As new digital technologies arise, leading the music, movie, print journalism and other content industries to complain that they "cannot compete with free," Mark Lemley, Director of the Center for Law, Science and Technology at SLS, poses the following overarching question: is the sky really falling on the content industries? As Lemley makes clear through a series of examples, representatives from these industries have echoed this same claim countless times throughout recent history, and yet have never been fully accurate. Even so, both the courts and the legislature have taken action in response to content industries' claims in some cases.

One early example of this claim occurred when gramophones were introduced. For the first time, it was possible to record music. However, it was also widely believed that no one would have the incentive to create content, now that they could no longer make money through the same revenue streams as they had had in the past. When radio began proliferating in the 1920s, the claim that "you can't compete with free" was raised again. Decades later, the Supreme Court came very close to declaring Cable TV an act of copyright infringement, but ultimately voted against doing so. In the 1970s, the photocopier enabled replication of books and journal articles, which you had to pay for before. The court case Williams v. Wilkins was an attempt to prevent copying, but it did not ultimately succeed.

By the late 1970s, when the VCR came into the market, the movie industry became convinced that no one would want to make movies anymore if people could acquire them for free. In fact, however, VCR and DVD industries added revenue to the movie industry. Despite the introduction of audiocassettes, furthermore, more media was bought in the 1980s and 1990s than ever before. Even so, there was an attempt by Congress to stop digital audiocassettes. The suit to prevent the introduction of MP3 players failed, however, and MP3 players took off in the 1990s. Although the RIAA fought to delay Napster for several years, and eventually won their cases, they couldn't stop the digital distribution of music, so they looked for ways to join it.  As VCR was replaced by DVR, new fears surfaced. The industry expected that people would use DVRs to skip the commercials, which they deemed to be the same as stealing the show (since the viewer would not be forced to view the ads that funded the show). However, the 2000s became a golden age of TV, driven in part by DVR, which expanded the audience to people who had otherwise been put off by commercials.

Today, digital and internet radio, digital TV, and online video sharing are the new perceived threats. Most recently, pornographers have been the industry complaining they can't compete with all the amateur porn that new video sites have enabled. As Lemley concedes, it is true that each one of the technologies mentioned here has changed the business model for their respective industry. But although these technologies have shut down some revenue streams, he emphasizes, they have also simultaneously created new ones.

Lemley next moves on to consider the policy question of what content industries can do to ensure that the sky does not fall on them as new disruptive technologies enter the market. First, they can attempt to lock down their technology with copyright law, although this is not always possible. Second, they can attempt to shut down a technology completely; however, past experience has shown that this is not effective. The third response is for businesses to evolve in response to new entrants in order to stay in the market.

There are a number of business models that give content industries the opportunity to compete with free.

1. Advertising: Lemley suggests that ads do not need to bring in as much revenue as in the past to be successful, since expenditures have likely been greatly reduced by the digital revolution.
2. Technology can change people's relationship with content in a way that creates revenue opportunities. The introduction of 3-D movies represents one example of this type of technological innovation in the movie industry.
3. Business models can retain market share by building on the experiential aspects of their content. After all, people still go to see music live at concerts, so they must reap some extra benefit over listening to pirated music on their iPod.
4. Branding: People are still willing to pay for brand name.
5. Providing convenience for users. People with means often pay for things, even things they can get for free. For example, peer-to-peer file-sharing versus downloading music and movies safely and legally.
6. In the media business, there's value in credentialing original content rather than blocking new technologies. Also, there is also a possibility that enabling copying itself drives creativity in certain ways; in fashion, where copying and knock-offs is a demand driver, this is certainly true.

As Lemley concludes, content industries say they cannot compete with free, but in fact, they don't have to. In some cases, of course (such as still painting versus photography), the newer technology does destroy a pre-existing business model. However, it also creates a new model that better enables people to get a product or service that that they value. In many ways, these disruptive technologies expand the market for content by providing convenience and new ways for customers to engage with content.