One (of the many) points of contention with copyright law is how much it limits fan-created works.  Last week I wrote about a fan-made sequel to the classic video game Chrono Trigger that publisher Square-Enix forced to stop (only a few weeks before release). This fan-made sequel would never have replaced an official sequel. It was a labor of love from fans eager to promote their love to other people.  Cory Doctorow points out, under copyright law, you’re allowed to criticize a work but not praise it.

Under fair use, I can criticize any copyrighted work. I can use clips or excerpts from it to support my criticism. But if I want to promote or praise the work, it’s considered a derivative work, and I have to get permission the copyright holder.

But as my IP classmates say: “Without copyright law, no one will make Transformers.” And “No good has come from remix culture.” These are the future of IP law.

This is where fan creation gets pushed aside. It’s not only the content providers that over value their content. Consumers also give commercial content a higher value than fan or user-generated content, often recognizing professionals do it better (whatever it is). But this assumption under-values the real benefit of fan content.

Video games are the best example of this. Many games have whole-heartedly embraced fan content, providing free tools for fans to create their own levels and add-ons to games.  Fans help extend the longevity of the game with their own creations, extending the shelf life and value of the game for users. Even with tons of free content, game developers will release their own add-ons and fans will pay for them (sometimes even releasing fan content as official content).  These game developers are not scared of the competition – they know the professionally made content will have a larger, more captivated audience because of the fan content.  Other media are slow to realize how beneficial fan made content is for the lifespan of a project.

Fan content doesn’t compete with official content – it’ enhances it (I say official content because fan content can be commercial).  Only devoted fans of the Lord or the Rings would take time to make “Hunt for Gollum.” And only fans of the franchise will go out of their way to see it. Any non-fans who see it will quickly recognize it is not an official production and if they like it, they’ll find the official versions. And if they don’t like it, no harm done (increased expose nevertheless helps).

And to say no value comes from fan or remix content? Let’s understand what that is: All those Disney movies from Snow White to Cinderella to the Lion King are based on fairy tales, Shakespeare, and other already written stories, remixed by fans to tell new, exciting tales. West Side Story is no less entertain for remaking Romeo and Juliet and yet Romeo and Juliet remains popular to perform. Movie versions of books and plays often increase the popularity of the original work. Letting fans create labors of love cost the content creators nothing, but gives them every opportunity to gain. Let fans be fans.

As Hulu adds Disney to its video fold, some seem to be calling this a loss for YouTube. But YouTube and Hulu are very different video sites and hopefully will continue to evolve so as to co-exist peacefully for the benefit of all web video kind.

YouTube is the video site for the masses. Anyone can upload anything for any reason. It makes the site excellent for finding something, whatever that may be. And that makes it an excellent service for many people, from content creators trying to get noticed to guys filming their dog do funny things.  Hulu is the standard for premium, professional content from the legendary gatekeepers of entertainment.  Even as the two imitate each other, there is more than enough space on the World Wide Web for both.

Yes, YouTube is adding premium content and using much of Hulu’s interface. That’s good for everyone – Hulu has a great interface. But Hulu will never add the breadth and freedom of YouTube. Similarly, much of Hulu’s content providers refuse to give up the control a closed system provides (including, still bizarrely, blocking out most of the world from viewing the page).  Much of the apparent concern for YouTube comes from the higher ad rates Hulu gets for its premium content, but of course, this puts mistaken value on the content itself rather than the experience and the community.

Hulu is an excellent experience, when they aren’t blocking access, but it lacks the community that makes YouTube thrive.  While Google has yet to figure out how to monetize the community, there are still millions of loyal video makers and watchers devoting hours of their time to the making the site more enjoyable and valuable.  Already we’ve seen unique ways YouTube can be a tool for increasing wealth and marketing, from the recent Susan Boyle excitement (which increased sales of Les Miserable CDs) to the amazing Wario Land: Shake It video game ad (you must click the link to experience it fully). Plus, YouTube videos now allow links, allowing for some interesting new opportunities.

