My guest post on the DDB blog: The Future of Marketing & Media - Data Is the New Oil

Thanks to Pat Sloane at DDB for inviting me to contribute a blog post on the DDB blog, see below (links added by me)

"This guest post was written by media futurist Gerd Leonhard. Named "one of the leading Media Futurists in the World" by The Wall Street Journal, Gerd works as a futurist in the media, telecom, technology and communication industries. He is also an author, blogger, keynote speaker and strategist and is the CEO of TheFuturesAgency and a visiting professor at the Fundacao Dom Cabral in Sao Paulo / Belo Horizonte, Brazil.

With the explosive growth of the Internet, mobile devices and social networking, a connected world is indeed a very different world. Just witness the meteoric rise of YouTube, Facebook and Twitter, and the demise of the recorded music industry as we knew it. I would go so far as to argue the only reason advertising in its pre-Web 2.0 form (a global business worth approx. $400 billion per year) ever existed was simply because we were not yet truly connected as today's mobile, social and real-time Internet did not yet exist.

Now that it exists, most of us will no longer tolerate interruptions, meaningless pitches, garish popups, Las Vegas-style skyscraper ads or junk email. We are looking for truly personalized offers, real meaning, solid relevance, timeliness, and yes, transparency and truthfulness. In other words, we will be looking for merit and values that are geared 100% towards us, not to everybody else, or someone else. Think micro-sprinkler systems, not fire hoses; droplets of expression, not spigots of noise exploding off empowered consumers (many of which in fact loath that very term).

Clearly, if brands and their marketers, ads and messages do not provide real value (remember: only time is a truly scarce value now), we will quickly lock them out of our lives and put them on the 'infinitely ignored' list. One might therefore argue that advertising is indeed becoming content (contvertising, anyone?), since relevant and desired, opted-in and followed content is usually quite valuable to us as we spend time on it, while irrelevant messages that encourage us to purchase items we don't even need are just noise. And the Internet has been so fabulously great at increasing the noise level that the time has come to turn that noise into meaning, to take the firehose of data and turn it into a clever sprinkler system.

The key question for marketers, as ever, is: how can you cut the noise, how can you be relevant, be truly wanted, make a better match, and benefit from meaningful connections? How can you turn the act of selling into content, into engagement, into mutual appreciation? Is that even possible?  This is where we get to the enormous value of Data.

According to an April 2010 Wired.com post and a related IDC study, the total universe of information available to us already amounts to 800.000 petabytes of data. If you stored all of this data on DVDs the stack would reach from the Earth to the moon and back! By 2020 the digital universe will total 35 zettabytes, or 44 times more than in 2009, keeping in mind that an estimated 75% of all data is already generated by the users themselves.

This makes total sense when you think about it: forwarding a link, rating a site, commenting on a blog, twittering, sharing bookmarks, allowing cookies on your computer, sharing your location, logging into websites, liking something on Facebook -- everywhere we go, everything we do, every move we make around the Net (and soon, elsewhere, as well) -- creates click-trails, leaves digital breadcrumbs, produces data exhaust, and creates what I like to call meta-content, i.e. content around content.

Now, just imagine faster mobile Internet access at a much lower cost (or even free, courtesy of Google and O3B); much cheaper, yet more powerful and smart, mobile devices, connected devices that are not phones or computers but things, objects and products; BRIC+Africa coming online at a furious pace; and computing shifting from tethered computers and mouse clicking to tablets, touch-screens and finger-sweeping, and from downloading to cloud-tapping, which without a doubt will generate seriously more data than ever before, and at an increasing faster rate.  The mind boggles (and possibly recoils) over the possibilities and over the huge challenges that these changes will pose, as well. But no matter what one's concerns may be, I think we can safely state that data is indeed the new oil, a metaphor that originated not with me but most likely with the ANA's Michael Palmer and Clive Humby.

Whoever gets to sift through this data, slice and dice it, move it around, make it useful, clear its legal and fair use, and just make sense of it all, is probably going to be more powerful than Shell, Exxon or Mobil have ever been (BigG and BigF emerge as distinct options here). This will, of course, require very careful and sensitive fine-tuning, with utmost attention to giving full control to the user, period. Regulation will be required but should, in my view, not be hastened; however, something that we must certainly come to grips with is that privacy will become something that we must act on to get back, rather than attain or retain by mere default. Those shiny new and very powerful tools of sharing and self-publishing do require that we accept and handle new responsibilities, as well - now that all of us can easily and constantly connect, we also need to learn new limits, new do's and don'ts - and the purveyors of this new power need to help us rather than merely seduce us.

