It's obvious that it is a challenge to compete with “free”, but I don't think we should be of the view that just because something is available for free, no market can develop. For instance, iTunes has sold well over a billion songs, and all of those songs are freely available online. Let's not kid ourselves. You can access it through peer-to-peer. You can access it... If my kids and other kids want to listen to music, they frankly listen to it on YouTube. It is effectively licensed, but they listen to the song. That's all they wanted to do anyway, to listen to the song.
There are lots of ways of accessing that song, some paid, some not. The truth of the matter is that there is value associated with the way you access a song, through iTunes or through a CD, so that you can compete with free.
The oldest example that people like to offer up is that they got a glass of water for free, and there are plenty of people walking out right now with a bottle of Dasani or Perrier or other kinds of bottled water, in which they pay for basically the same thing. They'll pay two or three or more dollars for it.