What do you do when you want to save your business from failure? Seek taxes, sue your customers or find some government protection, apparently.

Although the auto and financial industries’ troubles are the obvious, in-the-news examples, many other traditional businesses have been struggling for years too. Think movie, music and newspaper companies.

The Internet being the great disruptive force it is has thrown many firms into a tailspin trying to protect their old business models from its influence. Here are some recent examples.

• Record companies in Canada receive 29 cents — recently up from 21 cents — for every blank CD sold in the country. The Canadian copyright board levies this charge in an attempt to “compensate” artists record companies that are suffering loses due to music piracy. IPods, flash drives and even DVDs are not taxed.
• This guy — who is a professor, god help us — suggests newspapers should seek an antitrust exemption so they can collude and start charging for online subscriptions.
  

  Now, here’s my idea: The newspaper industry should ask the Justice Department for an antitrust exemption that would allow publishers to collaborate on a decision to begin charging for their Web sites. No paper would have to charge, and each paper could determine its own price. But if most papers in a region – San Francisco, Oakland and San Jose, for example – began charging for Web access at more or less the same time, many readers would likely subscribe.

• Speaking of papers, this writer and others think the government should revive the Depression-era Federal Writers’ Project to put unemployed journalists to work.
• Ever wonder why sharing music is such a pain in the butt? Blame DRM, which many record, movie and software providers use to block you from sharing their works. What happens when companies put particularly intrusive DRMs in their products? Revolution.

  The Dark Knight, which grossed nearly a billion dollars worldwide, was 2008′s most-pirated movie. (Could have all the piracy actually encouraged people to pay and see the blockbuster movie?) Spore, a popular computer title, and despite its DRM, was ’08′s most-pirated computer game. Have they not learned?

  Sony widely received criticism for putting DRM malware in its CDs in 2005. The protection software actually opened users’ computers to viral attacks. Not exactly a ringing endorsement for the technology.

  Say what you will about piracy/sharing’s legality, but the Web makes “owning” intellectual property in the 21st century very difficult.

• The Recording Industry of America rushed to shutdown two last.fm-like music-sharing Web sites because the group couldn’t collect royalties. Never mind that these sites encourage more music consumption and exploration.
• The much-hated RIAA has shifted its failing strategy of suing its customers to suing Internet Service Providers. One record company exec has even suggested taxing universities for all the music their students steal.

Even Web companies struggle making money off the Internet. The first dot-com crash showed that your .com needs a business plan beyond piles of venture capital money and unrealistic initial public offerings. (Goodness, Netscape had revenues of just $16 million when it went public and was valued at more than $2 billion(!!).) I believe the later days of Web 2.0 are showing that you can’t count on just advertising to sustain your online business.

Still, some companies successfully mix free and charge services. Basecamp creator 37signals is an oft-cited example.

Bottom line: Businesses are struggling to survive in a world of “free” online. Competition is fierce and creating a scarcity online is difficult. With the cheap cost of entry, anyone can undercut you by being a disruptor. Taxes, suing your customers and government interference are hardly business plans, though.

The movement’s most visible face is a growing and financially challenging component of the W3C’s budget, and the group needs your help to keep it alive. For a small donation, corporate gift (Hewlett-Packard gave a server) or volunteer time, users can help this valuable service stay in operation.

Open-sourcers find advertising antithetical to their movement. Passing on ads — a sure bet for the millions of hits the validators get a month — is a principled and costly decision.

However, the economic downturn is showing a lot of Internet companies that they can’t count on a giant pile of ad money to fuel their ventures. In a blog post, free Web dating site Plentyoffish’s founder laments about the advertisement downturn and a surging, but server-intensive, user base. He writes, “The bigger you get as a free site the less money you make per visit and the more it costs to service a visit.”

Some bloggers suggest the W3C mirror the validator and spread the bandwidth drain. Others think a desktop tool would do the job. (Enterprising developers can grab the open-source code.) As a central part of the standards movement, it seems most logical to host the validators with the W3C, but it may become necessary to spread the pain. Servers and bandwidth aren’t cheap. Even free costs something.

(Via RefreshCleveland)

I wonder if Google will attach a short, verbal AdWords-like advertisement to these searches? Local search, especially as connected to cell phones and increasingly as linked to the phones’ GPS services, is a HUGE developing market. Imagine having your ad included as a sponsored result for someone’s voice search. “Nick’s Pizza Shack. Just 10 minutes from you in beautiful downtown Akron. Press 1 to call for reservations.” The possibilities are amazing.

Update: And the whole thing is in limbo.

So, is Apple making money off of it? No.

Are many developers? It’s hard to tell. Although this lady is making $2,000 a day on a crossword puzzle game she created.

Most articles I’ve read suggest these apps — many which are free or near free — are great for promoting other services.

“It’s all good, thought [sic], as a sort of reverse razors-and-blades scenario: Instead of razors selling blades, Jobs theorizes that applications will help drive sales of the iPhone — just like iTunes helped propel iPod sales,” writes Wired blogger John C. Abell. Here, again, we have “free” making people money.

Free apps may also help sell the services behind them. Some are a teaser versions of full-blown programs, iPhone-optimized versions of a pay service, or promotions for beer or food.

The quality of these programs vary widely. By allowing the apps to be sold, Apple is opening up its phone to a “marketplace” of ideas, or programs, really, and enriching the user experience. Many will stink; fewer will be awesome. Quite a few will only be downloaded a couple hundred times but will find their niche down the Long Tail.

Apple has taken a risk by opening up its previously closed system, but could reap the rewards of increased phone sales (the company already has sold millions and plans to sell 40 million worldwide next year) and marketshare. When Google’s Android OS debuts this fall, it could be a battle of platforms.

With a new Web site called Mygazines, you can scan in your favorite periodical and share it with the world. That’s a lot of work for something that is terrible to read on a computer screen.

Are publishers grateful for these extra eyes on their content and advertising? I guess not.

No, I don’t get the “convenience” of being able to read a print publication on my computer screen, especially when many Web technologies exist that allow you to do this more easily. MP3s, music, movies and software certainly lend themselves to piracy; I don’t think magazines do. I can’t think of a publication that I would like to spend time scanning. Plus, many of these magazines are already online for free!

But wouldn’t that be … awesome?

Some commenters on the Mashable article like the concept. One remarked that you could assemble articles from various sources into a single, uber magazine. This experience is something I think you could do more easily (and legally) via RSS feeds, blogs, news aggregators and the like. On your mobile, Google’s site for cell phones provides an excellent RSS reader, and there are various iPhone apps that also pull this off.

Another commenter thinks this site is the magazine industry’s Napster-like wake-up call. Uh, that wake-up call came nearly 18 years ago when the Web really took off. Newspapers and magazines alike have tried to put up pay walls on their sites and have failed miserably. The mainstream media’s problems are well documented, and I don’t need to elaborate on them ad nausam.

Go free

What does this mean for publishers? It’s just a repeat of something they should already know: you cannot control your information on the Internet. Information wants to be free, and there’s little you can do about it.

Free is not the future; it is now. Says “Free” author and Wired editor Chris Anderson:

Once a marketing gimmick, free has emerged as a full-fledged economy. Offering free music proved successful for Radiohead, Trent Reznor of Nine Inch Nails, and a swarm of other bands on MySpace that grasped the audience-building merits of zero. The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multiplayer online games. Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411.

Anderson goes on to outline how smart business people can make money off of “free.” Clever publication leaders should take note.

If publishers wanted to get ahead — well, at this point “even” — with the game, they would create a Mygazine-like service themselves and do it better. Make it more stable. Heck, they have access to the PDFs and raw files already. They should also drop Zinio and monetize it themselves. Make this service available for free on Kindle, and create iPhone and Android apps. This alone could boast sagging subscription rates and bring more eyes to grateful advertisers.

(And don’t just post your PDFs online. That’s lame and not in the most usable form.)

As we know, a publication’s subscription rate usually goes to the costs of getting it to you via snail mail. (There are exceptions, of course, like journals that survive on subscription dollars, rather than ad money, to deliver content.) Electronic distribution is nearly costless and gets valuable content into more hands.

Would dead-tree subscriptions fall? They already are. Look at this as a way to boost them in the short term. An aging audience is *gulp* dying off and the younger one that is replacing it is turning less and less to print products for information. People who like getting a magazine every week will probably stick to it because that’s the medium they most enjoy perusing. Those people aren’t going to go to these extra services. I think online and print audiences for some publications are different beasts, different demographics.

I won’t use Mygazines, but its arrival shows there’s some sort of demand. Are magazine publishers listening?