Amazon initially thought they were sidestepping the sensitive music licensing problem by allowing its customers to upload their songs in MP3 or A.A.C. format and then storing it in the cloud, enabling consumers to play the music on any Android phone, Android tablet, Mac or PC, regardless of where they were. “We don’t need a license to store music,” said Craig Pape, director of music at Amazon in this Reuters article. “The functionality is the same as an external hard drive.” 

What Amazon neglected to do was license the rights, for this type of activity, from the major Hollywood film studios and record companies. The labels immediately fired back, but rather than engage in a nasty drawn out lawsuit the two sides quickly realized they needed each other (for now anyway) to compete in this new music sharing market, fueled by the changing desires of the consumer. Amazon is currently engaged in talks with all members of the big four (Sony Music Entertainment, EMI Group, Universal Music Group and Warner Music Group) to discuss how this latest business model can make sense for both sides. If the two sides come to an agreement, the way we access music will change dramatically once again; however, the question remains, how will the music industry be affected by this sudden access to online stored music files. And other than the consumer, who stands to benefit the most from this new platform?

David Bowie predicted in 2002 that music would become “like running water or electricity,” notes this article penned by John Naughton, The Observer. At the time of the original interview, Apple’s iPod had only just been released. Bowie understood that “iPod users were, in fact, the audio equivalent of travelers to primitive countries who carry bottled water because public supplies are unreliable or unsafe. In a comprehensively networked world, Bowie surmised, people would eventually become more relaxed about carrying their supplies of bottled music: when they needed it, they would just get it streamed from the network.”

I wonder what artists think of their content, once again, being downloaded and potentially shared by millions of people without a licensing arrangement on the table. Will Mick Jagger shout, “Hey! You! Get off of my cloud” (ok, that one was too easy) or will Rihanna say, “Come on, come on, I like it, like it.”?

The music industry continues to struggle to keep up with the consumer’s demands, but finally appears to have recognized its better in the long run to accommodate music fans rather than waste time in court.

What are your thoughts? How do you think cloud-sharing with affect the music and media industries? Share your thoughts with me and the readers of BurrellesLuce Fresh Ideas.

Pondering this question, two phrases immediately come to mind: “The Inventor’s Dilemma” (a great book by Clayton Christensen, 1997), and “like turning an aircraft carrier around.” The legacy environment is blinding. At the heart, though, I believe, is the much bantered-about idea of “engaging the consumer.” This is the “buzz” used by the folks attempting to do the engaging. The consumer is evidently not getting the message that they are being engaged; at least not by The Media companies’ definition, which is about adopting and paying according to its rules of engagement.

I was at a conference last fall with a significant number of aspiring media titans in attendance. The panels focused on devices, technology, and the creation of apps to support their existing revenue models. My takeaway was the tremendous amount of energy going into convincing the consumer of what their, the consumers’, needs are instead of discovering and meeting those needs that already exist.

This contrast became more apparent with the remarks of each and every one of the CEO keynotes: Jason Kilar, Hulu; William Lynch, Barnes and Noble; and Oprah Winfrey, OWN. They all shouted about the key to success being the result of a dialog with the customer, listening to them, and giving them what they wanted. The panelist’s focus was certainly not the result of these folks being from a culture that celebrates entrepreneurial thinking. The legacy rules discourage divisional collaboration and non-linear approaches. You don’t get your own castle without being able to protect the moat. Problem is that the market in which these rules worked moved and it didn’t happen in the dead of night.

The old marketplace based on scarcity of information has left the building and with it the providers’ absolute control of access.

So what to do . . . ?

After having given this way too much thought, I would suggest an industry strategic planning meeting be convened with a very select group of players. I would gather together Hearst’s Frank Bennack, Advance’s Donald or Stephen Newhouse, Google’s Eric Schmidt, Barnes and Noble’s William Lynch, and Clay Shirky, who consults, teaches, and writes on the social economic effects of Internet technologies. I would also include Ken Doctor, a leading news industry analyst, as the scribe. The group should be sequestered for a week and then every six months reconvene to make adjustments. With all the exclusive consortiums in play targeting “low hanging fruit,” this is one consortium that could actually move the needle, and create enough disruptive engagement to get all those “mortgages” paid for a long, long time.

My guess is that, in the end, a process of marking, tracking, and monetizing will emerge. The only absolute is that time is of the essence in the 30-second world or information.

The challenges are formidable and immediate. More importantly, however, I see tremendous opportunity.

Let me start by saying that content is not free. But let me also quickly emphasize that content must not be perceived as expensive either. It has to compete with free or at least the perception that content is free.

