CHANGING INDUSTRIES AND THE RISE OF PERSONAL MEDIA

(Prepared Remarks for Nelinet)

May 11, 2007

To start us off, I thought we’d review a couple of Internet terms to keep in mind during my talk.

IANAL

You may have seen this one tossed around on the Internet. Anyone know what it means? Right — “I am not a lawyer.” Here’s one I made up, which is also good to keep in mind.

IANAE

This one stands for “I am not an economist.” And one more I made up.

IAAISW

I’m not a lawyer, or an economist. What I am is an ink-stained wretch. Pixel-stained wretch, actually, which makes the washing-up easier. Like a lot of folks, I’m an avid consumer of digital media in various forms, a creator of some digital media of my own, and I like fooling around with technology — except when it breaks. I’m curious about this stuff and how it’s changing our lives, and because I’m lucky enough to work for a newspaper folks have heard of, sometimes people indulge my curiosity and let me ask them questions.

A lot of the questions that keep coming up concern what folks have taken to calling remix culture, how its rise is changing industries, and how its rise is changing us.

Digital technology has exploded the old idea that content is given to us at a certain time in a certain format. We now increasingly repackage it to suit ourselves and remix it to say new things. We time-shift it with TiVo and speed through the parts we don’t like. We clip it, post it on YouTube and watch it in bites. We excerpt it and comment on it in blogs. We cherry-pick it and reassemble it through iTunes, Rhapsody and peer-to-peer networks. We experience it when we want, in the order we want, reduced to the size we want, and then we use it as raw material for our own assemblages and statements.

The result is … what? An explosion of creativity? Yes. An explosion of theft? Yes. But more than that, it’s a sea change for current content models. The content industry has long relied on a set of implicit bargains between consumers and content creators, and built its business models around those bargains. It’s even — as people do — come to regard those business models as eternal, and the implicit bargains that supported them as inviolate. That’s not true. It was NEVER true. When technology offered consumers better choices, consumers took them. When given the chance, they voted with their feet against models they didn’t like, and rejected implicit bargains they’d never explicitly agreed to. And now, in more and more instances, the content industry is struggling to find new bargains and new business models.

Today I want to walk you through several implicit bargains that are being abandoned, and how those changes are affecting parts of the content business. And then we’ll hit the most dangerous point of any argument a columnist has to make: the segue. Because from there I’d like to try out some ideas on you about the rise of what I call personal media — a catch-all term that covers other people’s media that we store and the media we generate ourselves, and increasingly keep in perpetuity. What could that material mean to people in the future, and what can we do to make it as valuable as possible to them?

Let’s start with TV. Who here has TiVo or another kind of digital video recorder? Today, penetration of DVRs into American households is at about 25%. If you’re running a TV network today, you’d better be preparing for the DVR to reach the same level of penetration as the DVD player. (That’s about 84%, if you’re curious.) And when it does — if not before — the implicit bargain that’s supported free television for decades will be dead.

What’s the primary purpose of TiVo? The industry says it’s to skip commercials, but I don’t think that’s it, exactly. Rather, it’s to find programs and time-shift them so you watch them when you want to. That change actually arrived with the VCR in the late 1970s, but it’s only really taken hold now, because VCRs were too hard to use. You had to find out when shows were on, have a cassette ready to tape them, fast-forward and rewind to the right point on those tapes. (Our VCR rewinders will seem as odd as butter churns a generation from now.) And — and this is where my videotaping efforts always fell apart — you had to label the cassettes so you knew what was on them. The VCR was a huge advance, but there were too many moving parts, so in practice the VCR was a device for watching rented movies. TiVo took away the moving parts. It got rid of looking in the TV guide and the cassettes and the labels. It began by offering the ability to search and making search easy — and everything went from there.

My TV-watching habits have already undergone a sea change because of TiVo. Except for sports, I almost never watch anything “live” anymore — in fact, it’s become downright peculiar to think that we ever didn’t make plans because “Seinfeld” or “The X-Files” was on. I generally sit down on the couch around 10, think “I’m going to watch half an hour or an hour of TV,” and pick what I want to watch. That would have been unthinkable a few years ago. Now it’s just life. That’s one of the ways you can tell something is an extraordinary change — it immediately makes the old way of doing things inconceivable. I’m gonna remember that something I want to watch is on at 9 on this channel and lasts two hours? Really? Why on earth would I organize my life that way?

