Joi Ito's Web

Joi Ito's conversation with the living web.

Last night I went to see fireworks. There were approximately 22,000 fireworks ignited and an expected turnout of about 320,000 people. You could pay 30,000 yen (around 300 dollars) and get a special seat as a sponsor. Otherwise, you could, like the 320,000 or so other people, find a nice spot and watch the fireworks for free. In fact, there were two other fireworks festivals (Japanese love fireworks) going on within view of the nice spot in the park that we had chosen.

Fireworks shows in Japan are sponsored by companies and local governments. The sponsors usually get the best seats and they are thanked over the PA system for the people watching the show up close. For 99% of the people who watch the fireworks from far away, the sponsors are invisible. These people are, to use Hollywood's favorite word, "stealing" this content. They don't view ads, they don't pay. They do consume a lot of beer, buy stuff in local shops which pay taxes and generally feel good about the "public good" they've just been a part of. Like me, they take pictures and videos of the fireworks and post them to the web and send them to their friends.

I wonder if there is some sort of equivalent business model for other content businesses. Charge a small number of people a large amount of money and give it to 99% of the people for free. Get sponsored by companies and other organizations like local governments that benefit from the secondary consumption increase and follow-on derivative works creation and sharing.


Isn't broadcast television that business model? Or Public Broadcasting in the U.S.? Or the "controlled circulation" trade magazines that are mailed free to qualifying "subscribers." Or, what about the magazine "pass-along" practice that generates 5-6 additional readers for every magazine "purchased"? Or the magazines one reads in a doctor's office -- and not just the old ones? Or free concerts in Central Park? Or public libraries?

Well, I've heard the ability to skip commercials on TV called "theft". I think the point is that with broadcast TV, you have an assurance to a certain degree that the viewer will see the commercials. You don't have that assurance with fireworks.

I think free concerts in Central Park and others are more similar, but I've never been to one so I don't know. But I guess the question is whether they are sponsored and whether such sponsorship is tied to strong advertisement.

I think this model is fairly close to what most non-profits engaged in teaching the public anything do. While there are lots of efforts to promote sponsors, I'm sure that there are lots of people who consume the content without ever noticing the sponsor announcements.

It's called "Advertising". There are now firms which will sell advertising on your web site or your blog, for a commission of course. It's the same model used by most print magazines. And it is priced the same way: CPM or cost per thousand impressions.
And those whow were watching the fireworks were not "stealing" content. The sponsors were giving it away.

For the good will it would bring them.

Francis, my point is that 99% of the people who watched the fireworks have no idea who the sponsors are. When I did/do advertising work, it's quite important to make sure that the audience knows who the advertisers are. I think the sponsors of the fireworks are not working just from "impressions" or branding.

Right now there is a range that starts from revenue share, click thrus, banner CPM, sponsored sections for branding, etc. But most "advertising" models don't involve 99% of the audience not knowing that you exist.

Could be the real point is that some companies are giving away those expensive seats to wealthy shareolders and investors and it's more important to, say, impress a few wealthy clients than a crowd of thousands. The same thing goes for companies giving away executive box seats at sporting events to a few wealthy investors or to lure in new contracts, etc. It's not that the brand name is there for the majority, it's who they're catering to.

i'm here cos i heard'f u on npr, the last honest source'f news.

I've seen plenty of massively multiplayer online ganes with an almost similar model. Many people play for free - so there are players around when the paying players come. These free players are usually exposed to many advertisements. A medium (not small) number of people are charged a medium or small (not large) amount of money, they usually see no advertisments and have an advantage that might be trivial or else signifigant in the game.

This sponsorship business model is already being used to some degree in the movie industry in the US. Corporations and governments will sponsor or provide tax breaks to movie producers. The question is does the sponsorship for this content cover the entire cost of production plus margin? If it does then great, everyone else can get it for free since it already made money. With that said, in the US capitalistic system, the desire is always to make more. So even if sponsors pay for a good portion of the production, the studios will still try to get the public and viewers to pay something for the content. That upside pushes the total revenue production higher, making more for the content producers. As an investor I am sure you appreciate upside.