Information is, ultimately, created by people with mortgages to pay – even corporate titans have a roof expense; some are just larger than others.

People, individually and as part of an enterprise, want more and more of this information, and they want it in real-time. The information-consumer is not really concerned with the technology. They just want what they want, when they want it, where they want it, and how they want it. Most users of content are not going to go beyond their usual routines to get info. They are not really concerned with platforms or formats. They are all about convenience; their convenience. In general, they are impatient, conditioned as they are by the 30-second sound bite, the 140-character tweet, and of most importance, the compilation of “hextracts” (headline/extract) and associated links as search or news results, which, by the way, will continue to defy monetization. Oh, and they want this all for free.

I am convinced that, even in the digital world, there is still and there will continue to be a place for full publication and page formats. This falls mostly within the areas of individual use and first use. These formats have an advertising and/or subscription component to provide some support for the creators’ mortgage payment, as long as the payments have been modified.

The 30-second formats are now clearly the largest format in use for the delivery of content to the user. The users receiving information in this “bite” format represent both individual and enterprise, initial use and reuse and generally do not provide support from advertising – except when the consumer occasionally follows the link to the article. These 30-second formats are all about the article format standing alone. Focus on monetizing the article will provide the big win/win for the consumer and the provider. Did I mention this is my view we are talking about here?

So, pretty simple right? Just come up with a way to charge for the use of the article when somebody reads the whole article instead of the hextract. Do this regardless of whether that somebody is the first reader of the article or the recipient of it being passed along in an email. Make the charge a passive transaction and at a price the consumer considers fair (I can hear Clay Shirky from here on that statement).The technology to do just this is actually, for the most part, already in existence.

Then why hasn’t it been done?

In my next post, I will provide my own take on this.

Fast forward two years and very little has changed in terms of copyright law itself. Copyright still legally protects original creative works such as: literary works, including articles from newspapers and magazines; songs, including words and music; plays and choreographed dances; art; motion pictures; sound records; architectural works, etc. Copyright exists from the moment a work is created (i.e., it doesn’t have to be registered with the U.S. Copyright Office in order to be protected.)

What has changed, however, is the position that content providers (i.e., publishers) have taken regarding copyright. This renewed focus on copyright and fair use directly impacts public relations professionals. Read more of this newsletter in the BurrellesLuce Resource Center.

The facts may be free, but getting them collected, edited, checked, and delivered to you online or otherwise still costs money. Like almost every else you do in this life, you do get what you pay for. The old joke of “hiring’em young while they still got all the answers” may work fine for opining in the blogosphere, but may not cut it in the “knock three times and tell’em Dan sent you” world of investigative journalism.

Then there is this little issue of legality. At the recent OnCopyright 2010 conference put together by the Copyright Clearance Center in New York City, a self-proclaimed investigative blogger lamented the chilling effect of the many defensive lawsuits filed against him. While we may be prejudiced against the larger media organizations at times, they can stand up to this type of intimidation. To preempt the criticism they vet their sources and data prior to publishing and if that’s not enough they have financial resources to support their position.

Back to free; the cry is that everything should be free on the Internet . . . Well it never has been and never will be. The content and information you get every day on the web is being paid for by somebody, usually advertisers. For lots of reasons we can look at later, this subsidy is just not cutting it.

So if we want reliable, vetted information we have to support its creation. In other words, we have to pay for it. The organizations that are creating vetted content are searching for a way to do this. There are a number of models being tried currently.

1. The pay-wall which is in place at a number of sites and variations are being implemented by the Financial Times and the New York Times.
2. The pay-by-article model for which you pay only for what you read á la iTunes.
3. A central subscription service for many participating providers.

I believe all of these are doomed to fail. However, I do believe there is a fourth solution that could prove viable and consumer-friendly. It would be a hybrid of the pay-by-article model and the aggregated subscription combined with some as of yet unreleased technology.

Over the coming weeks, I look forward to examining more closely some of these monetization options and having a bit of discourse on the topic. In the interim, I strongly recommend that anyone whose livelihood, especially journalists and public relations professionals, is tied to media read the Pew Report. And share their thoughts with myself and the readers of BurrellesLuce Fresh Ideas.

Amid privacy concerns, Facebook is turning off its controversial Beacon service, which tells one’s friends about your purchases. You may recall the brouhaha that ensued when Beacon was launched. (A synopsis: By default, data about the online purchasing habits of Facebook users were automatically shared with other members of their network, and it was near impossible to opt-out if you didn’t catch a single fleeting pop-up window. Responding to consumer protest, Facebook made Beacon an opt-in program within weeks of launch. But in the end, many pundits supported the inevitably of this direction – a way for social networks to make money and marketers to capitalize on an automated form of word-of-mouth marketing.)

