Eepybird - the two man team behind the diet coke and mentos viral videos claim they lost tens of thousands of dollars in revenue due to their videos being posted on Youtube and other sites.

We are on the precipice of a revolution - though it’s something of which we are scarcely aware. Part of our ignorance stems from its obscure potential, but revenue sharing will be something that will come to dominate the very minutiae of our lives -whether we like it or not. The idea, in a nutshell, is that all parties involved in shuffling traffic around this grand internet highway of ours will be given a cut in the revenue. At first glance this doesn’t seem like much of a big deal - but it will be the catalyst for massive social change. It will be the enabling condition for millions of ordinary people who suddenly gain access to an income stream that never existed before. But it will also be the cause of great social alienation - the likes of which we’ve never seen before. The question then, is how will we deal with it once it comes? How can we make the most of it as an opportunity - without selling our souls in the process? This will be the first in a two part post that examines first the nature of the revolution, and secondly the potential impact this will have on us as a society.

First of all we need to identify what is going on and why this is a truly revolutionary step. To do this, we must first recognise that revenue sharing in its most basic form is not a new idea. An artist that produces a piece of work, who then gives up rights to that work to a distribution and marketing company, was always given a share of the resulting revenue. It was never very much - and many an artist has been screwed out of the true value of their efforts - but the principle of revenue sharing has been in place for a long time. There have been other methods for remuneration as well. Content producers sometimes accept paid roles as members of staff; sometimes they work in a freelance capacity and accept a static payment for the work produced. But for the artist who believed in the mass appeal of their work - the revenue sharing option was always the golden path of hope for it had the potential for the greatest reward.

In the context of the internet, however, revenue sharing, in general is considered both new, and relatively untested as a business model. Those sites that have adopted it have largely struggled in obscurity in the shadows of their non revenue-sharing cousins. I’m thinking of the difference between a non-revenue share site like Digg or Reddit, verses an upstart Digital Journal or Newsvine. This is largely because of the way the web 2.0 phenomenon has developed in the last couple of years. The idea of user generated content seized the collective imagination of a nascent community - but only because it had for so long had its choice of content dictated to it by the oligarchs and the cultural elite. The community embraced the opportunity to self determine the choice of content - and did so without expectation of reward. Secondly, there is a pervasive philosophical belief underwriting this contribution to the effect that remuneration would spoil the purity of the expression. With people contributing for gain - they would do so on the basis of what earned them the most money, not on the basis of what their heart of hearts dictated to be the quality content.

It was on the basis of this massive homogenity of human spirit that the likes of Digg, Myspace and Youtube have come to power. This in itself is an extraordinary thing. In all other previous contexts, the thought of contributing content to a corporation without some idea of monetary reward would be considered laughable. One could imagine the difficulty of imagining it possible as a business model - before it happened. So all kudos to those guys for thinking of it. Who would have thought that people en masse would give the content to the corporations for free? I certainly wouldn’t have picked it.

Recently, however, Chad Hurley from Youtube recognised that revenue sharing for the users was inevitable - and that youtube would be moving to that model in an undisclosed time frame. Once a major site like Youtube adopts it - it will be a short space of time before it’s the standard model for web 2.0 companies.

But this fact in itself isn’t revolutionary. As I said above - the fact that artists are considered worthy of a cut of the revenue isn’t new at all. It’s just new in the context of the web 2.0 phenomenon which in its evolution is somewhat aberant. Note also that bloggers have been revenue sharing with Google for years now - via adsense. But somehow this phenomenon got past the philosophical scruple mentioned above - for some reason this was okay to do - not a sellout as such, while revenue sharing versions of Digg were considered potential link spam havens.

So what is revolutionary about all this? There are two aspects. The first is obvious. It’s that with web 2.0, the points of distribution become considerably more accessible to people than they were before. Anyone can upload their content to Youtube - anyone can set up a blog on Blogger. Previously, media distribution companies had complete control of the content that made it out to the masses - so you had to get in with them to get your content out there. Now the game has changed - and the means by which one plays this game is an essay in itself that I’ll leave for another time.

The second aspect is more subtle - but will nevertheless be considerably more determinative in terms of the great change this will herald for all of us. After all - the first aspect is just a change of scale - it’s not new as such. People have been making money from their content for centuries. What IS new is the fact that individual people will have some measure of control of the means of distribution itself - and the fact that they now serve as distribution points will now entitle them to a share of the revenue - regardless of whether they are the creators of the content.

Does this sound unlikely? It’s not. Think about what a point of distribution actually is. An easy to imagine example is a movie theatre. It’s a point where the content is connected with the audience. It’s not to be confused with the distribution method. The distribution method, as I am using the term, is to be thought of as the film on which the content is stored, the couriers that physically deliver the film to the distribution points (i.e. the movie theatres or DVD rental outlets, etc). Now in our internet age, the distribution method is the set of cables, pipes, routers and servers that send and receive the data. But the points of distribution are almost infinite in their variety. A simple link, posted by 15 year old in a forum, is a distribution point. A video display page on Youtube is a point of distribution point. An embedded video on a blog is a distribution point. A link posted to Digg is a distribution point. They are all distribution points - individually not often amounting to much, but collectively they drive the great hordes hither and thither across the net.

This point hasn’t been sufficiently appreciated. Nor have the business models emerged to fully exploit it - but they will. The rationale behind it will be this - look, you wouldn’t expect an old-style distribution business to do it for free, so why should individual people? Net neutrality is essentially a battle over the distribution method - but what I am talking about here is the means by which the distribution points and the revenue they create are controlled. Various old guard elements will resist giving the value over to users created by their efforts. Digg is already to be considered old guard in this respect. They are trying to hold on to revenues they can’t possibly expect to retain.

But why am I so confident this will spread? After all - there is that philosophical scruple I mentioned above that has so far been effective in causing such practice to be viewed with suspicion. Also there is a general confusion in the community that causes them to equate distribution with stealing - so when a video from Youtube is embedded in a blog, it’s considered a link jack (Reddit users are notorious in this respect), even though the author has enabled the function in youtube (and can disable it if they choose). But once processes are developed which ensure that the creator, distribution point owner, distribution method controller (i.e. telecommunication companies and the like) - all get their cut, all these concerns will become moot. The corporations will stall for as long as they can so as to ensure their greatest cut - but like the debacle of their response with respect to the Youtube phenomenon, they will be forced to follow the crowds.

What will happen is this - someone will develop an application that allows the creator to determine the revenue cut to various distribution points. It will be easy to use, and empowering to the user. A natural competitive environment will favour those that offer greater rewards to distributors - and so those that offer the most rewards will be most likely to gain distribution for their content. Incumbent distribution points will either embrace the model or lose out. Corporations will rely on massive marketing budgets to maintain their presence as central distribution points - but even they will come to adopt it as a distribution method as it will prove cheaper than traditional methods (though they’ll try as long as possible to get the service for free as they have been doing currently).

The philosophical scruple that has held it back will be swept away by a new generation that will see itself entitled to the share of revenue that it creates. All it will take is a savvy web 2.0 company that manages to package the idea in a way that gets across the underlying empowering fact of the change.

And it will be empowering - vast revenue streams that once flowed directly to the corporations will now flow to the people. But it will also be devastating - totally re-arranging our ideas about marketing, distribution, but also the means through which we relate to one another as individuals. The scope of the change will be profound. It will indeed be a brave new world - to use the Aldous Huxley title.

In my next post I’ll examine the possible effects of this revolution and show why they will be so dramatic. You can read this post here: