Another bitcoin-based site has launched, enabling digital content creators to sell their wares. Min.io is offering an easy way for writers, illustrators, musicians, and other artists to sell digital content. But will bitcoin-based digital content sales take off?
Min.io was developed by three brothers: Niel, Simon, and François de la Rouviere. They were fed up with the complexity of taking payments online through credit cards, or payment processors like PayPal. Setting up online stores to sell their songs or games is overkill, they said.
Cryptocurrencies such as bitcoin enable value to be transferred quickly and easily between buyer and seller, they argue, lowering the barrier for the sale of independent digital products online.
Digital content ecommerce sites are not new. Gumroad, for example, lets everyone from comic vendors through to software developers sell their products online. BandCamp takes 15% of digital revenues from its musician clients. But neither of them take bitcoin. They work exclusively in fiat currency.
“It’s too early, and not really known as a consumer product,” argues Sahil Lavingia, founder and CEO of Gumroad.
Others feel the same way. Art DeVaughn is director of operations at ContentShelf, an ecommerce service that provides self-service online storefronts for digital content creators.
“We discussed it, but we’re not going to roll anything out, because bitcoin isn’t popular with our sellers right now,” he explained. “They don’t understand the concept.” He has never been asked about bitcoin sales by his customers.
It’s a frustration, admits Simon de la Rouviere, who was the lead backend developer for Min.io. His team also has trouble convincing creators that bitcoin is a feasible option for sales. “To us in the know, there’s an obvious benefit: worldwide audience, instant selling, and a lower barrier to entry, but not to other creators.”
Min.io tries to make it as easy as possible for its sellers, even pricing in fiat currency to make things more digestible for all parties to a transaction, before converting. It has some competition from Yumcoin, launched just a few weeks ago.
Yumcoin, created by two producer/DJs, is designed to connect digital creators with their audiences, say the founders.
“The bitcoin community is incredibly supportive of the artists and creators who accept bitcoins for their products,” says cofounder Étienne La Boum. He promises to sign deals with some “bigger names” to make content exclusively available for bitcoins.
Yumcoin began with a minimum viable product, enabling content creators to make their own sales pages for digital products, with a basic image and description. However, it will build out new features over the next few weeks, he said, promising seller analytics, and online storefronts for sellers that want to display multiple products.
How does all of this work, tax wise? ContentShelf uses third-party payment processors, including PayPal. It is up to the sellers to declare any taxes by analyzing statements from their payment processes at the end of the year, says DeVaughn.
The bitcoin-based sites essentially dispense with the payment processor altogether, however, replacing it with the decentralized bitcoin network. “Yumcoin is entirely based on bitcoin and we don’t convert bitcoins to dollars or any other local currency,” pointed out La Boum. “It’s easy for sellers to keep track of their sales and declare any profits on their taxes.”
De La Rouviere also explored the tax implications. “The way I see it, if you are worried, classify your bitcoin as capital gain,” he advises. “If you turn it into fiat, then either classify it as gains tax or income.”
It’s good to see these kinds of decentralized sites emerging, offering more channels for independent artists to get their content out. But one of the biggest benefits of large, centralized sites is customer traction.
One of the biggest challenges facing ecommerce sites selling digital content is building a big enough audience. Amazon, which launched its own virtual currency called Amazon Coins in April, uses it in place of US dollars on a optional basis. Writers self-publish their books on the Amazon Kindle, and the company is able to take payments in Amazon Coin or fiat currency.
The advantage of publishing on the Kindle store is that the audience is so huge. The firm began selling more Kindle books than paperback books in Q4 2010, and it has been growing relentlessly since. Authors get up to 70% of the sale price back in royalties. While Amazon is a big fish, sites like Min.io and Yumcoin are mere sprats.
Creators would rather sell their games on the Steam network, or through an app store, and take a smaller cut because they are guaranteed an audience, De La Rouviere admits. He will try to brand Min.io as a central hub for creators, he says. But it is difficult to build a strong brand in a fragmented space that thrives on decentralization and diversity.
It’s up to creators to build their own audiences, argues La Boum. “It can be a chicken and egg situation to bring buyers and sellers together on a platform,” he says. “Yumcoin gets around this by enabling creators to accept bitcoins from their existing audiences – on Facebook, Twitter, their personal blog, or anywhere on the web.”
Sites like Min.io and Yumcoin face competition from others who are finding ways to make conventional fiat purchases easier. ContentShelf recently signed with online payment processor Stripe, which allows websites to take credit card-based payments from customers without setting up a huge infrastructure at the back end (comparatively, setting up credit card payments via PayPal can be painful). Stripe also has a variety of other users, including Indie Aisle, which helps authors self-publish their work in an online storefront, taking a 10% cut. That’s far less than Amazon, although a little more than Yumcoin and Min.io.
It will take some doing to get digital content creators and bitcoin together. The problem isn’t the technology, which is relatively easy. The issue is more cultural. Not only do sellers have to understand bitcoin, but buyers have to be prepared to use it, which means hosting a wallet.
If one of the larger conventional online content stores such as Amazon, or Apple’s iTunes, were to adopt bitcoin, this nascent industry would achieve critical mass more quickly. But Apple is allergic to bitcoin, and Amazon wants to control its own currency, so that’s unlikely to happen. The independent sites must do it on their own.
Hopefully, as more sites like Yumcoin and Min.io emerge, and their feature sets improve, we will see more interest from some of the incumbent digital content aggregators.
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