Free what?

Free what?
: Penn State announced today that it did a deal with Napster to give students free music to stop them from illegally downloading it. VC Fred Wilson cheered the school’s “stroke of brilliance.” At first, I agreed.

But then I thought about it and wondered: If a university is going to give away copyrighted intellectual property and performance, shouldn’t they start with, oh, say, books?

[This post was going to end there but then it grew like a stream of consciousness after the spring thaw into a larger look at the fate of music and content. Put on your life jacket, let’s go for a ride….]

: Meanwhile, over at, Chris Kitze, CEO of Yaga, presaged the Penn State deal when he argued in an email to Rafat Ali that music should be bundled (note my bold):

“Just like airline seats, a few suckers will pay full boat retail just so everyone can establish the “value” of music…. And just like airline seats, you can “earn” a free seat by using your credit card, buying products or services, etc.

Look at their revenue model and except for business travel and consumers too stupid or lazy to play the games, lots of people use miles to travel for free…most people will get their music bundled with other things…university tuition, soft drinks and hamburgers, etc. Music companies will make more money from these kinds of licensing deals because there are virtually zero selling costs and (net of royalties) pure margin.”

: Actually, Coca Cola CEO Steve Heyer (an ex CNN exec) pushed for just this model in a groundbreaking speech for an Ad Age event earlier this year. He lectured ad agencies and entertainment executives, telling the Madison Avenue tribe that they need to cooperate with content creators and telling the content creators that marketers will enable them to create “emotional capital” together.

There are a few odd and funny lines in this complex speech, for example: “Coca-Cola isn’t a drink. It’s an idea. Like great movies, like great music. Coca-Cola is a feeling.”

But get past the brand hubris and what he’s really saying is that a brand is experience and entertainment is experience and life is experience. Pop the top on these intriguing quotes:

We will use a diverse array of entertainment assets to break into people’s hearts and minds. In that order. For this is the way to their wallets. Always has been. Always will be. This much hasn’t changed.

We’re moving to ideas that elicit emotion and create connections. And this speeds the convergence of Madison and Vine. Because the ideas which have always sat at the heart of the stories you’ve told and the content you’ve sold… whether movies or music or television… are no longer just intellectual property, they’re emotional capital….

Earlier I’d mentioned the erosion of mass markets. Markets are giving way to networks. In a networked economy, ideas, concepts, and images are the items of real value – you know, marketing….

We view your content as “new media”… a new way to reach and motivate our consumer… it’s your movies, your music, your video games that become a component part of our communications strategy and plan. You should view us the same way. As a partner and a resource, not just a source of new revenues. The Universal Music Group does. Jimmy Iovine understands the power of our network and we appreciate his skills and ability to tap into popular culture. What does he get? That we can help break new acts, support new releases, and help sell, not just give away, music. And he understands that it’s a collaboration. Our advertising creative becomes his FM Radio. His artists become our way of connecting with audiences and contemporizing our brands….

As we move to an experience-based economy, the effective use of relevant and powerful cultural references takes a front seat. Each person’s life becomes a commercial market. And any ad agency that thinks a jingle connects like real music, or a powerful movie, and doesn’t collaborate is lost.

An “experience-based economy.” Hmm.

: Now add in this: At last year’s Foursquare conference, ad genius Donny Deutsch bragged with good cause about how he is managing to break new music and new acts in his car commercials (you know the latest, the one with the hot young woman practically dancing in the passenger seat: she sells the music, the music sells the car, the car sells her…).

Media, marketing, and entertainment become a chicken-egg-and-omelet question: What comes first, the content or the brand or the marketing? They all woosh together.

: And don’t forget this: Pepsi and now McDonald’s are getting ready to give away millions of cuts of music via iTunes.

: Oops, one more: I won’t quote from the music panel at Foursquare but I will tell you the reaction of the execs I spoke with afterwards: They said the music guys are doing the ostrich dance, fooling themselves about their value and their fate.

: Finally, add Fred Wilson’s pronouncement yesterday that “the push model of advertising is over… It’s toast.”

And while you’re at it, go read Cluetrain Manifesto — markets are conversations — and then Gonzo Marketing, in which Chris Locke argues that a wise marketer will join the community to which he is marketing before he starts marketing.

: And so where do we land?

If you look at it simplistically, you could say simply that the music business is in deep doodoo and it’s going to get worse now that everybody — from soft drinks to burger flippers to frigging universities — is giving away its product.

You could say that when music becomes value added to everything else, it loses its value.

You could ask how the hell we run an economy in which everything we create is only the free gift to get you to want something else, which is, in turn, a free gift to get you to want something else… When will we actually end up paying for anything with real money?

You could ask whether all content follows music down this drain.

And you could be right.

But all this adds up to another message:

It’s all about creating connections that matter to us. Whether that’s the music we like or the TV we TiVo (see the link to Teachout below) or the weblogs we read or the friends we make (see the writeup of the AlwaysOn confab yesterday), this combination of the networked world and the experience economy is about connections.

Music has value because it makes connections and marketers are willing to buy it for us to also connect with us.

Penn State recognizes the power of the connection and wants to keep itself out of court and its students out of jail and so it says, OK, we’ll give it to you.

Fred Wilson and Steve Heyer and Donny Deutsch — very smart guys, all — get excited about these connections because they can see they are the basis of a new marketing economy.

Connections are relationships and relationships are trust and trust is the most valuable commodity of all.

I also see a generational trend here in the overarching value of free. But that will be the subject of another flood of consciousness later.

Where, exactly, all this water flows, it’s too soon to know. But it’s a fun ride. Enjoy the soundtrack.