Now, due to privacy lawsuits, the entire program has been dismantled, and Facebook will pay $ 9.5 million in settlement charges, some of which will fund a new privacy foundation. (Read  “Facebook To Wind Down Beacon to Resolve Privacy Lawsuit” on MediaPost.)

T-Mobile joins Facebook in learning the hard way that it doesn’t pay to force customers to do what they don’t want to do, even if it’s the “right thing.” With consumer adoption of paperless invoices stalling, T-Mobile decided to charge for the privilege of receiving a hard-copy bill beginning in August. The new policy applied to new and existing clients.  At first, the program seemed to be a smashing success. After months of sluggish conversion rates spurred by voluntary “go green” marketing programs, requests for electronic invoicing exploded. (See The New York Times article, “What if People Don’t Take the Bait to Go Paperless?”)  But after a class-action lawsuit spearheaded by disgruntled clients asserted that the mandatory charge was a “material modification” to T-Mobile’s contract, T-Mobile rescinded the program.

I can understand T-Mobile’s interest in curbing paper invoicing. The paper, ink, and fossil fuels used in producing and sending paper invoices degrade the environment. Saving on the cost of mailings, especially in these tough economic times, allow businesses to hold the line on pricing, reduce the need for layoffs, and fund new products and services. But today’s consumer will use every tool at their disposal to avoid being strong-armed. These days, you need to talk to your customers, and get most of them on board, before you change policies.  

The T-Mobile situation caught my eye because we have a situation analogous to theirs: After BurrellesLuce’s “go green with paperless billing” marketing campaign had penetrated as far as it could, Client Services (CS) began to reach out to each of our clients (much in the same way both our CS and Sales teams  had done a couple of years ago when we launched a “turnkey copyright compliance” program so PR and communications could legally share their online news clips.) Anyway, as a result, in just a few months, the percentage of clients receiving electronic bills has jumped from less than 20 percent to almost 90 percent. Most of the change was the result of dialogue.

What do you think? Could the T-Mobile and Facebook initiatives have succeeded had they been implemented differently?  As a public relations professional, how would you advise Facebook and T-Mobile to proceed? And as a consumer and a citizen, what do you think of the role of lawsuits in changing the behaviors of these companies?

Without copyright protections, creators of original works would have little financial incentive to create them; thus, there would be less of the very things challengers claim copyright inhibits. Think about how many books, articles, websites, songs, software, and movies wouldn’t exist if their creators weren’t able to make their living doing so.

Helprin’s points also collide with an emerging issue affecting the news media, newspapers in particular:  How will they profit from their creative works published online, which they currently give away for free, when they are not earning enough revenue from a failed ad-supported model? Publishers may look to a system of micropayments and/or “passes” (read: subscriptions) that will charge users to view articles. So, to riff on the title of Helprin’s piece, can the average net-user rationalize paying for news content?

My prediction is that we’ll see a many folks adopt this model right away. The first group is the same “influentials” and “heavy news consumers” who now read the paper version of publications. This group includes me, and I pay $40 a month to have The New York Times chucked in my driveway every day. I’d gladly pay the same to access its great content online, especially if the print edition went away. 

Then there is a second group consisting of “media snackers,” who only consume content from outlets such as The Washington Post, online.  The Washington Post has a print circulation of 665,000 but draws 9.4 million unique visitors to its site each month. Those 9.4 million don’t all live in the D.C. area, and their browsing clearly shows they value something about the original content. (I’m a D.C. area native and I keep up on the region everyday on washingtonpost.com, so I certainly see the appeal.)

Assuming a print subscription to The Washington Post also costs $40 per month, those 9.4 million unique visitors would each need to pay $2.83 per month to equal the subscription revenues the paper gets for its print edition. That’s less than 10 cents per day in any given month. Of course, not all 9.4 million will pony up, but you get my point.

That’s where the micropayment model would work. Want to read one article on a newspaper site that you found through search?  Pay 99 cents.  Prefer to get a pass to let you read as many articles as you wish for a month? Pay six bucks. Want a pass to a consortium of sites? I’m sure that will exist as well.

If you think about it, the vast majority of creative journalism these days is still being driven by traditional media for their ad-supported print edition, and posted online, mostly for free. As revenues associated with the print mode of delivery decline, publishers will need to make up that revenue or go out of business. Like it or not, net-users will have to rationalize paying for content. It may be a micropayment model I’ve outlined above, or some other model, but they will have to pay. There is no such thing as a free lunch (or journalism).

