A Radically New Way to Use Money Online: Smart-Accounts for Selling Art and Information

by John S. James, 2007-03-22

Blog started January 2007 at


Online financial accounts could reproduce, creating "children" accounts that inherit their parent's options and settings, for any number of capabilities provided by the server. Such "smart-accounts" could be born with hundreds of potential services, already customized in ancestor accounts and immediately ready for use. For example, newly created accounts could already be set up to sell downloads of particular music, videos, or other art and information; receive payment by various credit cards or other means; do business in each user's choice of many different languages; let any account owner quickly set up customizable worldwide fundraising contests and games; do many automatic transactions under the account owner's control; and restrict or allow such capabilities through permissions and other security settings.

These automatic accounts will pay sales taxes, royalties, charitable contributions, and other owner-authorized payments as sales are made, without human attention -- send or receive emails, telephone calls, or paper checks automatically -- save transactions indefinitely and provide up-to-the-moment accounting or other reports on demand -- distribute personal, commercial, or public-service advertising targeted to people who like a particular song or other content -- allow individuals to easily charge any amount including zero for receipt of email (for spam control, fundraising, or consulting) -- and even negotiate prices and do routine business with other automatic accounts, without human involvement if the robots can reach agreement on their own.

For artists, smart-accounts will travel indefinitely through social networks as clickable, rechargeable, reproducing URLs, with no need for encryption no matter how much value they hold -- generating income for the artist, fundraiser, or other owner as long as there is public or community interest. These traveling accounts will sell prepaid downloads, page visits, or other content access, usually in bulk to major donors/buyers/sponsors worldwide, who can share their access as they wish. Even end users with no account or money at all can click such an account to instantly pay the artists by the act of free downloading itself, with no need to ever register or log in -- avoiding both payment-processing and social-class barriers. Sponsors will benefit by supporting the artists or a cause, creating gifts of free access to share, sending their own messages through social networks of their choice, and seeing their payment have immediate effect throughout the world -- all in one. DRM will be unnecessary if sponsors can be found, as pirate copies must then compete against authorized free copies that do pay the artists, which fans will prefer. This system encourages sharing instead of criminalizing it -- and pays the artists as well.

Account evolution: These accounts will reproduce through any number of generations, inheriting successive owners' changes like mutations -- allowing financial and other services to evolve in grassroots, community use, as the most popular services catch on and are modified further. In addition, any number of totally new capabilities can be added to the software at the server, even while the accounts are "live" in public use.

Easy Startup: Usually only the artist or other seller needs to use (or know anything about) a smart-account; end users will click to download free as usual, and buyers/donors/sponsors can pay by credit card, etc. as usual. Therefore this system will work for the first user, with no critical-mass barrier. Also, implementation will be easier because: this system is totally Web-based and compatible with almost all computers and browsers; the public can participate early; smart-accounts need never be "finished"; one server anywhere in the world can cross language barriers and support early users everywhere; and implementers can provide only non-financial services first if necessary (or limit money to nominal amounts), until they have thoroughly tested the system and received broad input and advice.

Financial transactions will be efficient, with an estimated processing cost under a tenth of a cent. Artists will set up global ecommerce through social networks with no initial expense and no more effort than starting a blog -- and keep almost all the money paid for their work.

Next Steps: I have no proprietary claims for this design, and published it rights-free for anyone to use in open-source or other development. I am looking for colleagues, but do not need to be involved in any particular project.

Part I: Artists, Sponsors, and Prepaid Downloads

Instead of making every end user pay, sell sponsorships to anyone in the world, so most users can download free while the artist gets paid. (See "Incentives for Sponsors" below.)

Artists could sell one, hundreds, thousands, or any number of prepaid free downloads of their music, video, image, poem, or other work to a sponsor (often a major donor), who could then email or otherwise distribute a "smart URL" (Web link) giving the prepaid access to social networks of his or her choice. Those who like the work will be encouraged to share the clickable access link, and all downloads using that link will be free until the prepaid copies run out. Then (or at any other time) anyone who has the access link could replenish it, purchasing any number of prepaid downloads by paying additional money to the artist.

For example, if the artist set a price of $1. per download, and the average sponsorship is $50, then 98% of fans can download free while the artist still gets paid. It is easier to get one person to pay $50 than to get 50 people to pay $1 each. A $50 average should be doable, especially since sponsorships can be of any size, with big ones such as 5,000 downloads going a long way, while each free user only needs one of them. A few big sponsorships will mean that the average for all the rest could be much less than the overall target ($50 in this example). See the list of incentives for sponsors, below.