Secondary to that is the fact that since you’re not watching in real time, you can skip commercials. And this side effect is where the implicit bargain comes in. For decades, that bargain was this: Accept commercials while watching TV and you get TV for free. You don’t need to actually watch the commercials — you might be in the bathroom or on the phone — but let them be on the TV. That’s it. If you think about it, it’s a pretty good deal. Now, if a few people skip commercials, that’s no biggie. But if enough people do it, networks and product makers start to worry. And things start changing. And that’s what’s happening today: Suddenly there’s a risk premium for making content for TV, and content creators are either not investing in TV or demanding a higher return. Which is one reason why you have reality programming — it’s really cheap to make.

Therein lies an important point about implicit bargains: By walking away from one, consumers may be opting for a new one they don’t like as much. Once the ball stops rolling, there’s no guarantee it will wind up somewhere you think is better.

That said, people are voting with their feet against the old model, even if they don’t quite know where they’re walking. And that’s changing everything. In our office, it’s no longer polite to chatter about last night’s plot revelations because lots of our co-workers have TiVo’ed the show and not watched it yet. There’s a social change that’s already happened. The business changes? They’re still catching up.

That said, I just don’t believe advertising is dead. However much we’re all annoyed by them sometimes, the best advertisers are remarkably clever, and their best work routinely becomes part of our culture. Once they accept that things have changed, advertisers will find ways to make ads work on DVRs. A couple of predictions — ads will get longer and slower-paced, in a reversal of the MTV-style changes we’ve seen for two decades. That way they’ll be easier to follow on fast-forward, when we’re actually paying very keen attention to the screen. Some enterprising advertiser out there will make ads that only work in fast-forward, like the old Burma Shave billboards on the highway. And DVRs can work for ads, too — you can go back and watch something twice if it catches your eye. What if a Burma Shave-style ad told the beginning of a story so you went back to watch the rest unfold in real time? There will still be a market for ads like the ones we know today — some events, such as sports and the Academy Awards, have to be seen live. Those ads just got much more valuable than they are today. And, of course, there are sponsorships and product placements — very old tools in reaching consumers. In analyzing a lot of these changes, we find that the past is prelude.

Another implicit bargain that’s breaking down is the one between record labels and music buyers. The bargain in the music industry used to be something like this: You spent $15 for a CD, a lot more than it actually costs to make one. In return, you got a steady flow of new talent and new releases from established talent, with the handful of hits paying for everything — tours, recording sessions, rehab, and lots and lots of CDs that didn’t sell and bands that didn’t make it.

That bargain was the foundation of the music business for a long, long time, but there was always a pretty big crack in the foundation: People didn’t like the CD. They complained that they were paying $15 for a good song or two and a lot of junk, and singles either weren’t released or cost too much. For a long time, they didn’t have a choice, and the bargain held. But it was ripe to be broken, and as soon as digital technology made new choices possible, consumers took them.

The music industry talks a lot about piracy — and it does have a problem with it. The digital-era equivalent of being very quiet in the family room while taping a song over the air off the radio? It’s ripping a perfect digital copy of a CD track and putting it on the Web for anyone in the world to make another perfect digital copy of. If you’re running a record label, that’s terrifying. But I don’t think that’s the music industry’s real problem. Its real problem is the album, and the fact that consumers don’t want it anymore. ITunes and its successors have pointed the way to the music industry’s future, but that future is based around individual songs, not albums. When digital technology gave consumers a choice, they voted against the album, whether it was stealing individual songs from peer-to-peer services or buying them from iTunes.

So what changes will this bring about? I think the album will survive — there are bands that still like working with that format, and fans who like to listen that way. But I think the default model for bands is going to change. It used to be that bands would spend a year making an album, take a year to tour behind that album, and then spend a year resting or getting in trouble — what I like to call musical crop rotation. I think that will go away in favor of bands making singles and EPs and embarking on short tours. This is already happening — recently Universal signed a hip-hop act called Candy Hill to a two-song deal. And again, the past may be prelude to the present: Until around Sgt. Pepper’s, the rock album was really just an assemblage of recent singles. (That’s where you got clever titles like BEATLES ’65.) I think once they get over the shock of the change, a lot of bands will do better without the album. For one thing, there are a lot more bands that have a good song or two in them than there are bands that have a good album in them. For another, music fans seem much more fickle than they used to be: Once upon a time, a best-selling album meant you at least had another album or two that would get a lot of exposure and a chance to connect with the marketplace. Now it feels like bands are starting over every time — and it’s in their interest to stay on fans’ radar screens instead of vanishing for years at a time.

But there will be changes music fans don’t like. As with TV, now there’s a risk premium. Record labels, or at least the big ones, are going to take fewer chances on acts and give new acts less time to break through. If you’re a music fan who thought labels were conservative and impatient before, you may not like the future you’ve voted for.