The bottom line is that the data that all of us are increasingly generating and constantly spreading as most of us are switching to an always-on mode, will be at the core of all future success in marketing, branding and advertising -- and for that alone it's roughly worth $1 trillion, already (counting advertising spend, marketing and communication budgets, data-mining etc).

In a truly connected world, i.e. within the next few years, marketers will need constant and deep access to that data, in all its various forms and levels of permissions, because without this data their efforts will be utterly useless to the people formerly known as consumers ( today's users, followers, friends and participants). If the future TV does not know a fair bit about who we are, where we are, what we have watched, for how long, who we have shared shows with, what we have commented on, how we rate things; or if - worst case - we decide to just pay a bit more and keep our click-trails and our data off the grid (yes: Think The Matrix), then the marketers' job will become a lot harder, if not impossible. Matches can't be made, relationships can't be forced, brands can't be followed, connections are interrupted. Yelling is dead, and engagement needs permission - a tough but extremely rewarding challenge.

Getting too little or bad data -- or not understanding it-- will literally mean running out of gas in the middle of the desert. Therefore, the mission is to keep it all fueled up. And just like oil, there will be a myriad of issues (hopefully, not wars) that will arise with the responsible and fair practices of drilling, pumping, shipping, refining and dispensing of data. But without a doubt these issues will be solved in due course because this Data-Oil is very potent and because the responsible use of it will light up so many households that sufficient incentive for problem-solving exists. Telecom companies and mobile operators will want in on this game, as well - after all, it's their networks that make this all work (for now).

My prediction is that we will see a huge influx of companies dealing with the various aspects of data drilling, shipping, refining and remixing, and that the next Exxon or Mobil may well be a data-slicing company. Agencies, marketers and brands need to embrace the challenges and experiment: Get into the new Data-Oil ecosystem. "

Posted in Strategy on November 8, 2010 DDB BlogStrategyNovember 8, 2010 

 

Related articles

• The Future of Advertising: Gerd Leonhard at Adtech London 2010 (slideshare.net)
• Social Media (R)Evolution (Schwab Impact 2010) (slideshare.net)
• Gerd Leonhard: Music for the masses (telecoms.com)
• The Future of Advertising: Interaction before Transaction (AdTech London) (mediafuturist.com)
• Egosystems become Ecosystems: the future of media, marketing and business (my presentation at DoLectures 2010) (mediafuturist.com)
• New video: 5 customer engagement trends by Gerd Leonhard (future of marketing) (mediafuturist.com)
• Announcing my new company: The Futures Agency (TFA) (mediafuturist.com)

Cross-posted from my Techdirt Guest Post: The Future Of Content: Protection Is In The Business Model - Not In Technology

Last month, Mike Masnick invited me to do a guest-post on Techdirt.com one of my favorite online destinations. It went live last night and is getting quite a few comments - check it out here. Comments and discussion is here.  Retweets are here.

Image by gleonhard via Flickr

If I received a dollar every time I get a question along the lines of "how can the content industries compete with FREE?" -- I would be traveling first class everywhere I go. Underneath this question I often find my favorite toxic assumption: "less control over distribution means less money."

This belief is as tired as it is poisonous: enforcing control (when trust is really what's needed) will yield instant disengagement, which swiftly and surely will translate into dwindling revenues -- as the music industry keeps proving again and again. If you believe in control rather than value and trust, the content business of the future is not a good hunting ground for you.

Take eBooks: despite clear and present proof that DRM has proven disastrous in selling digital music (and now is pretty much history), technical protection measures are still being looked at to 'secure distribution'. When will they ever learn?

The thinking that the digital distribution of content must be controlled to achieve any kind of reasonable payment is fundamentally flawed because of this not-so-futuristic realization: in our open, mobile, social and digitally networked economy, content publishers need to offer their goods in a way that no longer centers on the distribution of units (digital or physical) as the key revenue factor. The idea of just selling copies is toast - selling (i.e. offering) access is where the money is. Kevin Kelly said it years ago: we must sell what can't be copied, what's scarce, not what is ubiquitous.

