay to download a copy. (Unfortunately non-subscribers can no longer get access to The Economist by watching an ad for a car. If smart accounts were in use, The Economist could sell me any number of prepaid downloads in a “smart URL” to share with my readers, who could share it in turn. Any recipient who wanted to could keep the chain going by purchasing more prepaid copies for that smart URL, or a different one — and could communicate with those who used them free. All parties involved would benefit.)
  • The Future of Money: Creating New Wealth, Work, and a Wiser World, by Bernard Lietaer, January 2001, paperback January 2002. The author is one of the world’s leading experts on money. See reviews and continuing discussions online, especially discussions at Transaction Net, http://www.transaction.net/web/conf/confintro.html.
  • “Game Theories” by Clive Thompson, The Walrus magazine, May 2004, about the work of economist Edward Castronova on the real-world value of the assets in EverQuest — a game with over 450,000 players in 2004 that, if it were a country, would then have ranked as the 77th richest in the world. http://www.collisiondetection.net/mt/archives/2004/05/game_theories_m.html
  • “Micropayment Systems: Giving Your Two Cents, Digitally,” on Joe Kissell’s Interesting Thing of the Day, at http://itotd.com/articles/376/micropayment-systems/.
  • The Gift, by Lewis Hyde, 1979, Vintage 1983 — classic book on the many roles of gifts in human societies. Also see http://en.wikipedia.org/wiki/Gift_economy.