What else may be affected? This winter I was out in San Francisco and had a long discussion with a friend of a friend about albums vs. songs and digital music. I got up a good head of steam, as I tend to do, and he listened to me ramble on very patiently. And when I got tired he asked me this: So how will you feel when the same thing happens to writing?

Whoa.

Can’t happen, right? I mean, the novel’s entering its fifth century and pretty indivisible. Nobody goes to the bookstore and buys Chapters 1, 2, 5 and 8 because they didn’t really like the others. Nobody asks to buy a biography with the chapters about the subject’s childhood and old age removed. Right?

Well, hang on. Not all works of fiction are novels — what’s an anthology but an iTunes playlist of short stories assembled the way the editor liked them? How about recipes? Bible verses? Quotations? Ever bought, say, a travel guide for Florida when you’re just going to Miami? How about when you buy a course packet in college that’s filled with chapters and articles and fragments? What are you doing when you underline or highlight something? What’s Reader’s Digest but one person’s distillation of a book without the draggy parts?

Here are some email responses I got when I wondered about the future of writing in the Online Journal:

* “There are books I’d like to buy only a part of — technical manuals. For example, instead of an 800-page tome on Windows Vista, I might just want a chapter on how it handles networking, or some other topic. Interestingly, there’s a commercial Web service that lets me do just that, although at a steep price: O’Reilly’s Safari.”

* “I like to build furniture and frequently borrow ideas from library books. If I want to build a Craftsman-style desk, I could see buying an individual chapter on desks from several different books written on the Craftsman style.”

* “Recently, I chose to read a (very enjoyable, mind you) book about Alexander Hamilton, after reading another about Washington that described Hamilton’s role in the creation of the Treasury system. Being a finance guy, I wanted to learn more of the details and how he got in the position to do as much good as he did. I was not as interested in how his parents met or how they came to be in the West Indies. … I would love to be able to buy a chopped-up version of the biography, where I could pick and choose the parts of Hamilton’s life I would want to own and read again.”

Oh, and speaking of the Online Journal, we let readers print individual stories and email them to people. We make some individual stories free and let bloggers link to them and comment on them — remixing them, in effect. Our content gets chopped up and parceled out a story at a time through personalization, RSS, and people cutting and pasting things for their own uses. You no longer have to buy the entire Wall Street Journal to make use of its content. We hope you will, but you don’t have to. And it would be madness for us to try and make you.

What about when the law and social shifts are at odds? Let’s look at TV. TV is lucky — there’s another disruptive force battering away at it. YouTube is another testament to the power of fragmentation. It takes bits of things — a single play, a monologue, a snippet of an interview — and puts them up on their own. It also time-shifts them — you can watch that play or hear that joke anytime you want, instead of waiting for SportsCenter or the Letterman show.

YouTube and content creators have what can safely be called a complicated relationship. Networks put clips on YouTube — either officially or not — hoping to generate buzz, while asking for other clips to be taken down. The SNL skit “Lazy Sunday” is an example of both. Record labels look the other way as some videos — such as OK Go with its treadmill video — become favorites, while asking for other videos to be taken down. Big media companies talk of $150,000 per copyright violated while trying to strike licensing deals.

You can go mad watching YouTube and content creators duke it out, but I try not to get caught up in the boxing-match stories. Instead, I’m curious about how YouTube is changing things, and what those changes might mean. There’s clearly an appetite for YouTube. It lets you time-shift things from your home to your office. It lets you remix things into new forms. It lets you clip away the dull part of a game or show and watch the interesting part. Increasingly, YouTube is the digital watercooler of office, bar and living-room conversation. It’s where people catch up with big events — and increasingly, it’s where they see them for the first time.

Except a lot of those postings are clearly violating content creators’ copyrights. In most cases, that’s not to be argued. You can’t legally take a single interview from Letterman or a key play from Red Sox-Yankees, do whatever you want with it, and put it online. You can’t. But that said, I keep asking a question: Where’s the harm? Is the market for a Avril Lavigne song really hurt by a clip of teenage girls lip-synching to it badly? Am I really not going to buy the Red Sox season-highlights DVD because someone put up a Manny Ramirez winning hit, or a medley of Big Papi homers? Will I really not buy a boxed set of “Saturday Night Live” moments because “More Cowbell” is online? Really?

