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Stop, Thief!

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While the movie and music people see their lost revenues as a moral issue, everyone else is feeling the pain, too, and trying desperately to buck the trend.

Much Internet business talk is now all about putting content back “behind the wall” and getting people to pay for it. Everybody is dreaming of electronic subscription services (the plan to save AOL seems to be mostly based on the idea of making it the HBO of the Internet). Alas, there are virtually no examples (except porn) of content subscription services working anywhere online. Even the Wall Street Journal online service, which has always been the grail of Internet paid-for content, is little more than a break-even operation—and it’s had to curtail original-content-creation efforts in order to reach break-even.

In the magazine business, the most coveted number is the newsstand number, even as cheap subs (and, arguably, free Internet content) progressively erode that business. There is, too, a kind of Utopian talk about getting the consumer to pay for actual content value—but I don’t know of anyone who really believes that after two generations of subsidies (and now with infinitely greater and cheaper information distractions), consumers would now pay full fare.

The great cable scheme for restoring some kind of parity between content consumed and content compensated for is pay-per-view. Indeed, on my Time Warner system, the relatively feeble pay-movie offerings are being replaced by the kind of vast, play-anytime, choose-anything-you-want system that we used to check into hotels for. The problem is that, so far, nowhere on any cable system in the U.S. has there been any meaningful use of pay-per-view stuff (even for sports it hasn’t developed into anything more than a marginal business). We just don’t do it. We don’t pay for content.

Notably, Europeans do. They slice and dice and pay for content in droves. From the TV, from the cell phone, from the PC. (Although the online WSJ is careful not to break out its subscription sources, some analysts suggest a significant number of its subscribers come from outside the U.S.)

But paying for content—at least content for content’s sake—has become an un-American trait. We believe in getting it all. A bigger and bigger bundle for a lower and lower price. The flat fee rules (we don’t even pay for long-distance telephone calls anymore). And a flat fee is very close in function and perception to no fee.


It’s easy to understand why for the movie and music guys it’s primal-scream time. They maintained a very basic relationship with the consumer—we make, you buy—which suddenly was messed up, not least of all by the media empires to which the movie and music business belonged.

The West Coast movie and music guys have always had a simpler view of the world than their New York counterparts. Indeed, their New York counterparts have always treated the movie and music guys like dimmer cousins. Just off the farm in many ways.

They just didn’t understand how the whole media view came together, how synergy happened. In the empire’s view, consumers had to be made to consume—growth depended on media being everywhere, media being transparent, a utility. And as with a utility, it was better that you not really even be aware of how you consumed the product. It would just be on and available all of the time. The way to do that was to commodify the product and to make it ever cheaper—or in the case of the Internet, to make it free—and then to figure that with a giant audience and vast brand awareness and utilitylike dependency and this incredible cross-platform cross-marketing apparatus and an instant star-making and self-promotion machine, you couldn’t help but make a big pile of money for the conquering empire. ("DISNEY TO PUSH RETAIL GEAR TIED TO ITS TV SHOWS," read an ever-hopeful headline in last week’s Wall Street Journal.)

The thing that I always try to say to the movie and music executives frothing at the mouth about this stealing issue (accusing my children and, one might fairly suspect, their own) is that everybody can’t be an outlaw. If everybody does it, it’s normal rather than aberrant behavior. It’s not so much the consumer who is on the wrong side of the law, but the entertainment industry that’s on the wrong side of economic laws.

For better or worse, the media business has created a world where consumers feel content is worth less and less and they are entitled to more and more of it. And now the chickens have come home to roost.

The veins on the necks of these execs are distended and throbbing, and they really have a hideous look in their eyes.


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