Time's decision to name Apple's iTunes the "coolest invention" of the year illustrates an important point: realizing the benefits of the digital content revolution depends not just on cool technology, but also on establishing economic institutions and business arrangements that promote vibrant marketplaces.

iTunes is an example of an economic innovation, as Time's description makes clear: "It is a disarmingly simple concept: sell songs in digital format for less than a buck and let buyers play them whenever and wherever they like - as long as it's on an Apple iPod." Restricting use to iPods may offend the sensibilities of those who despise limits or insist on interoperability. But it is essential to making the economics work and cannot plausibly exert an anticompetitive effect.

iTune's success, measured in sales and number of imitators, is impressive - it has clearly moved the ball forward. But we are still a very long way from establishing the economic foundations for vibrant markets in digital content. To reach this goal, we will need innovations that enable authors to better protect their rights to distribute works online - through more effective copyright enforcement, use of digital rights management tools, and other means.