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The USB stick in the men's room

How can we compete with free?

This is the question the entertainment industry has been asking ever since the first MP3 was uploaded. We are supposed to feel sorry for them, pass laws to protect their business model, and arrest the wicked "pirates" who "steal" their work and...well, I suppose "fence" would be the right word for getting it out to others.

Many of us have argued many times that the numbers rightsholders - the software industry, the entertainment industry - comes up with to estimate the direct cost of piracy to their bottom lines are questionable, if not greatly exaggerated. Not all free downloads would have been sales; some customers would not have paid for the work if they couldn't first sample it for free. Agonizingly slowly, the entertainment industry is beginning to behave in the ways we've argued for all along. Digital rights management is vanishing from downloaded music; MGM is putting its movies on YouTube; and TV networks are posting their shows online. Legal streaming and downloading is coming along, and while the torrenting population keeps growing, the legal population will grow faster and eventually outstrip it.

But all these pieces of the acrimonious copyright wars, are merely about distribution. The more profound copyright wars are just starting; and these are between free content and paid content.

In the free content category: Blogs. Advertorial, including infomercials. Services - Web, print, or otherwise - that are automatically generated from existing content such as news wires and other sites. User-generated sites like Flickr and YouTube.

In the paid content category: all the traditional media.

Clearly some people do manage to compete with free: bottled water, Windows, and iTunes all are successful despite the existence of tap water, Linux, and BitTorrent. Others are struggling: Craigslist is killing the classified advertising in many US newspapers, including the New York Times and its subsidiary, the Boston Globe; Flickr is making life hard for photographers; copy-and-paste blogs are hammering newspapers (again).

Free by itself isn't exactly the problem. Take, for example, Flickr and photographers. No matter how good their best photos are, few Flickr posters have what professionals have: the ability to produce, to order, without fail exactly the photographs required by the client. For a live event where time and reliability of the essence, you need a professional.

But the rest of the time... Flickr would be no threat if it hosted only a few hundred images. What's killing photographers is the law of truly large numbers: given hundreds of millions of images the chances that someone will be able to find a free one that is good enough go up. Volume is the killer.

Similarly, the problem for newspapers isn't that any of the millions of blogs out there can do what they do. It's the aggregate impact of all those expert blogs on single topics, coupled with the loss of advertising revenues from copy-and-pasters mashed up with the quaintly long lead times necessary for print.

Still, there were hints at last week's American Film Institute Digifest that music and film companies might be beginning to find an answer. If the first day was all about cross-media promotion, the second was all about using multiple media to make movies and music into the kernel of a broader experience - the kind you can't copy by downloading for free.

Christopher Sandberg, for example, talked about the "participation drama" The Company P built around The Truth About Marika, the story of a young woman searching for a missing friend. Based on a true story, the TV drama formed merely the center of a five-week reality role-playing game that included conspiracy Web sites, staged TV "debates", real-world and in-game clues.

"It's not about new media. It's the level of engagement," he said. "The audience can get as close as they want to the core story."

In a second example, the band Nine Inch Nails' Trent Reznor kicked off the launch of his Year Zero CD by planting a USB stick bearing the first release of one of the CD's tracks on top of a urinal in a men's room at one of their concerts. A complex alternative reality game later, the most active fans in the community were taken on a bus to a secret show. Three million fans played the game. Plus, the CD itself was cool: heated up, the top changed color and displayed a secret message.

The key question, asked by someone in the audience: did the effort mean the band sold more CDs?

"All projects have specific goals and objectives," said Susan Bonds, head of 42 Entertainment, which ran the project, "and sometimes they're tied to sales." In this case, because the music industry's album sales are dropping and Nine Inch Nails has a particularly technology-savvy fan base, the goal was more "building the people who will show up at your shows and consume your albums and be your audience on the Web and figuring out how to connect to them."

The tiny folk scene has long known that audiences like the perceived added value of buying CDs direct from the musicians. That that doesn't scale to millions - because there's only so much artist to go around. But the arts have always been about selling special experiences first and foremost. Participatory media will reach their own scaling problems - how many alternative reality games does anyone have time for? - but at last they've made a start on finding a positive response to the ease with which digital media can be copied.

Wendy M. Grossman's Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, at her


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