Here is a brief case study in how unlicensed digital media eventually generated revenue for the music industry:
Last December (November?), Microsoft was running this commercial for a new video game that was coming to the market soon called "Gears of War". The commercial really struck me as it paired apocolyptic scenes with solefully sober background tunes, which I thought was pure marketing genius. It set up the framework to invoke emotions while looking at a video game.
I found the song a bit hypnotic, and a bit familiar. So, a month or so later, I got the itch to figure out what that song was. A search on Yahoo! led me to youTube where I found the commercial in its entirety, as well as some discussion about the music. There, I learned that the song was a cover from the old Tears for Fears song "Mad World". The cover actually came from the soundtrack of the movie Donnie Darko.
Further poking around the internet gave me more information about Donnie Darko, which really picqued my interest. Elizabeth and I rented and watched it a week or so later (great flik). A few weaks ago, I bought the soundtrack.
I always said this back in the day of Napster, too. So what if I listen to songs for free? Can't I do that on the radio anyway? If I like what I hear, I'll buy the CD. It's free advertising. Don't assume that you lost any revenue because I got the song for free as I wouldn't have bought it anyway since it wasn't until I listened to it that I even realized I liked it. We'll see if Steve Jobs recent comments on DRM have any impact.
--Chris
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