Overview
The model asserts that there are five necessary requirements for a viable commercial music digital distribution network:
| # | Requirement | Description |
|---|---|---|
| 1 | Open file sharing | users must be free to share files with each other |
| 2 | Open file formats | content must be distributed in MP3 or other formats with no DRM restrictions |
| 3 | Open membership | copyright holders must be able to freely register to receive payment |
| 4 | Open payment | payment should be accepted via all prior means, including credit cards and cash |
| 5 | Open competition | multiple such systems must exist which can tie together, not a designed monopoly |
The model was first articulated by Shuman Ghosemajumder in his 2002 paper “Advanced Peer-Based Technology Business Models.” The following year, it was coined and proposed as the Open Music Model.
The model suggests changing the way consumers interact with the digital property market: rather than being seen as a good to be purchased from online vendor, music would be treated as a service being provided by the industry, with firms based on the model serving as intermediaries between the music industry and its consumers. The model proposed giving consumers unlimited access to music downloads for the price of US$5 per month (as of 2002), based on research showing that this would be the market clearing price, expected to bring in a total revenue of over US$3 billion per year.
The research conducted at MIT demonstrated the demand for third-party file sharing programs. Insofar as the interest for a particular piece of digital property is high, and the risk of acquiring the good via illegitimate means is low, people will naturally flock towards third-party services such as Napster and Morpheus (more recently, Bittorrent and The Pirate Bay).
Read more about this topic: Open Music Model