Moments like these are part of our common culture. Isn’t there some social value to making these bits of video simply and easily available for us all to view, reinterpret and comment on? Content creators’ lawyers will tell you that every stream viewed is a lost sale, but c’mon. If anything, it seems more likely to me that such views drive more sales. I’m kind of old and don’t watch the Daily Show or Saturday Night Live very often. When I do watch them, it’s because I’ve seen them on YouTube.

The content creators have chosen to fight YouTube with one hand while patting it on the head with the other. They’re well within their rights to do so — those of us who love digital technology sometimes forget that content owners’ rights include the right to do dumb things, or to do nothing. None of us like being told what’s good for us. None of us likes feeling coerced.

But when I look at the blizzard of lawsuits, I keep thinking that maybe a little coercion is what’s needed here. Again, I’m not a lawyer — but I can’t help feeling that something has gone wrong in the balance of power between content owners and consumers. There’s an exception in copyright law for fair use, one that’s supposed to govern scholars and artists. Yet in practice, fair use is a right that big content creators will spend you into the poorhouse to keep you from exercising. Ever wonder why “Behind the Music” features so little actual music?

Instead of being hamstrung by the chance that a bit of footage or music might hurt sales of a content creator’s property, why don’t we try being outraged by the fact that creativity is de facto limited by the daunting time and expense of getting to exercise fair-use rights? If we’re not sure that using a snippet of something will hurt a content creator’s bottom line, why don’t we wait and see if dire predictions play out before acting as if they definitely will?

Lawrence Lessig wrote a marvelous book called “Free Culture” in which he looks at a 1946 case, United States vs. Causby, as an example of a moment when the existing law was revealed as lacking. Mr. Causby was a chicken farmer outside Greensboro, N.C., near an airport used by the US military during World War II. Bombers and aircraft flew so low over his farm that his chickens panicked, ran into walls and died. So Causby sued the government. He said his property had been rendered worthless for commercial purposes — it had, in effect, been taken from him. The issue was this: Did he own his airspace? Long-established law held that property rights extended to “an indefinite extent, upwards.”

That was the law. But the Supreme Court’s Justice William Douglas wrote that that doctrine “has no place in the modern world.” He imagined endless trespass suits against airline operators and wrote that “common sense revolts at the idea.”

And so it is here: Content creators are undergoing a wrenching transition, and we have to figure out how to ensure they continue to be compensated and their rights continue to be protected in a world dominated by remix culture. We shouldn’t expect them to surrender those rights idly, or without discussion. But at the same time, we shouldn’t let old paradigms that consumers have rejected, or that no longer suit their needs, be propped up through the brute force of lobbying and litigation. In every case I’ve discussed, content is getting fragmented. The forms it was once distributed and sold in are being rejected by consumers. And that content is increasingly not under its creators’ control. That’s scary. But at the same time, there are opportunities here. Content now lives on in an easily accessible form far longer than it did under the old systems, and can reach a far larger audience. The challenge for content creators is to take advantage of that without holding on so hard to the old system that they can’t make the transition to a new one. The challenge for us is to help them — to assert our rights as consumers and creators without taking away their rights to their property or their incentive to stay in business.

Something you might not have guessed about the case brought by the Causbys — the Supreme Court sided with them. Justice Douglas disagreed that flights over airspace were a taking, but he agreed that the military flights were so low and so frequent that they were interfering with Causby’s use of his land. And I think that’s a good guide for what we need to figure out in the remix era. Some of us are repeatedly flying over content creators’ farms at 20 feet — and we shouldn’t do that. Steal a song, kill a chicken. But a lot of us are being treated like barnstormers even though we’re 30,000 feet up and the chickens probably aren’t even noticing. It’s up to all of us to figure out what the safe altitude really is.

OK, and now the segue.

This is a one-terabyte drive — it holds a trillion bytes of information. (Actually its useable capacity is about 900 gigabytes, but that makes the math hard, so let’s ignore that.) You can buy one for about $360 today. In 1997 that much capacity would have cost you about $100,000. In 1956 it would have cost you about $10 billion.

A one-terabyte drive will hold about 179,000 four-minute pop songs. Or about a million 1 megabyte snapshots. Or about 833 VHS-quality movies. But as storage capacity increases, we won’t be happy with that level of quality. This is a 6-megapixel camera — it’s about a year old, so I’m sure it’s obsolete. Our old camera was 5 megapixels. I can’t tell the difference between pictures taken by the two — but I do know the difference between 5 and 6. And like everybody in this room, I like higher numbers and hate the idea of giving up anything technologically. So how high will we go? Well, a 10-megapixel camera will deliver resolution to rival 35-mm film. The human eye, it’s estimated, has a resolution of 500 megapixels or more. Anybody think camera makers won’t one day tout that their cameras can photograph detail even the human eye can’t see?

