The American consumer has long been confused with trying to figure out what they are actually paying for, especially when it comes to content like music, television, news, or even novels. Yet until the ubiquity of the Internet as a delivery vehicle came about, the issue was largely academic.

When you bought a newspaper, was that small fee actually paying for news, or was the news funded by ads and you were paying only for the printing and delivery to the door? When you bought a CD, were you paying for music or for the physical piece of media it was sold on? Honestly, most of us didn’t care as long as we got to listen to our tunes, read our news, and watch our shows.

The issue was further compounded by ad supported outlets that were free to the consumer. I could listen to radio or watch over the air TV without paying anything. The evening news came on at 6pm sharp and didn’t cost me a dime. As consumers we came to expect that content was pretty much free. The advent of value added services like cable TV played right into this mindset. While we paid for cable TV, we paid a connection fee to the cable company. It provided us access to the likes of CNN and Comedy Central, but we weren’t paying for the content (excepting premium content services like HBO). Granted, some of what we paid the cable company was in turn paid to CNN, which in turn subsidized their bottom line. But we didn’t see any of that. It was a bit like the infomercial that promises to send you a second set of Ginzu knives free as long as you pay the $29.95 shipping and handling charge. Sure, you’re really paying for the knives, but that’s hidden.

With the Internet, for the first time we came to consciously realize that we were paying for access, and just access. Using that access we can find all the content we might ever want and more. Music, TV, movies, news, and entertainment are just a click away. And most of it is available without paying. In fact, much of it is provided by the same companies we’ve traditionally sourced content from. Your local newspaper’s website is funded by the traditional newspaper business profits along with some minor online ad revenue. But the website itself generally isn’t profitable for the company.

But now these traditional content companies are finding that our appetite for traditional media distribution is waning. People are watching less broadcast TV in favor of Hulu and Netflix. People are buying fewer CDs and listening to less broadcast radio in favor of Pandora and Shoutcast. People are dropping their newspaper subscriptions in favor of Fox.com and Google news. And these companies are suddenly realizing that they can no longer give away content and charge for access because they no longer control the access. Further, they have hooked us consumers on the idea that content should be (or appear to be) free.

It would be a fair bit of suicide for content companies to simply erect pay-walls as they are threatening to do now. People won’t gratefully start to pay for something they perceive has always been free. At the same time, clearly content is valuable. People do pay indirectly for it today. So the issue is not whether or not content should be free. The issue is how to construct a new business model that either gets consumers to want to pay, or creates yet another indirect pay model that consumers don’t really perceive.

Either way, the onus is on the content companies to build this new model. In many real respects, they are now victims of the very model they created and thrived with over the past many decades. They need to step up to the reality of the Internet consumer and once again offer value we will pay for. Trying to enact legislation to enforce their dying business models or prosecuting their own customers for piracy is hardly the way to save a business.

Probably the hardest thing for a company to do is to stop doing what has always worked in the past. Regardless of how fruitless it becomes, there is a natural tendency to keep pushing the same button over and over. The reality is that many current content companies will likely fail because of their inability to find a different button to push. But for consumers, the beauty of capitalism is that new companies, with new business models, packaging content in ways we do find valuable, will doubtless emerge to take their place. It’s the capitalist circle of life. And sometimes it’s a little bloodier than we might prefer to watch.