One of the best remixed trailers I’ve seen in a while.

I’ve was in LA last week talking to various people in the entertainment business about various things, and a subject that kept coming up was how the way we create stories is changing. Most forms of big media storytelling are one-to-many, but new forms of malleable media and new opportunities to create many-to-many networks are adding value to broadcast models, and the way they tell stories.

Stories that include their audiences in the creation process become more complex, go off on tangents and create new relationships between the broadcaster and the audience. Some even extend markets and product life spans. Giving the audience space to create their own stories within the broadcast story is a great way to create mass media. Instead of creating one story with broad enough appeal for a mass audience to find it palatable, it’s now possible to create a piece of mass media without much of a storyline at all, but instead, the tools the audience needs to create millions of their own, that they in turn can change and narrowcast to their peers. The audience knows what they need from narrowcast entertainment better than the broadcaster does, and they know the target audience for that entertainment (their friends and families) better than the broadcaster ever will.

Video games, currently biggest selling form of entertainment, have realized the potential of this idea more than any other type of storytelling. The battle between Master Chief and the Covenant isn’t the whole story of the Halo franchise. Your YouTube video of yourself regulating ten noobs with nothing but the butt of your gun and a hand grenade, set to a techno music bed that sounds offensively bad to everyone other than you and your friends, is also a major part of the story. That’s the reason why Halo set the record for the most single day sales of any form of media. The game about to knock Halo off the top spot is GTA IV. It will do so for the same reason – GTA story lines are paper thin, the real value has always been the rich and detailed sandbox worlds of GTA and how they let you create your own stories within them.

Networks drive stories in physical spaces too, they drive our life stories. David Leonhardt recently made the point that ideas and the value of networks keep us living close together in cities when we don’t necessarily have to. You might visit a major city like LA or Tokyo or London as a tourist for the linear story, to see the sights and so on, but people move to cities for the opportunities and stories they themselves can create with the networks that exist there. The quality of the relationship you are able to have with the network in a physical place makes the difference between that place feeling like a nice place to visit, and that place feeling like it could be home. New York City and Liberty City are great places to be for the same reason.

Great networks perpetually add value to all kinds of stories. From fan-fiction to remixes to making home videos at theme parks, people have been creating their own niche stories within mass entertainment properties for a long time. When mass entertainment properties encourage and add value to the networks that grow around them, they make it easier for the network to reciprocate.

Music is a central part of many of the stories in The Pirate’s Dilemma, so naturally I tend to talk about music a lot in my keynotes. It would be great to use some of the music I mention in my talks, but there is no legal way for me to do this. I would happily pay for this privilege, but it is impossible. I checked with someone I know at ASCAP, I asked my speaking agency – same answer. There is simply no way for this to happen legally.

However if I do decide to use a few snippets of music anyway, there is a huge legal machine that could come after me. Some large organizations make you sign a contract indemnifying them for up to $1m in damages, just in case you do use something you weren’t supposed to. You’re not given an opportunity to pay to use music, but if you do it anyway, it’s possible you’ll pay dearly.

And herein lays the problem with the music business. There can’t be much money in royalties earned from people using music clips in PowerPoint presentations, but there is some. There are a million other ways people use music that the music business would never consider as revenue streams, because they are tiny. But if you use music anyway when legally you’re not supposed to, which all of us do, apparently it’s not too much trouble to punish you.

The future of digital media is not one large revenue stream. Lawsuits cannot control the flow of digital information. People are going to use your stuff anyway. The only thing you can do is give them the option to pay for it.

I did an interview for Booz Allen Hamilton’s strategy + business magazine with Edward Baker - you can read it here.

Just saw this melancholy tale of a He-Man character that never was over on THEBLOG WEEMADE. Slinger (pictured) was a new He-Man character Brian came up with when he was seven years old. He was sure Mattel would go for his idea, and from the sounds of things, he wasn’t looking for much more from the deal that some playground kudos from his peers.

Unfortunately for Brian, Mattel responded with a letter telling him that for legal reasons they couldn’t accept his idea, and had to place the blueprint for Slinger in a special box where it would be sealed for all time, in what I imagine was a warehouse full of secrets like the one at the end of Raiders of The Lost Ark.