Wealthy patrons have always been encourage to sponsor the arts. This is a kind of philanthropy. The addition of a commercial rationale for sponsorship in terms of reaching a desired number of people or gaining some advantage in terms of adding to the brand equity by association with the art. It is a continuum- total philanthropy to total commercial promotion with a lot of space in between. In the case of the fireworks - clearly it fits near the middle but on the philanthropy side of the continnum. The public is not stealing the content. The firework promoters made a choice to establish the event with an understanding of the revenue model. Likewise the sponsor decided to be a sponsor with a clear understanding of how the event would acheive its commercial and philanthropic goals. Sharing is great but it should not be forced upon the intellectual property owner by society. If an intellectual property holder wants to share their intellectual property as a philanthropic act, then that is their perogrative alone. If they wish to share their intellectual property on an open, free and commercial basis, they may choose a sponsorship model.

Burt, yup. I understand the upside. I guess what I'm groping for here is some sort of argument that says it's better in the long run not to try to maximize short term profits by trying to take everything you can, and that the 99% of the people who get a free ride provide some benefit that isn't immediately measurable to sponsors. I don't know if this is an example of it. My point is, that the organizers of the festivals could 1) try to make advertising more visible and turn the 99% of the people into "eyeballs" for advertisers, they could try to organize the festival in a way that forced people to pay more, 1) shoot fireworks lower to decrease range, 2) take over all parking space and charge a fortune...

But maybe this is a rathole. It could be that this is another example of non-commercial, old-fashioned Japanese tax money waste. ;-)

Promoting the arts and entertainment sector is a goodwill builder. It does not matter if everyone hears of it as long as some do. You are an expert on creating "buzz', so this should be very familiar to you. I would be willing to bet that those who sponsored the fireworks display also sponsor a lot of other things of a similar nature. This goes beyond building the brand to giving something back to the community. It makes people feel good about the sponsor and makes the people who work for the sponsor feel proud of the firm. That makes it a good responsible investment, but it has little to do with 'content". You are speaking of a one-time performance which will never be exactly replicated, not a digital file which can be retrieved again and again. The value of each is in the eyes of the beholder and the the fireworks display is a social or collective good rather than a product -- so the analogy breaks down. When I lived in Frankfurt in 1970 I did production photography -- live, available light work-- for one of the German road companies of "Hair" I had to see sixteen performances to get everything...and no two were exactly alike. One of the aspects of copyright is that the content is in fixed form and can be perceived. Perfomances can be registred for copyright only by making a fixed record of one of them. This too is a product. But if you were to make a record of the fireworks display, it would not quite have the same sence of wonder and joy of the original. Note also that evryone would have a slightly different perception of a simulatanous event. A shared experience.
And as we found out with Virtual Reality, there's no substitute for the real thing.

Well, it's kind of hard to limit access to open space above the event site. That would require a broadcast flag for the brain. Please mark this event as invisible to individuals n+1 or class y.

Anyway I hope to someday visit a few firework factories in Japan. They have some of the most remarkable effects and carry on some of the best shell building traditions in the world.

Good reading of fireworks making by a real master: Fireworks: The Art, Science, and Technique - Takeo Shimizu

How close is email? Though you do see advertisements, you're not forced to watch them as in T.V. I guess a question would be is: how intrusive could the ads be in free services?

Galen, I was trying to find a model that would help us go the other direction. Is there a justification for giving away content or "culture" which is stronger than, "it would cost too much to do." I know this isn't a good parallel, but if you mirror this with music industry. If you imagined the 320,000 people who are free-riding being music file sharing people, and the cost of production of the even the cost of producing bunch of music... is there a parallel?

For instance, if the argument for the city is that people spend money, is this similar to the idea of a "tax" on ISPs that goes to sponsor music? (I don't necessarily buy this model.) Is there an advertisement sponsorship equivalent? IE could you create music sponsored by companies and allow people to copy it for free? Anyway, I'm probably stretching the metaphor...

Well, preserving culture and bringing continuity for our generations to come isn't really a waste 'precious' tax money. Whats good in living, when we only learn to struggle for money and power, but ending up losing the ability to celebrate humanity in it great evolution to the top of the animal kingdom? We are the only mammal that uses the brain tenfold more effective than any species on earth.

Having said that, I will probably think the sponsors might be trying to conceal their prescenes instead? Could it be that they have sponsored the event, and tried not to spoil the event by exposing their advertisement every 1metre of that area, and using several methods, like what you mention about lowering the fireworks altitude, or forcing the mass to pay to come into the viewing area.

I am thinking more a bright side, that probably some rich dude is paying all the costs, simply to entertain and educate the mass of the Japanese culture of viewing wondorous fireworks.

