The unusual buzz surrounding the 2001 Cannes Film Festival proved one thing: it was not up to the jury to determine what was art, only how good it was. At issue was the festival's selection of three short films directed by John Frankenheimer, Ang Lee and Wong Kar-Wai; films that were paid advertisements for the BMW company and that, in their humble way, threatened to destroy the film industry as we know it.

In 2000, BMW hired some of Hollywood's biggest and hottest names: Guy Ritchie (Snatch) and Alejandro Gonzalez Inarritu (Amores Perros) in addition to Frankenheimer, Lee, and Wong to direct a series of six to nine-minute action films, collectively dubbed "The Hire." Each director was given five BMWs for his shoot, a multimillion-dollar budget, and complete creative control, as long as his film centered around some sort of car race, chase, or driving mission. Each starred Clive Owen (Croupier, Gosford Park) as the unnamed, cooler-than-James-Bond driver-for-hire.

It's easy to see how the jury mistook the shorts for entertainment, or, at least, didn't care that they were the latest marketing scheme by BMW and the Fallon advertising agency. Over the course of the series, Owen with fancy automotive prowess outraced an angry van of jewelry thieves, delivered a Tibetan boy to his guardian (and Madonna from her hotel to concert venue in record time), helped a war photographer (Stellan Skarsgard) escape the Nuevo Colon massacre, and trailed a woman (Adriana Lima) accused of cheating on her husband (Mickey Rourke). The cinematography was hip and edgy and the soundtracks pumped with adrenaline as Owen pushed the cars to the max and barely broke a sweat.

The films had none of the usual clichés of car commercials. No conspicuous beauty shots of BMW's blue-and-white checkered logo; no close-ups of the cars' exotic model names (740i Sedan, 540i 6-speed, Z3 roadster, M5 Sedan, X5 3.0i); no disclaimers that the stunts were performed by professionals or warnings that you shouldn't try driving like this at home. Movie magic made the cars appear to reach speeds and handle in ways that wouldn't be possible in real life. In fact, the films weren't selling the car so much as an image of excitement just like any other action movie. The cars weren't the objects of the films; they were just vehicles for the plot.

The shorts were released on BMW's website (bmwfilms.com) for streaming or download, and their premieres were accompanied by massive ad campaigns of billboards, TV commercials, and print ads. BMW hyped the advertisements as much as any studio would promote their films.

It's also easy to see why the films infuriated many people, especially consumer advocates. Imagine if Universal's next release were a feature underwritten by Anheuser-Busch where drinking kegs of Bud cures Josh Hartnett's broken heart. Or, in Paramount's summer smash, if reading Mademoiselle every day increased the Olsen twins' brain capacity so much that they invented a cure for AIDS at the age of 17. What if Liam Neeson, playing Oskar Schindler, only wore Brooks Brothers suits? Sharply put, the fear was that businesses would use corporate plugs to control the ideology of the film industry, and, in some way, the public. (Similar problems would arise if Microsoft bought The New York Times.) The real trouble is that the potential profitability of corporate money is too dazzling for studios to refuse. Confusing art and advertising, then, is serious business.

Attitudes toward the BMW films calmed in 2002, when they were officially recognized as advertisements. The second installment of filmsdirected by John Woo (Mission Impossible: II), Joe Carnahan (Narc), and Tony Scott (Top Gun) was invited back to Cannes, but this time to the International Advertising Festival, held annually a few weeks after the main film festival. "The Hire: Part II" won the Grand Prix Cyber Lion, and the IAF jury president called the series the "most important" marketing idea of the year. Automotive News named Jim McDowell, Vice President of Marketing for BMW North America, Marketer of the Year for 2002 after BMW's U.S. sales spiked nearly 9% on half the advertising budget of its top competitors. An estimated 13 million consumers downloaded the films, and 94% recommended the films to others. 2.4 million users provided BMW with their e-mail addresses, and more than 40,000 voluntarily filled out profile surveys.

The films were nothing less than a marketing smash and nothing more.

That meant everything was comfortably back to normal. Ads and films had their heads on straight after a temporary identity crisis, and no one had to fret that corporate America had become an all-powerful puppetmaster for the film industry. While all would agree that there was an art to advertisingindeed, increasing artistry was necessary to produce an effective 30-second TV spotads weren't the same kind of art as, say, Roman Polanski's The Pianist (which won the Palme d'Or at Cannes in 2002). The hierarchy was still intact.

But then John Woo's BMW film won "Best Action Short" at the Los Angeles International Short Film Festival, and the BMW films became eligible for an Academy Award after screening at select, digitally-equipped theaters across the country as part of BMW's Digital Cinema Series. The debate over the blurring of advertising and entertainment seemed moot once and for all; the real question that the BMW films posed to American moviegoers was what happened when advertising became better filmmaking than the pure art?

BMW may have pushed the discussion of "product placement" to "product production," but it hardly started the conversation. In the 1920s, companies employed film actors and actresses to promote products off-screen, and the idea to imbed commercial messages in fiction film came in the 1950s when James Vicary started to experiment with subliminal messages in Picnic. He placed single frames that read, "Hungry? Eat popcorn" and "Drink Coca-Cola" within the film to entice the moviegoer's subconscious to crave the concession stand's goodies. His experiments proved to have no effect and his data was faked, but the idea stuck. Successful, conscious, product placement began in 1982 when E.T. devoured Reese's Pieces in Steven Spielberg's film, causing the candy's sales to skyrocket. Later that year the Coca-Cola Company bought 49% of Columbia Pictures and started to plug its products in dozens of movies (it would later sell its shares of the studio). Product placement quickly became an important supplemental source of funding for feature films and proved terrifically successful for marketers. BMW bought some key screen time in the Bond movie Goldeneye, establishing BMWs as slick, cinematic cars. Studios moved beyond traditional product placement with the self-conscious commercial plugs in Mike Myer's Wayne's World and Austin Powers. Other films, such as last summer's Like Mike, about a young boy who joins the loving community of the NBA and produced by NBA Entertainment execs, managed to mask their commercial intent a little better.

The technique of using narratives or series in marketing is as old as advertising itself. In 1926, Burma-Shave famously arranged roadside limericks in a series of six billboards. By 1987, the method had manifested as a mini-soap opera in twelve TV commercials, hawking Nestle's instant coffee (called Gold Blend in Britain and Taster's Choice in the U.S.). As BMW would do for its films, Nestle's started to advertise when the newest "soap opera episode" would air. Now television commercial series are everywhere, with repeated motifs such as people shouting "whazzup?" and ducks squawking "AFLAC!"

Hiring veteran filmmakers to direct advertisements was nothing new either. Robert Altman, Francis Ford Coppola, Frederico Fellini, Jean-Luc Goddard, David Lynch, Penny Marshall, Errol Morris, and Martin Scorsese to name a few have all done commercial work. So did BMW's director John Frankenheimer, and Tony Scott started out as a TV ad man before venturing to the big screen. In 1984, Ridley Scott (Tony's brother and executive producer on some of the BMW films) likened the production of a 30-second spot to "doing a small feature." In 1985, Adrian Lyne (Unfaithful) told Advertising Age that he considered commercials to be short films. Throughout the 1990s, the Super Bowl broadcast acted as a popular forum for commercials, and production values were raised accordingly. By the end of the century, marketers assumed such a commercial-savvy public that an effective TV commercial no longer had to bother naming the product it was advertising. Nike, for example, just has to show the swoosh in its ads.

Other companies experimented with new formats to escape the conventional 30-second commercial. In the early nineties, Bell Atlantic attempted a "sitcommercial" ("The Ringers"). The "infomercial," an explicit, extended commercial, became popular, as did the "documercial," half-hour programs posing as news magazine shows. The "VNR," or "virtual news report," were reports, general interest, or science spots created by marketers to slip seamlessly into any local or national news broadcast to hype a product or company. The Nielsen Media Research reported in 1993 that VNRs were used "several times a month" by 80% of local news stations surveyed.

With television advertising approaching a saturation point, and commercial-zapping video recorders like TiVo increasing in popularity, the internet was the next logical frontier for advertisers to conquer. BMW research indicated that around 85% of BMW car owners used the internet before purchasing their car, so a persuasive website was a good way to hook potential buyers. The internet also offered BMW marketers a dramatic way to cut distribution costs for their ads. Some BMW executives estimated the company spent $15 million to produce the films (compare that to an estimated $100 million to get the cars into the Bond movies) and saved millions by distributing them on their own server instead of the network airwaves.

What the BMW films did was reverse the model; they made the consumer the active seeker. It was the opposite of direct marketing. The TiVo phenomenon posed an enormous threat to traditional marketing, not because TiVo subscribers represented a majority of people watching television (TiVo expects to break the one-million-subscriber mark this year), but because it sent a clear message that people wanted to, and could, escape watching TV ads.

The initial reaction of marketers was to force the advertisements upon consumers through unzappable product placement, "pop-up" ads in the corner of the TV during regular programs, or sponsorships. The season premiere of Fox's show "24," for instance, ran without commercials, thanks to a bookend sponsorship by Ford. But these marketers assumed that the consumers would avoid advertising if they could. The BMW films demonstrated, conversely, that consumers could crave advertising.

And just because consumers embraced the films didn't necessarily imply the doomsday of American film. If anything, "The Hire" was a conservative extension of imbedded advertising techniques. Only people looking for the films would be forced to endure the commercial message. And though the shorts could be confused with studio films at festivals, online the films are clearly hosted by BMW, invalidating claims that the films are deceptive advertising. Additionally, while the films have plenty of action and lots of cars, they are far more sophisticated than the "advertainment" plots imagined by this author in preceding paragraphs. The all-star directors showed that real stories, orbiting controversial subjects, could be told powerfully and tastefully, while featuring a product.

Perhaps the most radical implication of the films is the fact that substantial money, talent and interest has been devoted to, and generated by, short films. The internet offers a unique forum for filmmakers to distribute their work, and gives them the freedom to tailor their film's length to the necessities of the subject. Some filmmakers can be economical and effective, communicating as much in six to nine minutes as in some features. Though some amateur film sites like ifilm.com or singlereel.com have already taken off, the internet is still largely uncharted territory for professional filmmakers. It's possible that a long-term outcome of the BMW films will be the legitimization of the short film by studios, offering more freedom of cultural expression to filmmakers, not less. It's also possible that filmmakers may make better advertising shorts than action features, bolstering marketers' claims that films are good for American culture.