Ericsson report: Telecom crucial for new media business... says Media Futurist;)
A while ago, I was interviewed by the people from Ericsson Editorial Services, on the topic of "The Future of Content and Telecom". The interview was just published, today, and I am quoting it, below, while adding some relevant links and images. Ericsson has also added a pretty cool video called "Generation Gap" which I am embedding for your additional enlightenment;). Beyond this, you may also want to watch the video from my speech at eComm 2009: The Future of Content & Telecoms: Flat Rate Content Bundles and Social Media, embedded below, as well (you can download this and other videos via my Blip.tv channel)
Leonhard says there are two main obstacles facing the new media business. One is that operators don’t understand how the media world works and what it takes to make media content popular on handsets. The other is that media companies are unwilling to change their old ways of working. “Operators need to start to think of themselves as providers of content, entertainment and general communication that goes beyond messaging,” he says. “Content providers are also hopelessly stuck with a model of selling that no one wants. For example, very few people buy music online. People download music for free, and the same is true for films and TV shows.”
Free content and licenses
Leonhard believes operators have to make the first move. He says they have to be willing to subsidize the use of content until mobile advertising becomes mainstream, or until there are other profitable ways of supporting media content.“For instance, in terms of music, operators should integrate legal music services into their networks for free. If they do that, they can become powerful providers of music ‘experiences’ and this makes it easier for them to sell other things to get a return on their investments.
“The music business is essentially a ‘freenium business,’ which means
that the first step should be free, but then the other 10 to 50 steps
should be what operators charge for. Ultimately, Leonhard envisions a licensing system for digital media,
just like the TV and radio license system that exists in most European
“In Germany, you pay EUR 150 per year for using the TV, and I believe digital music could be wrapped into this fee,” he says. “A license system can also be created solely for the purpose of digital media.“Let’s say the fee would be about EUR 1 per week; I think most people would be happy to pay that amount. It would generate revenues and, even if tax-payers refuse to pay it themselves, the money could come from sponsors, marketing and advertising.”
Leonhard says that a “digital media” licensing system will not be achievable without the support of telecom operators. “Telecom has the economic power to create a licensing system because they have the users,” he says. “If the pressure is strong enough, the content owners will agree to public licenses and the telecom industry will agree to pay them.” Leonhard says splitting the earnings from such a licensing system would mirror that of a radio license. “The streaming or downloading of music could be monitored, providing a digital footprint. And, at the end of every month, you can see how many times a song has been downloaded and that will decide what percentage of the pool of money the song gets in that particular country. The more your song gets played, the more money you get.”
Leonhard warns that if content companies do not develop or adapt to new payment models, they are in danger of bankruptcy. “Until this year, most content companies have been trying very hard to control the flow of money due to their history of monopolies and cartels,” he says. “Today, they can no longer control the whole system because it’s an open system. And if we are going for an open platform, all players – from media companies to telecom – have to collaborate. “The problem is not so much that people don’t want to pay, but finding the right point of payment. I always say that media content providers have a ‘toll-booth problem,’ meaning they have put up the booth too early, and people turn away. If they put the booth in the right place, I’m convinced people will be willing to pay to get access to their favorite content.