Selling Digital Goods on The Internet – The Embedded Experience of Giving Google Money (Or, Your Eyeballs For a Song!)

I was going to write a new song, and the first line was going to be:

“If you want to Google Google, all you have to type is Goo …”

But then I wrote this instead:

HOW TO MAKE MONEY: FAILURE-TARGETING

There are two big trends in Internet commerce that are actually completely new sales industries, made possible by the Internet – selling digitally-reproduceable things on the Internet, and teaching people how to sell digitally-reproduceable things on the Internet, based on a high failure rate.

The scenario is unique, and with a magnifying glass amazing. Ecommerce, the digitally-distributed part of it, has been created by Google, almost effortlessly, gracefully catching a fumble by Apple.

MONETIZATION, FAILURE NUMBER ONE

Information, music and video encompass a lot of what we’re talking about, what’s digitally-distributed, the digital “varieties,” like a digital file of a song. It’s a lot of stuff that could be sold.

As we watch over the past dozen years, though, it hasn’t been sold exactly as it looked like it would be. People never stopped downloading things for free. The model became too stiff with embedded IPR everywhere, to the point you felt like you were being watched while listening to a song, and Apple became famous for poor reliability in the cloud. But Apple was also watching the wrong ball. At least with music, iTunes never had a chance.

PEOPLE DON’T PAY FOR THINGS ANY MORE

In the digitally-reproduceable-product world, it’s a problem that people don’t seem to respect intelectual property rights the way the rights-holders would prefer they do. People steal stuff all the time. The proving ground became, in hindsight, Youtube, where flocks of young music-search-experts knowingly plugged in their favorite song’s name, and Google came back with a result from its subsidiary, Youtube, and the pathway to Apple was quickly extinguished when the song was served up in all it’s “who-cares-fi” glory, usually with no actual video. It was go to Youtube for your music, and find it. All done.

Through this seemingly-unintentional process Youtube simply outflanked Apple by stealing everyone and giving them the music for free. This went on for so long (over the past few years) it became quite a big deal, and was encased in an additional layer as Youtube began monetizing through the music videos, no matter who uploaded them, on behalf of the musicians and others involved. Invisibly. It was such a fantastic solution for the musicians, who were now going to get paid for Youtube video hits, there would have been no way to counter this momentum even if a “charge-me-for-music” entity like iTunes had tried to flex its muscles.

Through the enormity of the Youtube user base, and their preference to get the music for free, tolerating Google’s inventive advertising styles, the entire music industry took a swipe, like an enormous baseball bat knocking off its pompous hat.

Not even Google saw it coming, but the graceful incarnation of the new digital model (selling nothing, making money with eyeballs), and it’s apparent immersion and acceptance by the world (come-on, try to cause an argument against free music on the Internet!), says enormous things about the power of advertising.

THE MORPHING OF PRODUCT TO AD

The trend is for people to not buy things. In the sense of Internet sales of digital-based goods, like music, video and web site subscriptions. Maybe we should call it the Napster curse. With the increase in quality protection of IPR (Intellectual Property Rights) in recent years, so products can’t be shared (in real life terms), I think the world was expecting things to balance out – so we’d be paying for plays. And some people do.

If you are one of those people who pays for television, music; buys dvds or cds and pays for downloaded tracks (a lot of people do these things, especially baby-boomers-and-up, and higher-income people) – you might be surprised at how many people don’t, how easy it is not to pay for any of these things, and how the industry has carved out a niche (mostly courtesy of our friend, Google, a very smart company), and not simply scolded and policed. The Apple-led philosophy of strong IPR didn’t pan out. At all.

PLEASE BOW YOUR HEADS AS THE CREATURE ENTERS THE ROOM

You Tube. It’s actually, cleverly, just one word, YouTube. Cool, huh?

Goo Gull. Together they are one big monster, already having pushed aside the entire Amazonian jungle and targeting new planets.

The Google revolution is underway. This time it’s being done very smartly. The way the entertainment industry (music and video) has embraced the blatant disregard of property ownership (by a new generation of customers who have grown up believing “they can”) and instead of “tightening down,” which would be a bigger disaster, I think, they just laid advertisements carefully on top of it. Problem solved. Proven model.

That’s the one difference. I think we learned.

The first time Google Googled us we were taken by surprise, so swept away in awe of the company’s initial rise to industrial and financial prowess, and for awhile … we could have forgotten the only thing gleaned – the lesson learned. But that didn’t happen. The new system, advertising without making people hate advertising but even making them appreciate it – works.

It’s really amazing how – One, you don’t have to pay for anything.

Two – The reason is because they gave up trying to make you.

If you haven’t given it a try, google a song you want to listen to. Spotify and services like that will play it for you, with maybe some ads but nothing to pay, and YouTube probably has it. If YouTube has it, there you go.

But I thought YouTube was a video site! We were looking for a song.

But it’s free!

OKAY!

HEY, DON’T FORGET ABOUT ME!

In conclusion, if you’re a seller, I think you should, first, be aware there’s a high failure rate selling your digital things, in general, on the Internet. But it might not be your fault if your thing isn’t selling, just a problem with the way you’re thinking about it. You’ll have to think about giving it away for free, just taking money for events, t-shirts and peripheral sales, and Internet eyeballs.

MORE TO COME

I’ll continue on the major ways to make money on the Internet, probably tomorrow. I can’t promise I’ll tell you how to do anything of the sort, but the ways other people do it is always interesting. One of the focuses of this short ongoing series is “Failure Targeting,” demonstrating how targeting people who are failing is endlessly fruitful for creators, and how advertising, the way Google does it, seems to take money out of everyone’s pockets at once without ever asking anyone to do anything!

During the series we’ll get to “follow the gold nugget,” and watch who makes money in different scenarios. This will strongly support your thinking about exactly what your actual profession is. It’s a wide-eyed zoomed-back look at where you need to be to intercept the money. it’s not where you think sometimes, and Google is often the agent representing both sides in every transaction. This is why understanding the overlay of advertising, and how it changes your product, makes it worth considering changing your job.

To advertising!

The next article will talk about why your content needs to be great!