Brian was devastated, and twenty years later, it’s clear Mattel are still struggling with monetizing user-generated content. But why does this have to be the end for Slinger? I say Slinger must live. I say Slinger must shine as a beacon of user-generated hope to seven year olds everywhere. Anonymous is great and everything, but user-generated content needs another hero. Slinger is not part of the He-Man franchise, so there is no reason why he can’t be 3-D printed vinyl toys, snarky t-shirts and the Reddit alien before the week is out (unless Brian has other plans for him). Slinger can be bigger than He-Man! With that in mind, I created a new version of Slinger:

If any toy companies would like more information on licensing this new version of Slinger, click here.

He may not look like much, but it’s the best my cacky-fingered hands can do with paint.net in ten minutes. Do your bit for Slinger too, because unless he survives, the terrorists have already won.

Here’s the full speech from my keynote last week at The Medici Summit on when and how it’s best to compete with pirates. There were some amazing speakers at this conference, check the Summit website for more videos over the coming months.

I wrote and op-ed on the future of mobile marketing for this week’s edition of ADWEEK, making the case that treating customers like criminals for illegally remixing your brands and messages isn’t a good idea:

“Effective strategies will mean more connections with consumers and increased opportunities to communicate with them. But they may also mean more crossed wires and mixed messages. The question is, are we in the business of spreading messages or controlling them? In the future it’s going to be harder to do both.”

You can read the piece in its entirety here.

Update: The New York Times picked up on the op-ed too.

Apologies for the lack of activity these last few days, was taking a break in Costa Rica, but normal activities have now resumed. While I was away a lot has been going on…

Lawrence Lessig might be running for congress.

Ji Lee developed the ultimate t-shirt for Red Sox fans.

Some great books came out, like Clay Shirky’s Here Comes Everybody and Gerd Leonhard’s Music 2.0

The BBC thinks the Chinese model of music-as-advertising could be the answer, I think that loss of independence will damage music and all we’ll be left with is muzak. As a revenue stream sponsorship makes sense, but as the revenue stream, it will damage music. There needs to be royalties and licenses and other ways for people to earn money from their work. I think as prices of these things fall (which they will) the value artists can create will go up, because more people will be consuming their material.

Oh, and I did an interview with Creative Generalist.

Modified Xbox by DJ Glo

Mike Masnick at Techdirt wrote about piracy as an innovation strategy a few weeks back, and this comment caught my eye:

“A great example of this is the original Xbox. A modified Xbox had a lot of great features like the Xbox media center and emulators that let you play ROMS of classic games. Microsoft, Nintendo and Sony all copied this feature in their current generation of consoles. Xbox Live for the 360 and Virtual Console for Wii both make Microsoft and Nintendo a lot of money. This was copied straight from the pirated, modified Xbox.”

This is a story of the console giants responding the right way to a Pirate’s Dilemma. They didn’t just fight piracy, but co-opted the good ideas the pirates came up with.

Illegally modified or ‘chipped’ Xboxes started with private owners eking out ways to improve the machine, dropping in custom-built mod chips such as the X-ecuter 2 Lite and upping the horsepower of their sytems by adding in 80+ gigs of extra hard drive (the original Xbox came with just 8 gigs). Some fans simply wanted to play or back up other media they owned, such as their legally purchased games, mp3s and movies using their machine. But this warranty-voiding practice was understandably frowned upon by Microsoft, because it turned the Xbox into a giant iPod for storing pirate video games. And soon enough, custom-built chipped Xboxes were appearing in stores, selling for $500, that didn’t just come with more hard drive space, but fifteen or more pirated games pre-loaded as well.

Microsoft, true to form, sent in the cavalry. In 2003 and 2004 stores were raided, modded machines were confiscated, store owners were arrested and some even imprisoned. Fans and modders had mixed feelings about this. They recognized that the piracy was wrong, but they liked the new features of the modded versions as well. Xbox owner and modder Karl Reinsch wrote about what he saw going on in his local mod chip store on BoingBoing in 2004:

“I stopped in one of the locations just about two weeks ago looking into PS2/Xbox mod chips and was stunned to see them selling modded systems with games already copied onto the hard-drive (They were defintely doing it with Xbox systems and may have been doing it with PS2 systems as well).

“They even printed up stickers with the list of included games and attached them to the packaging for each system. You could pick your Xbox based on the size of the hard-drive and the list of included games. “Oh look, this one has ‘Halo 2′ on it!”

“They were also preloading the Xbox systems with tons of emulators (arcade and console) and as many ROMs as they could find. I watched a customer walk in and ask about a specific original GameBoy game - the employee immediately fired up a GameBoy emulator with the appropriate ROM right there on the demo Xbox and handed the customer the controller to play with. I was shocked.

