I'm either: 1) crazy, 2) a visionary, or 3) stating the obvious. You'll have to let me know.
I think the television show American Idol is a great business model. It is an early pop-culture manifestation of the "Age of Participation" that the Free and Open Source Software Movement and the Internet are ushering in. And I think it will be just the beginning of a dramatic change in how entertainment and other products will be developed and sold.
So here's how it works in this simplified world of television and the telephone: Tens of millions of Americans to participate in the selection process of choosing a product (a pop singer), which is then sold to the very audience that helped to create it. What a formula! If you consider that the time spent watching the show (and commercials) is a form of investment by the audience, they have actually paid for the privilege of participating.
Now we can quibble about the amount of actual participation involved in just dialing phone numbers to vote for your favorite contestant, but it is participation. Our family watched the second half of the American Idol season, and granted it's the first television show we've watched regularly in years, but we really had a good time. We would talk together in anticipation of each show, we each voiced our opinions during the show, different members of the family voted (and frequently voted for different contestants), and we eagerly awaited the results which were always announced the next night. Then we'd spend the next week critiquing the performances, the judges, and the results! It may have only been phone calls from our home that were tallied by the producers of the show, but it was pretty full participation from our perspective.
So, participation is not just about the improvement of the product, but it is about our becoming invested as well, since there is something so inherently fulfilling about being involved that we want to stay involved. Now, as it turns out, the end products of American Idol have become comparable with the traditional music industry (as evidenced by the quality of both the guest artists and the contestants this year), but I am told it wasn't that way originally. And yet, in its earlier and less-polished seasons, it still captivated millions. I would imagine that is because they were able to be involved. Take the phone surveys away from American Idol and you probably have a fairly decent "talent search" program. But with the phone surveys, you have TV's number one show.
The roots and results of Free and Open Source Software are, in my mind, more noble than the production of a hit television show, but the similarities are evident. First, when people have a voluntary role in the production of something, they care about the end result. Second, the active participation of people in the production of something contains the inherent potential to produce something that accurately matches their desires, and that they will be willing to pay for (or contribute to).
The web applications now being referred to generally as Web 2.0 are starting to show us a third element in the culture of participation. Many of the most popular tools of the read/write web have been built on the framework and culture of Free and Open Source Software: from the original blogging and wiki software, to the massive server farms at Google. But in the world of Web 2.0 there is a new addition to the business model: the creation of products that so actively incorporate user feedback that the product now exists at a level significantly above its competitors and even its own previous incarnations. Often used as an example for this is Amazon.com, where independent reviews contributed by readers so set the site above its competitors that it is hard to imagine going somewhere else online to shop for a book. While there are a variety of increasingly sophisticated means for generating user involvement that becomes content-enhancing, and don't actually depend on the user even knowing the extent to which they are contributing, I want to stick for the moment to user-aware contributions.
Imagine an American Idol show (or, for that matter, any product production process) that not only provided general voting, but actually sought for more sophisticated involvement by the user. Viewers might have a way to introduce ideas (what songs to sing, outfits to wear, changes to singing style) that could be voted on by other users and in a "digg" or "slashdot" kind-of way make their way into the actual decisions-making process by the contestants.
I've actually seen this process take place in the development of a product: Google Reader. Google Reader is an aggregator of content feeds that I use. Like many of Google (and others) products, it's considered in "beta" form right now. There is a user forum with active participation by the developers, and where there is an ongoing dialogue about what features are needed and why. And what is amazing is to watch an idea get suggested by a user and then quickly be implemented by the developers. Very smart. And made possible only because of the tools of the internet age.
What's amazing about American Idol is to realize how little participation was actually needed to make it a smash hit. I predict we'll see increasingly complex and interesting methods for involving "users" in the creation of the "products" they will buy. As a result the products will better suit the users, who in turn will be more likely to "buy" them, and new product development can flourish as communication between the "users" and the "producers" of products grows ever stronger.