Since they can be replenished, these clickable access links can circulate indefinitely through social networks, as long as people are interested in the art or other information the link provides. The act of free downloading itself will instantly pay the artist (from prior payments by sponsors) -- allowing even fans who have no money at all to participate, and materially support artists they like, both by free downloading, and also by sending the clickable access link (URL) to others who may be interested. The link will usually have free copies in it -- and anyone who likes the work can support the artist by purchasing any number of additional prepaid free copies for others.

Artists will be able to sell their work globally in dozens of different languages -- even if the artists, sponsors, and free end users are in different parts of the world. The payment-processing, music downloading, and other standard instructions will have been translated into all supported languages (see "International Sales in Many Languages," There will probably be no upfront expense for artists to distribute their work this way, since the more attractive business model will be to charge a percentage of sales. Artists will need to have an audience or be able build one through social networks, to reduce or avoid the need for paid advertising. These artists will keep almost all of the money paid for their work, probably over 95%, as smart-accounts service will be competitive and operating costs will be minimal. (For example, computer processing cost per financial transaction should be much less than a tenth of a cent.)

Sponsors could include a short message to be delivered with each download they paid for -- giving them recognition or advertising, targeted to selected networks of people interested in a particular song or other art.

Note: for details of procedures and payment flows, see

Incentives for Sponsors

Why would sponsors pay for music, etc. downloads to be used by others? They will have many reasons, including:

Of course not all art or information can or should be sold through such sponsorships. But much can be.

Advantages of Selling Sponsored Downloads

Part II. Online Magazines and Journals

Today the ways online publications try to "monetize" themselves are pathetic. Much better is possible.

For example, medical and scientific journals routinely outsource themselves to corporations that charge $30 or more just to read one article, if you are not a subscriber -- and only major corporations and the biggest, richest universities can subscribe to almost all the journals their users are likely to need. That money does not pay for the research reported; usually taxpayers do. Universities have to ration access that costs nothing to provide, and probably a large majority of would-be readers who are non-subscribers just do without -- making the entire medical and scientific enterprise less productive, for no economic gain to anyone. Advertising can be OK or even helpful, but many ads degrade the reader's experience -- by deliberately covering up the text they are reading, for example, or by making readers watch an ad for a car or other expensive item with no indication they are interested or able to buy. One major U.S. newspaper addressed its readers (using their computers' speakers) about their presumed problem with male impotence and need for an expensive pill. "Free registration" is also problematic, since the main point of the Web is choice among thousands of sources, and managing endless free accounts becomes burdensome.

Smart-accounts will let anyone in the world (who can pay online) sponsor whatever online access they choose for anyone else in the world, either for particular groups and networks of their choice, or for the whole online public. Universities, for example, could give donors a menu of projects they might support with library access. Some people might want to donate this way: helping the university, the students, the library, the supported projects, the publishers, and the authors, all in one -- and they could add their name, Web site, or other short message if they wanted. Projects not supported this way will still have their existing options, and will benefit because more money will be available there. Access could be provided by smart URLs that bypass the library software -- or could be integrated within a system that searches out the best way to fulfill each student or faculty request. In either case the user will just click and get the article as if it were free, and the publisher or author would be paid. And any library user could click to donate access to any class or project they chose -- in case of a shortage, for example.

For access to general articles in magazines and newspapers, third-party companies could negotiate bulk rates with thousands of publications, letting readers buy measured access that could be used at any of them -- avoiding the need for individuals to have a separate account for each publication that sells online access. This is already done and smart-accounts are not necessary, but they could help by providing a low-cost, standard infrastructure. Alternatively, publishers could accept smart-accounts from a particular server of group of mutually trusting servers, and readers could pay individually at very low transaction cost, by pasting a smart URL into a form on the publisher's Web site.

Schools and others could raise money for article access or other needs by sponsoring fundraising games (see below), in which teams compete to raise the most money, probably most of it from major donors.

Part III: Other, Very Different Applications

Here are a few other uses to illustrate the range of possible uses of smart-accounts. We have published details elsewhere; for more information, you can ask in a comment at our blog,

All these uses could be done without smart-accounts -- but much better and more easily with. Smart-accounts will provide a uniform, compatible financial infrastructure, payment-processing, accounting, and user interaction for all these applications. Smart-accounts will also offer a steady stream of new applications, as they are programmed into the server in response to public demand, even while the accounts are live in public use. Once the application somebody wants is available, setting it up (at an account's control panel) will be much like setting up a blog. Then the new account can be open for business around the world, with payment-processing instructions in dozens of different languages. Probably there will be no upfront cost at all to get a smart-account with all these services available. Instead, a small percentage will be charged automatically as sales are made and money comes in.