“They appeared to be to be doing pretty brisk business. I left the place seriously disturbed by what I had seen and wondering whether to report them. Guess somebody already had. They definitely crossed the line. And it is sad to see that happen with one of the few reliable local suppliers of mod chips.”

Microsoft had every right to go after the pirates, but they were smart about it – they didn’t go after individual modders and private owners like Keith, only the store owners selling the machines on the grey market. But the real reason this was a winning strategy was Microsoft recognized the value in what the chip-modders were doing, and beat them by competing with them in the market place. When the Xbox 360 launched, the media center idea developed by modders was front and center, one of the most touted features of the new machine. The popularity of emulators, which let modders play old games from consoles of the past, is also a main feature of the Xbox 360, PlayStation 3 and Nintendo Wii.

The console companies didn’t treat fans like criminals. They gave the fans what they wanted instead, which meant the fans sided with the console manufacturers. Legitimate companies and copyright/patent holders are, in most cases, able to do what pirates are doing with their products more efficiently, more conveniently, and through legitimate channels more palatable to consumers. Often this leads to new revenues streams, as it did in this case for all three console giants. But all too often companies don’t compete with pirates, out of pride, ignorance or a failure to recognize that piracy can be a market signal. Piracy can be a way for fans to let companies know what they really want. It’s often advisable to fight pirates, but ignoring what consumers really need from you is the easiest way to lose the battle.

I thought this comment which I received from Whitney Drake at Ford on my previous post about the Black Mustang Club’s 2008 Calender was worth publishing here. Whitney writes:

“We’ve been watching this discussion with interest and I’d like to clarify what is essentially a misunderstanding.

Yesterday we spoke to both Cafe Press and the Black Mustang Club and explained the situation (about the Black Mustang Club’s calendar) to everyone’s satisfaction. Ford has no problem with Mustang or other car owners taking pictures of their vehicles for use in club materials like calendars. What we do have an issue with are individuals using Ford’s logo and other trademarks for products they intend to sell. Understandably, we have to take the protection of our brands and licensing very seriously.

Ford did not send the Black Mustang Club a “cease and desist” letter telling them that they could not use images of their own cars in their calendar. The decision not to allow the calendars to be printed was made by Cafe Press, because we had gotten in touch with them in the past about trademark infringements on products they sold.

The Black Mustang Club, and any other Ford enthusiast club, are free to take pictures of their own vehicles for use in calendars or other materials as long as they don’t use Ford trademarks in products that will be sold.

I think it is great that the Black Mustang Club, and any other enthusiast club, would take pictures of their own vehicles for use in calendars or other materials.

I’m looking forward to purchasing a copy to hang in the garage next to my Mustang (even if mine isn’t black).

Thanks for giving us the chance to have our say.”

Protecting trademarks while allowing customers and fans to express themselves and create media with your products is certainly a difficult balancing act. I agree with Whitney that third parties producing Ford-branded merchandise, without obtaining permission from Ford, is an infringement of some kind, and a problem Ford needs to address in order to protect its trademarks. Legally Ford do own some rights to the “trade dress” of their products, even after they have sold them, and others can’t use that trade dress for profit. But in reality this gets a little more tricky.

Taking pictures of your Mustang with the logo clearly visible isn’t the same as selling these (can’t believe this is still on Cafe Press after all this). But you could interpret the law to mean that selling a second-hand Ford in your local paper with the Ford logo visible would be a tradmark infringement - after all, you would be reproducing a Ford logo and trade dress in the hope of earning a profit, would you not? It’s clear Ford doesn’t take this view, but legally it’s not so clear, and this is where the problems start.

The problem here isn’t what Ford did, it wasn’t Ford who stood in the way of BMC. The real problem is what Cafe Press did. Because they had been spoken to by Ford before about trademark infringement, they stopped BMC in their tracks without even consulting Ford. A decision that had nothing to do with anyone at Ford turned into a PR snafoo for them, because Cafe Press tried to act in Ford’s best interests. Sites like Cafe Press or YouTube, where third parties can upload content they may not own the rights to, are under pressure to police what people upload more effectively. This is causing sites which feature user-generated products and content to impose draconian measures, preemptively prohibiting some content without checking if it’s ok or not, which in this case turned into a PR problem for the actual trademark holder.

Like I said, a difficult balancing act.