The content wars: No more free ride

November 4, 2011: 5:00 AM ET

Our Weekly Read column features Fortune staffers' and contributors' takes on recently published books about the business world and beyond. We've invited the entire Fortune family -- from our writers and editors to our photo editors and designers -- to weigh in on books of their choosing based on their individual tastes or curiosities. In this installment, contributor Richard McGill Murphy reviews Robert Levine's Free Ride: How Digital Parasites Are Destroying The Culture Business, And How The Culture Business Can Fight Back.

FORTUNE -- In 1847, the French songwriter Ernest Bourget walked into a café in Paris and ordered up a drink. Soon after, the house band struck up one of Bourget's compositions. When the waiter brought Bourget his check, the composer declined to pay on the grounds that the café had not compensated him for using his music to attract patrons.

Bourget successfully sued the café for copyright infringement. The landmark case led to the creation of SACEM (Société des Auteurs, Compositeurs et Éditeurs de Musique), one of the first organizations dedicating to collecting public performance royalties for artists.

Sound familiar? In our own day, "content creators" (the community formerly known as writers, musicians, and filmmakers) have an even tougher time getting paid for their work. As we all know, the Internet has drastically lowered the cost of distributing media and made it optional for consumers to pay for much of the media that they consume. As a result, the traditional media companies that once provided artists and journalists with income are struggling to survive.

What's at stake? Only the future of civilization, according to Robert Levine's smart, caustic tour of the modern culture industry. "The Internet has been an impressive engine of economic growth," writes Levine, a former executive editor of Billboard magazine. "But a great deal of that growth has gone to a small number of technology companies. They depend on informative journalism to make their search engines helpful and compelling music and movies to make digital players worth owning. But the companies that fund those cultural products have never been in worse shape. They're cutting jobs, and with them the ability to create and market new work."

Digital piracy is flourishing, while Google (GOOG), Apple (APPL) and the Huffington Post laugh all the way to the bank with the vast sums that they suck up by indexing, aggregating, hosting and otherwise exploiting the "free" culture that we all consume. (Later in the book, Levine gives Apple credit for creating the beginnings of a functioning digital media economy via its iTunes ecosystem, which uses a walled garden approach that does compensate content creators, albeit at very low rates.)

Levine revels in pointing out the hypocrisy of billion-dollar corporations like Google that advance their own economic interests by lobbying for an open Internet at the expense of the cultural creators that provide so much of the value in a broadband subscription. His gallery of cultural parasites also includes social networks like Facebook and YouTube, whose business models depend on publishing a steady supply of free content from wired, forward-thinking Netizens like you and me. But Levine points out that after nearly two decades of dreamy, collectivist rhetoric about cyberculture, crowdsourcing, citizen journalism and the like, professional media organizations still produce the bulk of compelling online content.

Levine marshalls plenty of evidence to support his case. Seven of the 10 most popular video clips in YouTube history are professionallym produced music videos, he notes. A decade after Napster's demise, file-sharing services are still stuffed with copyrighted music. Newspaper websites reach some 75 million readers a month, more than a third of all Internet users in the U.S. And fully 99% of all blog links to news stories go to traditional news organizations, according to a 2010 study by the Pew Research Center's Project for Excellence in Journalism. In Levine's telling, the salient difference between the musty old media world and the brave new digital world is that professional content creators get ripped off more online.

It's not all bad news: Levine ends his book on a hopeful note by considering revisions to U.S. laws like the Digital Millennium Copyright Act that could foster a more equitable and sustainable relationship between the media companies that create content and the technology companies that largely control its distribution online. At the end of the day, he argues, it's about striking the proper balance between open and closed information regimes: "Online activists present the choice about our online future as one between control and creativity, but it's really about commerce or chaos," he writes. "A completely closed system would indeed defeat the purpose of the Internet; it would limit both commerce and creativity. But so would an absolutely open one, where selling digital media -- or anything that can be reduced to zeroes and ones -- would be almost impossible in the long run. We'd have a 21st century communications infrastructure supporting a 17th century economy, where artists need patrons and only physical items have value. That doesn't sound like progress."

I hasten to add that Levine is not an uncritical defender of old media behemoths like Sony (SNE), Disney (DIS) and of course Time Warner (TWX), which publishes Fortune and, not incidentally, pays me to write articles like this one. He acknowledges that record labels and movie studios have a long, ignoble history of exploiting the creative talent that they employ. He's less interested in holding professional media companies to account for their role in the coarsening of public discourse both here and abroad, although he does note, in the course of an approving take on News Corp.'s (NWS) efforts to monetize digital journalism, that Rupert Murdoch and his son James make "unlikely potential saviors of journalism" because of the tabloid vulgarity and shrill politics that some of their properties peddle.

Nowhere does Levine address the phone-hacking scandal that rocked the Murdoch empire just a few months after his interview with James Murdoch at News Corp headquarters in London. That's a glaring omission, given Levine's central argument that stealing culture is wrong because it kills the goose that lays the golden eggs. If it's wrong for the Huffington Post to steal News Corp's journalism, then surely News Corp journalists were also wrong to steal a murdered girl's voicemail messages for the sake of newsstand sales? And while the author's manuscript deadline may have come before the hacking scandal broke, a wise publisher would have allowed him to strengthen his book by holding the presses for a few weeks.

Granted, the two cases are hardly parallel: Failing to compensate professional content creators is quite different from violating individual privacy for commercial gain, although both constitute sleazy behavior. But I think Levine missed an opportunity by not following this comparison to its logical terminus, which would be an examination of the moral issues raised by a digital advertising industry that makes money by aggressively harvesting personal information online. That's a stark illustration of the high price that we all pay for "free" culture.

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