Learning with the Fang

The Karma police are on the job making sure I suffer for missing my part in episode 42 of the Extraordinary Everyday Lives podcast (serves me right for being a petrol-head I suppose). The discussion around the Grooveshark business model was a ripper. As always, Dave was right on the money when he began talking about ‘network effects‘ - those systems/models that get better as they get bigger. It did not come out clearly, but Dave was having one of his prophetic moments when bemoaning FaceBook (and other big, centralised, do everything here, walled garden, monolithic sites) while noting that some aspects of Grooveshark get better the bigger the ‘network‘ becomes.

Had I been at my microphone, I would have tried to steer the conversation toward clarifying and exploring just how network savvy business models can be. To me, this is the key for future success in the post Web2.0 era - figuring out how to make revenue streams that grow with the network as the value of digital content heads toward zero. The people who figure out how to do that AND sustainably grow a network are the ones I want to invest in.

So what is Grooveshark and what’s so clever about its business model?  Based on what I heard in the podcast, a little intuition and bugger all research it would appear to be a peer to peer (p2p) based music sharing network that collects and distributes money in the fairest  and most legal way it can. The basic idea is to promote commerce around sharing of DRM free .mp3 files of any music - yours, stuff you have purchased, stuff you have stolen, anything!  Sounds weird an even wrong, until you think about it from a couple of perspectives:

1. Music from the ‘old industry’ - you know, the stuff produced by musicians who are under contract to the middle men who are losing so much as digital music and the internet combine forces in the age of the read/write web.  Grooveshark provides an interesting collection service that reminds me of shuffling deck chairs on the Titanic. Providing a service that collects funds from the very activity undermining the ‘old way’ (the destructive-creative force of the ‘new way’) and returning some funds to the vast array of middle men, labels and collection agencies is interesting. Providing they do a good job of this messy work it is a valuable service. It does get better the bigger the network gets BUT it loses out as the value of digital content heads toward zero.
2. Music from the ‘new industry’ - still forming and somewhat undefined, where any kid with talent and $1000 worth of equipment can record, produce and distribute their music. (the stuff my kids do). Here the big challenge is getting noticed. Providing zero barrier to entry platform for collecting funds for the sale of .mp3 files is a start. Finding a way to promote artists as they raise funds from live gigs, intimate services for fans and merchandise of things made from atoms will be key to the future. This model leverages growth of the network and is insulated from the inevitable decline of the value of digital content.

Well done Dave and Kent for finding Steve Spalding and getting him on the show! While I am sorry I missed it, I’m encouraged to see the EEL model working - our network is growing and our connections are becoming more intimate.

Fang - Mike Seyfang

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