At the heart of the digital media revolution is a burning question about the sustainability of the content creation business. The issue was recently stirred up by Lloyd Shepherd’s post on digitial rights management (DRM), further stirred by Doc Searls, and brought into critical focus by Jon Udell, who made the compelling assertion that the key questions is about talent:

If you believe that talent is scarce, as Diller does, then it’s going to have to be metered, and we’re headed down the DRM path for sure. If you believe that talent is relatively abundant, as Doc and I do, then you imagine a very different future where technology favors use over control.

I’m going to weigh in against the need for DRM, but not because talent is abundant, but rather because ideas are scarce. The blog revolution has shown that while there is no shortage of people willing and able to write, and do so effectively, there are still very few original ideas. That’s why blog conversations are typically started by one person or one company’s innovative thought or action. Thanks to the culture of linking and referencing that bloggers have fostered, it’s usually easy to trace an idea back to its source, allowing the creator of the idea to maintain credit, if not control.

But the issue is not about control of ideas or of content. It’s about sourcing. Rather than digital rights, we should think in terms of digital pedigrees. A blogger who puts forth a great idea in a post can’t control how the content of the post is disseminated or used, but the blog itself will ultimately see a lot of traffic, allowing the blogger to monetize the value of the idea. The content effectively becomes commoditized as the discussion evolves — only the idea itself retains real value.

There’s nothing new about content creators benefiting from the repurposing of their content. Remember Vanilla Ice, the flash-in-the-pan white rapper, and his one hit “Ice Ice Baby,” while stole the base line from David Bowie and Queen’s “Under Pressure.” Queen and Bowie sued, but at the time in 1991 when they were out of the pop spotlight, it brought them attention and probably sold more than a few Queen albums with that single, as people suddenly found themselves nostalgic.

So how does this help the movie industry, both the establishment and the indies, if they can’t be effectively compensated for the distribution of their content? Well, that business isn’t looking so good anyway. From a consumer study released today:

AS APPLE AND GOOGLE STAKE their successes as Internet video-hubs on pay-to-play models, new data is emerging that suggests consumers are unwilling to pay up. A report released Tuesday by Points North Group shows that consumers prefer ad-supported content over a fee change by a greater than three to one margin. When Points North researchers asked consumers if they missed their favorite TV show and could watch it online or order it through cable or satellite, 62 percent of respondents said they would prefer getting it for free with commercials, versus 17 percent who chose paying $1.99 without commercials.

Who’s going to create content if consumers are not willing to pay for it? Maybe the content industry can follow the lead of (gasp) Microsoft, which realized that, in post-Google world, consumers don’t want to pay for applications anymore. So they’re going to turn their software business into a media business — as Google did, Miscrosoft is going to distribute its applications for free and monetize the value through advertising (InfoWeek coverage of Gate’s announcement last fall):

By developing new Windows Live and Office Live products and other online offerings, Microsoft is betting it can build a business on software supported by advertising instead of licensing and leverage the millions of programmers proficient in Microsoft technology to help the company go up against Google and other competitors.

Imagine a future where all content and all applications are free and everything is media.

A movie studio releases a film digitally and distributes it for free, with ads upfront just like in the theater. With no distribution gatekeeper, the audience is larger, and so is the ad revenue. The studio creates a website, like those common now for films, and monetizes the traffic of fans of the film coming to learn more about the actors, production, inside story, etc. The studio doesn’t control digital distribution, but it maintains the digital pedigree as the creator of the movie.

Movie studios, like record companies and Microsoft, will resist such a future and cling to their old business model until technology and consumer behavior overwhelm them.

In a world where everything is media, the winners will be those with the best ideas — that’s how Google won on search.

George Will was more prescient than he realized:

The more journalism I read and do, the more convinced I am not merely that ideas have consequences, but that only ideas have consequences…Very little (else) lasts…Least of all the everyday arrangements in which we are immersed and on which we plan to depend indefinitely. In the late 1850s, American cotton was king, feeding the mills of England, but on a tonnage basis, America’s second largest export was…ice. Blocks of it were sawed from New England’s ponds and shipped, insulated under sawdust, to warm climes as distant as Calcutta. People probably thought that would go on forever. Nothing does.