Once Again, Give It Away And Pray Isn't A Business Model

from the but-it-doesn't-mean-free-doesn't-work dept

There's an odd article over at TorrentFreak, which is usually quite good and reliable. This one starts out with a title announcing that Nine Inch Nails' Donation Model Doesn't Work for Most Artists. That's a questionable assertion from the very start, because Trent Reznor and Nine Inch Nails, for the most part, haven't used a donation model. Instead, Reznor has very much focused on using free as a part of a business model built around giving fans scarcities to buy. Yet, TorrentFreak falsely states that Reznor made $1.6 million using a "donation" model. That's simply untrue. He made $1.6 million by selling scarce goods.

The rest of the article goes on to show that a bunch of unknown artists on some file sharing service that asks for donations didn't make very much money doing so. That should bring out a "well, no duh!" from pretty much anyone. As we've said for years, "give it away and pray" isn't a business model at all, but that fact is hardly a condemnation of using free infinite goods as a part of your business model. The unfortunate opinion out there, often repeated by those who want to trash those of us explaining the economics at play, is that we believe if bands just put their music out for free, they'll make money. Thus any band that doesn't make money that way is an example that the model we believe in doesn't work. This argument completely misses the target.

First of all, there will always be some bands that won't be able to make money -- and that's because they're not very good. No business model will work if you're not that good. So, seeing a particular business model not work for some bands is hardly a condemnation of that business model. Second, if bands want to make money these days they need to do a lot more than just give away their music for free. They need to get out there and cultivate true fans, which means working hard to build up a serious fan base. From there, they can begin to put in place any number of business models to make money, focusing on using the free infinite goods (music) to sell scarcities of some sort (concerts, access to the band, special limited edition goods, the creation of new music, etc.). So, the fact that a bunch of bands that used a poorly thought out business model didn't make money from it isn't surprising. It's the way it should be.

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