They also release the first few chapters of a new book online. If the book is good, reader gets hooked and spends more disposable income on the new book (in hardcover no less).

Needless to say, I really hate those Baen Books guys…

First with music, then TV, movies and lastly I imagine prose, media is becoming easier to comprise entirely digital existence. The amount of costs this cuts is huge – aside from web hosting and the initial production of the piece, there aren’t any. This means a writer, musician or filmmaker can potentially make a good living charging less from their product. The middlemen at the media companies know their lifestyle is doomed.

I think eventually the system for payment will be somewhat like that in Cory Doctorow’s novel ‘Down and Out in the Magic Kingdom’. Everyone will be plugged into social network software that records what they are listening to, watching and reading, like last.fm does currently. People like showing what they’re into, having a large cross-media standard is no big step. the second part of the business model is in channeling micropayments to the highest chart-rated artists. For instance you pay $20 a month for the ability to download any music you like. The greatest proportion of your money is channeled to the artist you have the most play counts for.

Surveys of music consumption have shown that people who download the most mp3s also buy the most music. The big point people are missing is that the public generally wants to compensate the artists they enjoy – just look at the huge amounts of people choosing to pay for the new Radiohead download despite being given the chance to get it for free. Although some would resist it, I think if people were given the chance to pay a reasonable monthly fee for any content they wanted, the majority would pay it. The internet lets us be more choosy with what we buy – sampling lots then paying for the ones we like most. Using a last.fm chart based payment model would do the same whilst still channeling some money to every artist.