More resolution, better sound quality — all of this takes up more room. A one-terabyte drive will hold about 25,000 songs recorded in the lossless WAV format. It’ll hold about 34,000 photos taken with a 10 Megapixel camera in an uncompressed file format. Or about 682 photos taken with our as-yet-imaginary 500-megapixel camera. Or 200 DVD-quality movies. Or 40 HDTV-quality movies. We’re going to need a trillion bytes of storage sooner than we think. And if you’re going to back up your data — which of course you should — you need to double your storage capacity. A one-terabyte drive? Only the beginning.

But you know what? This won’t matter. In 51 years a terabyte of storage has gone from $10 billion to $360. For all intents and purposes, our personal storage capacity will soon be infinite. And once that happens, no one will ever delete anything again.

This is already happening. In 2004 Google launched its free Gmail service, with its pitch that the combination of search and a gigabyte of storage meant you should archive things instead of getting rid of them. When I started using Google I thought that was very strange. I was so used to deleting things from my work email (with its 100-Megabyte capacity) that it felt irresponsible. But I got used to it — I don’t delete anything anymore. And Google, by the way, now has gone from 1 gigabyte of storage to 2.85 gigabytes. Same thing with iTunes — I used to delete duplicate song files. Now I remove them from my player, but leave the files alone. I’m not alone — it’s becoming mildly OCD to delete files. Pretty soon it’ll become downright suspicious.

How many of you have a free email account? An account with a photo service like Shutterfly or Ofoto? A digital storage locker like Carbonite? They’re going to have near-infinite storage too. Very soon, all such storage will be free to the consumer and all such companies will make money off premium services. And with storage so cheap, any wise company will pay the tiny cost of keeping files rather than risking angering potential customers by deleting stuff.

When that’s true, we’re going to have a fairly amazing situation: Every bit of media we store or create will live forever. It will travel from server to server as data farms are upgraded and companies change hands. And it will be around long after we’re gone. Think of the future’s Yahoos and Googles as information Swiss banks, with active accounts sitting alongside ones long gone dark.

So what are we going to do with all that stuff? And does it have any value?

A lot of it doesn’t — but one day it will. Old pictures are interesting because they’re old. Whether we’re amateur or professional historians, records of daily life in the past are immensely valuable. Think of what historians have pieced together from such bare-bones sources as censuses and deed records. Think of the value of diaries of life as a slave, or old letters. Where would we be without the Domesday Book, the great survey of England conducted in 1086? More personally, wouldn’t you like to read your grandparents’ love letters? (OK, assuming they were chaste.) Which of us wouldn’t love to see even the most mundane snapshots of our street from 50 years ago?

One day, the daily lives of the suburban middle managers of the 2000s will support the careers of grad students and social historians every bit as ably as the recorded mundanities of life as a farmer’s wife in the 1830s. One day, a teenaged girl’s iTunes playlists will be as interesting as a list of what records a flapper from the Jazz Age played and how often. Our email courtships and flirtations will be the stuff of epistolary romance. But that’s only if we find a way to make this tidal wave of stuff usable and accessible.

We can do that. Today snapshots come with data about when they were taken — already a big advance over photos in the past. I’ve got a set of binoculars that know GPS data about where I am and can figure out where I’m pointing. That lets them tell me what star or planet I’m looking at. A camera can do the same thing, and record the information as part of a digital photo’s metadata. And increasingly, search engines are being helped out by users “tagging” information — specifying that, for instance, information about a hotel near the Eiffel Tower is not the same as a fan site devoted to a spoiled celebrity heiress. In a world where information isn’t thrown away, search will improve — because it has to. But the historians of the future won’t thank us. Instead, they’ll wonder how anyone ever got by when you had to call on knowledge of fashion and architecture to know when and where a photograph might have been taken.

And there’s one other hurdle to clear. Everyone in this room probably has at least one Internet account somewhere that they’ve forgotten about or are locked out of because they have no idea what the username and/or password are. (I think I’ve got like a dozen of those.) What good is any of this ancient data if it’s locked away in dead accounts?

Today, we’re horrified by the idea of someone getting access to our accounts and reading our email. When we’re dead and enough time has passed, we won’t care. What if we had a system for ensuring that all our information one day is accessible? A way to tag sensitive information that would remain password-protected or be erased? A system for becoming data donors after we die? What if all of the information we generated could become part of a great digital commons? Imagine letting family members, historians and the merely curious reconstruct the past in a way that seems like the stuff of dreams today.

Thank you.

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