A fair monetization model to reconcile authors and consumers of intellectual property
aa r X i v : . [ q -f i n . GN ] N ov A fair monetization model to reconcile authors andconsumers of intellectual property
Evgeny Ivanko [email protected]
October 24, 2018
No one likes to pay for virtual goods. There may be many deep psychological reasonsbehind it. Maybe we are not happy to pay for intangible stuff, maybe we do not agreewith the authorship model, where one single product is copied for no expense and boughtfor considerable expense many times. Maybe in our fast and dense century we can findso much information around, that it feels ridiculous to pay for it. Anyway, we do notlike to pay for intellectual property (IP) (see e.g. [1, 2]).Intellectual property is a stumbling block and bone of contention for many states,industries, companies and people. In this small article one compromise monetizationstrategy is proposed, which hopefully may lead to a more satisfactory coexistence of IPmanufacturers and consumers. So, how could a manufacturer get his expected profit ifwe do not like to pay for his job? The motto is “fair exchange”: you use our IP-product,we use your product (in form of money); when you do not need our product any more,we change back .In the next section we consider the general structure of the proposed scheme andadd a brief discussion. Section 3 is devoted to a simple rough computation answeringthe question “how much clients do we need to flourish with this model” (if you do notlike formulas, then skip to the last two paragraphs). The final section gives several briefexamples and may prove the most interesting part of this text. • Consumer deposits the agreed amount of money for the agreed period of time tothe account of manufacturer and get the right to use IP-product during that time • Manufacturer may use the invested money at his own discretion, e.g. deposit toa bank, or buy obligations, or invest to development, but he has to return all themoney upon the end of the agreement1
Consumer may wish to retain the IP product after the end of the agreement, thenthe deal becomes a simple buy-sell • Transaction commissions may apply to either the manufacturer or the consumer,but it is better to apply no commissions at all – the bank managing the manufac-turer’s account may receive enough profit from permanently large deposit to maketransactions free; if the manufacturer is large enough, he may think of his owntransaction-bankThe proposed approach blurs the edge between sales of products to customers andsales of shares to investors. The number of deals in this scheme should be far more thanin case of plain buy-sell business, because it seems much easier to make a decision topay in case you are sure you get your money back.The price and duration of contract should be chosen for each business and eachproduct separately and accurately; see several naive examples in Section 4. In particularcases a manufacturer may even pay a part of his interest to his clients; in this case theedge between IP-business and investment fund starts to thin.The issues with piracy will surely appear, but probably not greater than in case ofusual buy-sell approach. Actually, piracy may even decrease since the proposed approachmay seem more fair in the eyes of clients.Let us make some very preliminary and approximate computations concerning theeffectiveness of the proposed model. If you do not like formulas, you may omit the nextsection without loosing anything essential.
How many clients are needed and what should be the deposit size for the seller toflourish? Let us model a bit (however, we do not claim to be realistic). Let p ( x, t ) bethe probability of depositing x ∈ , M coins for t ∈ , T days by one average client onan average day, where M X x =0 T X t =0 p ( x, t ) = 1 . This probability is assumed to be equal for all clients and days. How much moneywill remain in the account on average? The expected one-client today investment is M X x =1 x T X t =1 p ( x, t ) . ( ∗ )For yesterday investments we consider only those that were placed for 2 days or more, M X x =1 x T X t =2 p ( x, t ) , T we have T X k =1 M X x =1 x T X t = k p ( x, t ) . Now let us choose a simple but plausible function for p ( x, t ), e.g. p ( x, t ) = K x ( x + 1) K t ( t + 1) , x ≥ , t ≥ K , x = 0 or t = 0 . Please note, it is by no means a function from the industry, it was pulled out of ahat. Taking large M and T (like M = 10 , T = 10 ) and using the summation formulafor telescopic series, the probability of the event “an average client invests somethingtoday” may be expressed as M X x =1 T X t =1 K x ( x + 1) K t ( t + 1) = K K M X x =1 x ( x + 1) T X t =1 t ( t + 1) ≈ K K . If, for example, we assume that an average client makes a deposit once in a quarter, then K K ≈ .
01 (e.g. K = K = 0 . ∗ ), we get T X k =1 M X x =1 x T X t = k p ( x, t ) = 0 . T X k =1 M X x =1 x T X t = k x ( x + 1) t ( t + 1) = 0 . T X k =1 M X x =1 x + 1 T X t = k t ( t + 1) =0 . T X k =1 M X x =1 x + 1 (cid:18) k − T + 1 (cid:19) = 0 . T X k =1 (cid:18) k − T + 1 (cid:19) X x =1 x + 1 ≈ . X k =1 (cid:18) k − (cid:19) (14 . − ≈ . · . · (7 . − ≈ . N ≈ .
15 million clients (0 . N ≈ ), which is fully realistic in our online andmobile world.The number of clients depends on the probability of deposit linearly, which meansthat if the probability of investment is 10 times less ( K K = 0 . Huge expensive software like that of Adobe, Autodesk, SAS, Oracle, Microsoft, Cisco,VxWorks, Maya or Unreal Engine products needed for high-tech startups are not easy3o buy. Startup investors might be happy to use the proposed model to equip theirfledgelings with the best technologies at little or no risk.
Do you really need to buy a book forever [3]? How many books do you read twice?Probably just a few. Then you would feel fair about paying a bit more than usual, like100-500$, but getting all your money back in 10-100 days.
The same applies to computer games industry as games lifecycle is shortening ([4, 5]).The range of use of the proposed approach here is practically infinite – there is a greatnumber of opportunities to improve your character or game process or game world bydifferent temporary features. Which, of course, are given just in exchange for yourdeposit. It can make a small revolution in games monetization (as it does not seem tobe used [6] yet).
Different kinds of membership like closed clubs or service subscriptions are good candi-dates for the proposed business model. Note that if you do not withdraw your depositand continue to use it for e.g. playing mobile games or reading books one by one, thenthe proposed model naturally becomes a usual subscription.
Also.
Probably there are many other directions where “fair monetization” may be applied.The author is open for collaboration with institutions and companies interested in de-velopment of the described approach.