Isn’t there an odd contradiction in all the thinking about new media? Individuals are now empowered to create content, to publish and have a voice without going through the old corporate hierarchy. You can blog and be heard, all for free, without asking permission. But what about brands? The assumption that online advertising will finance the next generation of media and software implies that individual companies still need to pay to play. They may be paying empowered individuals like Rafat Ali and Om Malik, but they still need to pay.

If individuals can bypass traditional media and connect directly with a community of common interest, why can’t brands do the same with their customers? Well, they are (via Search Engine Journal):

A growing number of Louisville businesses are turning to the social-networking Web site to connect with customers, promote events and, ultimately, make money.

Taverns, clothing stores and gift shops — many of them independently owned — are creating virtual profiles of themselves on the site as an informal approach to free online advertising. For Peter Berkowitz, owner of Old Louisville Coffee House, the effort was so successful that he abandoned his traditional Web site in favor of MySpace.

I’ve written before about the challenge MySpace faces in getting companies to pay for what individuals can get for free, i.e. a MySpace page. But really all of media — including the newly adopted software industry — faces the same problem. In fact, small businesses connecting with customers directly sounds like a challenge to Google as well.

Despite massive innovation on the content side (what used to be called “editorial”) — blogs, MySpace, YouTube, Flickr, Digg, search — there’s only been one real innovation on the old “business” side — pay-per-click text ads. But even search advertising is based on companies paying to ride along with a content provider (search results) to deliver a commercial message — sure it’s more relevant, but it’s still paying a big media company to deliver the message. Search ads can lead people to useful information or “meaningful brand experiences,” but when you push the new media revolution to its logical conclusion, you get companies setting up their own identities on the network (in this case MySpace) for free, empowered just like everyone else.

Sure, companies paying to advertise isn’t going to go away anytime soon — old habits die hard, and the network isn’t nearly efficient enough yet. But if brands drink enough of the Kool-Aid new media is serving, they may start to realize that self-empowerment is indeed liberating — and much more cost effective.

Or to put it another way, if it’s all about “conversation,” then why play a game of telephone by putting a media company between you and your customers?