Would you pay for online content? Share your thoughts with us here at BurrellesLuce.

The graphic below shows tweet results for the terms “Google,” “AP,” “Copyright,” “NAA” (Newspaper Association of America) and “ACAP” (Automated Content Access Protocol). If one were to review quantitative share of conversation yielded by this graph you would think Google “owns” the conversation; however a qualitative look into these conversations shows if Google were to engage in a “pay-per-click” micro-payment system for copyrighted content, the search giant risks being abandoned by some searchers.

If public relations teaches us anything it’s that huge fires can be started by a small spark. This graphic also demonstrates that the metrics produced the fastest and easiest often tell only part of the story.

Google has already found it’s difficult to monetize social media (e.g. purchase of YouTube) and may experience some bumps in their upward trajectory if micro-payment of copyrighted content takes hold. This situation will continue to evolve and Internet users will be watching closely to protect the free search.

I’m left thinking this is one more reason to protect the free press and investigative journalism that could provide in-depth reporting on this very important issue. Is this the tipping point showing the importance of getting the estimated 15K-20K trained reporters back to work? While micro-blogging grows increasingly popular, my guess is micro-payments won’t be embraced with quite the same fervor. I want a good investigative journalist to take the reins on this and let us know the real ramifications and the likely future of copyrighted material.

Questions specifically for public relation pros:
Will micro-payments change how some of you currently use the free alert system?
How will you be affected if Google alerts are forced to change its source list?
Are you prepared to modify your benchmarks to accommodate this change?

If you’ve read my previous posts, here, here and here, you knew this day was coming. What does it mean for PR professionals? Simply, be careful how you use copyrighted material. A handy primer is the BurrellesLuce white paper, Copyright Compliance: What Every Media Relations Professional Needs to Know, that covers the subject. 

Expect to see the AP pick on some small fry first such as a blogger or two. But beware, a “poster child” big fish may be in the offing as well, to set an example, and get everyone in the land paying attention to copyright and news material, much as the recording and movie industries have done in the past. Don’t forget that the SIIA, another organization where news publishers are heavily involved, brought Knowledge Networks to a $300,000 settlement for violating copyright on both printed and digital news content. That was a fraction of what they could have won in court as the Digital Millennium Copyright Act calls for penalties as high as $50,000 per occurrence.  Remember that cutting and pasting ten entire articles into a clip report is ten occurrences and a potential $500,000 fine.

Of course, BurrellesLuce clients can sleep easy through this latest development.  They know that our small copyright compliance royalty covers them for the internal use of our digitized print clips (under agreement with the AP and thousands of publishers), and that the links and best passages supplied in our BurrellesLuce iMonitor service are copyright compliant (and have no royalty charge either).

My chat with Patrick illuminated for me the forces at work in the world of copyright and what the future will hold.  Of course, given my work at BurrellesLuce, a lot of my questions to him were about newspapers and magazines.

In quizzing Patrick about what’s ahead for the printed media, I learned he sees a continuing online evolution. He believes consumers of that media will see a mixed model of free and paid content, with the horse already being out of the barn on free content. Once publishers secure an ongoing and viable business model, Patrick thinks they will then put more muscle behind copyright enforcement, and will rely on technology to track the use of their material.

Because most news items have a shelf life, Patrick believes they have a lower value to digital pirates. Still, Patrick notes when piracy does take place, it happens in real time. Going forward, this may force publishers to become hyper-vigilant about protecting their copyrights.  As an example, Patrick points out that the content of his own blog on copyright is already being pirated and used to sell ads. Patrick is flattered that his content is considered valuable, as his readership is remarkably high given the weighty nature of its subject matter, but like any publisher, he wants his users to interact with his content in the context of his choosing, in this case the Copyright Alliance website.

Of note, Patrick told me that while copyright law is about 300 years old, one can find many examples of the use of the word piracy related to takings of original works about 400 years ago.  Clearly copyrights and their infringement is an age-old issue.

Lastly, I asked Patrick what he sees on the horizon for the next two to three years in regard to copyright.  Patrick’s first observation was that the Prioritizing Resources and Organization for Intellectual Property Act of 2007 (PRO-IP Act) signed into law by President Bush is a significant development for copyright protection and enforcement. While not yet funded, PRO-IP should be soon, putting a cabinet-level intellectual property coordinator in the White House and increasing criminal penalties for trademark and copyright infringement. Patrick also thinks the Department of Justice will add staff to their computer crimes division for the specific purpose of piracy enforcement.