You can ask questions at our blog (below), and I will try to answer them.

Part IV. Money, Poverty, DRM, Audience, Superstars, and a Path Forward

The U.S. and most other economies are failing to provide a comfortable, dignified life for more and more people. As the title of a book on youth crime said, "murder is no accident"; and it seems that poverty is no accident either. Human societies tend to have outcast roles and force many people to fill them -- a major factor, we believe, in some of the greatest public problems, including war, poverty, racism, crime, and the prison state. In most of human history such pathology was driven mainly by resource scarcity; but today poverty is largely engineered, even in the absence of scarcity. Ultimately the most productive interventions may start with an understanding of why there is not enough dignity, respect, and money to go around. What is this process that demands outcasts and human sacrifices of various sorts? What are its rules, what can we do with them, and how?

Part of the issue involves the creative community, especially popular art and entertainment. Most popular arts are afflicted by a superstar system where a few public figures get fabulously rich, while most who are equally good cannot make a living at their work. Part of the superstar dynamic seems to be almost mathematical, a function of the average audience size. Only a limited number creators can each be known to tens or hundreds of millions of people; many more are constantly competing to get into that circle, so the public mind space is filled up with as much stuff as cadres of smart, committed professionals can jam into it. Mass culture is pushed further by mass personal communication, as people throughout the country and soon the world are talking with each other routinely over great distances, and need common characters and events (real, fictional, and mythical) to talk about. So local culture increasingly loses out.

One way to advance is to find alternatives to corporate publishers, who strongly push the superstar model. Increasingly the central goal of major publishers is to get best sellers, where the corporations will make most or all their money. Everyone else is most likely a throwaway, a financial loss once it appears that they will not be a prized best seller.

We believe that a main driver of the superstar system is an unhealthy approach to "intellectual property" -- which has a baleful influence for reasons that may not be obvious at first. Today, in the U.S. and wherever its empire reaches, someone who buys a commercial song or book usually has no good, legal way to share it with friends and associates who live far away and who might or might not be interested. If they are on an email list of 50 people around the country or the world, of whom maybe 10 will be interested but there is no way to predict which 10, they could ask everyone for their physical mailing address, buy up to 50 books or CDs and mail them all; 40 would end up unused, a major waste of effort. Or they could mail their copy to a friend, who would listen and mail it back -- too much hassle to happen very often. In short, there is no good way for music especially to spread horizontally by word of mouth, except in special cases like within a family, or a carpool. In most communities, even when people are together in a restaurant or most other public places, they can seldom play their own choice of music there. Note that the cultures more tolerant of boom boxes are generally the ones that care more about music -- and that music does develop significantly in local scenes, with different styles frequently named for different cities, because within a city people can much more easily hear music together, in clubs or sometimes outdoors.

Otherwise, the law strongly discourages most word-of-mouth about music, the most effective kind of selling (because it's hard to tell people about a song they have never heard) -- except in one case. Once the artist is a star, and the music is heard from radios and everywhere, then fans can discuss it with their friends, who probably will have heard it by then. Grassroots word of mouth becomes available for promoting stars -- while for artists starting out, it is unnaturally blocked. So usually the only way to be commercially successful is to be a best seller. ("Cult" fandom alleviates this problem somewhat by creating separate worlds that can have separate stars. Still there are not nearly enough roles to just sell well, and earn a middle-class living as an artist.)

Smart-accounts music and other digital-art distribution will strongly encourage sharing, instead of criminalizing it. Sharing the smart URLs will only help the artist or publisher (whether or not they contain any prepaid downloads at the time). The person who wants to share with an email list of 50 will be able to buy a new smart URL with a few prepaid downloads in it, and easily email the URL to the list. Those copies are first-come-first-serve, and if they run out, anyone on the list can buy and add more -- or buy them and put them into another new URL for their friends only. Word of mouth, the best and most natural way to sell, will return even on a small scale.

This grassroots distribution system will have more paying roles for different artists than corporate entertainment does. There will still be superstars, because of the mathematics of public attention as noted above. But independent artists will find much more middle ground to develop a paying audience of dozens, hundreds, or thousands. Artists will have more opportunity than today to make all or part of a living. And art can develop more deeply within social networks, outside the confines of corporate monoculture.

Part V. For More Information on This Project

Part VI. Related Links