I'm surprised anyone hasn't yet mentioned it.
I think the model you're looking for is the original Shareware or Freeware Model, whereby the developer makes enough off the those interested in the extra features (or in the case of freeware, off generosity) to support doing said work full time.

When the work in question only requires supporting a developer or two, having


How about the olympics? The in-person spectators pay relatively stiff fees to see the events, television networks (at least in the US) lose money when they buy the rights but do it for the prestige and try to build network loyalty, the host city pays a ton to improve their facilities and get ready for the games, lots of companies sponsor it and free stuff ranges from the local shop getting more sales because of a cardboard "Go for the gold!" sign praising a hometown athlete to the host city, to the Guiness Book of Records, artists writing songs about the olympics, magazines putting an athlete on the cover of their rag, people selling a country's flag/t-shirts with the flag/etc. While you can't directly resell tapes of events, the "buzz" is free. Of course, we saw with the IOC corruption scandal that the model is far from perfect.

It seems like it'll come down to events or works of prestige or passion that would thrive with this model. I guess the fireworks show, song, or whatever needs to be something that you (the organizer) would do not because of the money but that happens to be better if you could get some funding.

Speaking of passion, maybe the right example is organized religion. The bible, the book of mormon, buddhist dharma teachings, attending services etc. are usually available free with no contractual obligations to pay but the church still gets rich.

Joi Ito wrote:

I wonder if there is some sort of equivalent business model for other content businesses. Charge a small number of people a large amount of money and give it to 99% of the people for free. Get sponsored by companies and other organizations like local governments that benefit from the secondary consumption increase and follow-on derivative works creation and sharing.

Motorsport events come to mind. Most Formula One fans, for example, couldn’t remember for the life of them the name of the sponsors who pay some serious money to litter the F1 cars’ bodies with small stickers. The sponsors are thus, in some sense, mostly invisible.
There might be some obscure economic rationale in the minds of the sponsors, who get to entertain their clients in a circuit’s VIP areas, and for the local governments, who might benefit from the media attention and increased local consumption. OTOH, it’s quite hard to say what meaningful revenue-generating “derivative works” might actually be created in the case of fireworks, F1 or Le Mans races...

Interesting examples.

MV: "OTOH, it’s quite hard to say what meaningful revenue-generating 'derivative works' might actually be created in the case of fireworks, F1 or Le Mans races..."

But it's quite popular among copyright holders to sue people for copyright infringement even if the derivative works are meaningless and non-revenue-generating.

My house parties. My parents get the tab and everyone gets in for free.

When a copyright holder sues someone over a derivative work it may have nothing to do with the money, although copyright is always, at some level, about the money.

Often it has to do with protecting the integrity of the original creation and the artists's rights not to have the work distorted, misused, or maligned. The French call this the "Driot Morale" or moral right and it is in the WIPO treaty.

The point is that it is the creator, not the consumer, who controls the work. There are five rights incorporated into copyright; copying, distribution, display, performance and the right to make and control derivative works. To this the DMCA and WIPO added a sixth, which you might call "credit where credit is due". It is called "Copyright Management Information" which means some pirate can't claim to own your creation. There is quite a bit fo this going on. You can find more information on my "The Fight For Copyright" blog if you drill down to previous month's postings. that's at ""

As for the fireworks display; no marketing model assumes that you will get a 100 percent response from a single exposure. Research indicates that if you get one percent you're doing well. This is why you see the same television commercials over and over and over again. Marketing is more art than science and no one really knows what works. The most effective insurance salesmen right now are a gekko and a duck.

The only reasons a company will give away something for free are because it's too hard to protect it, or because they get something in return.

Fireworks are too hard to protect fully. In other cases, maybe in this one as well, they're trying to build goodwill, as has been suggested.

But if it's easy to protect the content, there's no reason not to charge for it. It seems to me you're trying to find a reason for a company to make 'enough' money, but not as much as they can. But companies will almost always make as much money as they can, within the constraints of law, public image, etc...

Real-time financial market data uses this model. A very select few pay large monthly subscriptions to get stock, bond, and currency prices and news as soon as possible. The rest of us get this information fifteen minutes later for free.

I believe the model you're talking about is called craigslist. No one knows who the companies that actually pay craigslist for its services in the san fransico bay area are, but the whole nation benefits. In effect, the companies paying craigslist around SF are sponsoring and sustaining the craigslist trading platform for the rest of the country.

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