In wrapping up with Patrick, I asked one more question about the news media world and how the “build it and they will come” model needs to change.  His answer was quick, succinct, and noteworthy for public relations professional in this new Media 2.0 world: “Find your audience and move towards them with content.”  Copyrighted content of course.

The creation of content, whether it be by a well known rock band or a coffee house performer, a mainstream newspaper or an avid blogger, an established painter or one who aspires to become one, all have a common thread – they all either make their living creating that content or hope to make their living doing so. Without copyright protections, making a living creating and selling original works would be non-existent.  And so would the public’s enjoyment and benefit from top-notch music, news, art etc.

To that end, the copyright infringement movement is only beginning to gather its steam.  Don’t bet for a minute that creators of original works and industry groups like the RIAA are just going to roll over and see their hard work and investments of time and money given away. It always takes a while for law to catch up with technology and as long as there is money on the line, the law will indeed catch up to where the money and commerce is. Whether digital copyrights are clarified by case law, as the RIAA was attempting with the Thomas case, or by the passage of clearer laws on digital copyright, you can be sure this will happen.

In the meantime, it would be wise for in the public relations field to gear their use of copyrighted digital material (mainly news content found on the web) the same as they always have for any other copyrighted works. If you’re in PR, and not sure what the right manner is for the use the copyrighted works, the BurrellesLuce whitepaper “Copyright Compliance: What Every PR Professional Needs to Know” serves as a ready primer.  If you have any questions, and there are always lots of questions around this topic, please post them in the comments and I’ll be sure to answer them.

The first two were that two top-tier print outlets, the The Christian Science Monitor and US News and World Report, were going to focus their efforts on the web. The Monitor will be completely abandoning its print edition and will deliver only via the web in April of next year. US News will migrate to the web, but continue a monthly print edition, largely to distribute their famous rankings of colleges and other consumer guides. Certainly, both moves are aimed at securing profitability in light of declining ad revenues and the fixed costs of printing and distributing hard-copy editions.

The third event was Google and book publishers proposing a settlement to a lawsuit brought by the publishers who claimed that Google, in scanning the publishers’ works and making them searchable, was violating their copyright. Google maintained it did not need a license from each publisher to do the scanning as it was permitted under the doctrine of Fair Use.  An article by James Gibson of the University of Richmond’s Intellectual Property Institute on the decision made by Google to settle makes an interesting point: that is possible for a company using copyrighted works to license them and still make a profit (albeit sharing that profit with the publishers).

What do these recent items mean for PR pros?  First, I imagine we’ll begin to see publishers further monetize some or all of their web content through subscriptions (as The Wall Street Journal has successfully done for some time). Second, should the court approve the Google/Publishers settlement, I imagine we’ll begin to see publishers of news content follow this strategy, and increasingly protect their copyrights, revenue and profits by cracking down on improper use of their work, in ways similar to the case in my last post, where the SIIA took Knowledge Networks to task. This means that PR folks will have to find a way to effectively monitor subscription-based web sites and make sure they use news material from the web in a copyright friendly manner.

Given some of the reactions in the audience, it looked as if some pros had some work to do to bring their organization into compliance.    That’s probably because they’ve made their clip books they way they always have, using entire articles, either digitally or photocopied, and routing them to key colleagues electronically or by inter-office mail.   What gets them into trouble, like Knowledge Networks did, is that they used entire articles, and didn’t obtain the publishers’ permission or get their clips from a supplier that provided copyright compliance as part of their service.

The digital world has brought about many changes for society, business, publishers and public relations, and each in its own turn is learning how to adapt.  For publishers, it means safeguarding and further monetizing their content.  In the case of clips, it means PR pros need to take a little extra and easy care in showcasing their great coverage.

The protection of intellectual property (IP) in general has become a higher priority of the federal government. Earlier this month, President Bush signed the The Prioritizing Resources and Organization for Intellectual Property Act (PRO IP Act) which creates a cabinet-level office to oversee IP enforcement in the U.S. and abroad. The SIIA, an organization which has devoted resources to warning PR professionals about the consequences of flauting copyright, weighs in on this new development.

Citing Digital Millennium Copyright Act (DMCA), CBS demanded that You Tube take down a McCain campaign ad that used broadcast video from CBS News.

Bottom line: Content providers are fighting hard to protect their works. Look for more fireworks to come. In the meantime, you may want to take a look at the whitepaper, Copyright Compliance: What Every Media Relations Professional Needs to Know, posted on this blog.