Obviously, I like YouTube, and I have some problems with Hulu. Basically, web video, like most aspects of the web, is not a zero-sum game. Just because Hulu gets something does not mean YouTube loses. YouTube finds its own market and its own success because of Hulu, not in spite of, and vice versa.  That’s called competition. And it’s a good thing.

Disney and Target appear to have made nice before anyone even knew they were fighting. The Associated Press reported Target reconsidered plans to remove all in-store advertising, an move it originally announced as a response to Disney selling movies on iTunes for less than the price of a DVD. Target has agreed to promote these movies after Disney threatened to not ship DVDs of “Cars” and “Pirates of the Caribbean: Dead Man’s Chest,” two major holiday titles.

The stand-off, however short lived, was inevitable. Target and other retailers have been pushing movie companies to price online movie downloads at the same price as DVDs or not at all. The result means you pay the same price online for lower quality with no extras. Thus retailers keep your business.

I have brought up before, retailers are the only ones with something to lose. Movie companies have thus far let themselves be bullied into mediocre online services. Disney, of course, is the only movie company on iTunes because of their new friend and largest stockholder, Steve Jobs.

Thankfully, Disney stood up to Target, proving, at least for now, who has the power in this relationship. Yes Target gets to sell an exclusive collection of Winnie the Pooh items, but that can hardly be see as a loss for Disney. Disney’s muscle through its movie blockbusters showed movie companies can decide where to release movies and retailers should be happy with their piece of the pie as long as it lasts.

Now let’s hope movie companies decide to take advantage of this power and start charging reasonable amounts for online downloads. It’s unlikely, but one can dream.

Movie companies vs. major retailers. While this may sound like a royal rumble, it’s really posturing of the worthless kind. Wal-Mart is rumored to have plans, which it denies, that will punish movie companies who release films on iTunes and other downloading services. Movie companies seem to be scared of this.

Even as Wal-Mart denied these rumors back in September, stock of Apple and Walt Disney Co., the only movie company with films on iTunes, fell 2 percent (Sept. 22 to be exact).

It seems no one is making the right decisions here. Movie companies seem to be hesitant about releasing movies online for fear of alienating retailers, not making enough profit, and risking more piracy. Retailers want their brick and mortar monopoly to last forever. And shareholders think Wal-Mart’s going to win. They are wrong.

New media and liberalization win in the end, and this benefits movie companies. But it seems movie companies haven’t learned from their failed fight against VHS. The changing media demands changes first by the media companies. This means, unfortunately, a possible dip in stock value over a few quarters until consumers understand whatever changes occur. But, also unfortunately, stock price is everything. Viacom Chairman Sumner Redstone had his 2007 compensation cut with future pay tied to stock prices.

The internet market allows for greater access to more people with specific interests. As Chris Anderson shows in “The Long Tail,” online retailers like Amazon and iTunes are able to offer more products and reach more audiences than Wal-Mart and Target’s brick and mortar stores. But for now, this business model is scary. For non-blockbuster releases (which Anderson shows are no longer as blockbuster-y), revenue has to be looked at long term. A small movie release might only sell 2 copies a month, but over a few years. Wal-Mart and Target would never sell a title that sold that little.

Movie companies need to realize this technology shift provides consumers with more information and this includes information about their entertainment. Choice is empowering, whether choosing how to access, buy, or enjoy entertainment. The result might be less profit per unit (or feature film), but the internet will allow for a greater number of those units. And through online, these will always be accessible to a hungry audience.

Let movies be downloaded. Let them be downloaded inexpensively (as in less than the price of a takes-up-shelf-space DVD). It’s okay to put special editions in stores. Or offer coupons for in-store purchases to be used online, and vice versa. Some how, some way, embrace the new technology. That’s what the retailers are scared of. That movie companies will discover there is a better way to do business.