The irrefutable trend is that the window of opportunity of 'selling copies' (be it iTunes, eMusic, the Kindle or the iPad) is rapidly closing. The real opportunity, the TeleMedia Future, is in selling access and presenting a constant stream of up-sells (i.e. added values and offering content-related experiences). Remember, as Mark McLaughlin so righly pointed out in the HuffingtonPost recently, consumers have never really paid for content - they paid for distribution! And now, distribution means Attention and Access.

Imagine when buying access to eBooks, you wouldn't just pay for the authorized enjoyment of the authors' words, but you would also gain instant access to highly curated and socially-networked commentary, a fire-hose of meta-content provided by your most important peers and friends that may also be reading these books, and their ratings, explanations, slide-shows, images, links, videos, cross-references -- and maybe even some direct connections with the author or the publisher. In an access-based, bundled and cloud-centric content ecology, being a legitimate and authorized user enables engagement, conversation, relevance, personalization, meaning... i.e. it unlocks really valuable benefits for the user. Connect with Fans + Reasons to Buy (as has been mentioned on this blog a few times, before, I believe) - that's where the money is.

In music, streaming-on-demand will without a doubt be available 'for free' (i.e. bundled and packaged by 3rd parties) or advertising supported, while many added values above and beyond the mere reproduction of music will not - no matter whether WMG's CEO Edgar Bronfman thinks it's a good idea 'for the industry' or not.

Just imagine where an access-to-the-cloud model could go next: if I want a high-definition version of my favorite opera or that Blue Note Jazz Club concert from last night I could buy a premium package that provides it. If I want to share my personal play-lists, ratings and comments with my Facebook friends, and get access to their content, as well, I can add the 'social network option' to my package. If the price is right (micro-transactions, anyone...?), I'll buy - because I am already hooked on the music.

The music industry needs to ask itself this question: if a permanent, unprotected download of a song would cost only $0.10, or if an ad-supported version of a on-demand, all-you-can-eat music service would be seamlessly bundled into your mobile phone subscription - would anyone still bother to scour the web to find badly ripped, virus-laced tracks for free? Would we need 3-Strikes or HADOPI or Digital Economy Bills?

Yes, I know, that price point sounds ridiculous for those record label CEOs that used to sell CDs for 15-25 Euros a piece, but hang on a second: if they can get 95% of the users to buy access at a much lower price (and almost zero cost of duplication and distribution!), and in that process really engage with them, the fans would also do the marketing for them - i.e. share the links. Sounds like a great model to me. But of course: selling access at a much lower (or feels-like-free) price to quite literally everyone only makes sense if it actually connects directly and smoothly to a multitude of up-selling possibilities, such as interactive versions of eBooks, high-definition versions of online radio shows, albums or concerts, in-depth analysis and audio/video commentary for news, etc.

Now, content storage is starting to move from my own computer or my hard-drives into the cloud - and I think this is very good news for content creators, publishers and rights-holders because it makes it even easier to engage and up-sell to those new generatives. Crucially, the answer to the constant quest of monetization is also in the cloud: I believe most people will soon stop sharing the actual media files (since they are getting increasingly larger and larger, and therefore more unwieldy) and will share only the links, the bookmarks, the metadata or the tags, and that should be a boon for the content industries.

The perfect test bed for 'Media as a Service' (MaaS) may unfold soon, with Apple's new iPad or Google's Tablet (hopefully). Extending the concepts mentioned above, rather than blocking my wife or my kids from sharing an eBook with me it would be much more logical if I could easily read her book, as well; but beyond the 'copy of the words' all else would not be available without a micro-transaction on my part, i.e. I would not have instant access to the cool video clips, the updated links, the footnotes, the ratings, etc; i.e. all that valuable context that will make eBooks so much more powerful would be out of my reach until I validate my own access.

The bottom line: content sharing isn't the real problem: high price points, outmoded, pre-web toll-booth concepts, broken relationships and processes, low values for high prices, bad technology and service, and utter lack of conversation and engagement are.

Here is my message to publishers and content owners: lower the prices for access to your content to the point of unanimous excitement, use open standards and technology platforms that work for everyone, everywhere; bundle and package as attractively as you can (then: repeat). Team up with ISPs, mobile operators, advertisers and device makers.

Remove all the reasons that your users may have to avoid your new toll-booths and skip the desired conversion to 'paid' - the lower the hurdle for legitimate usage and paid engagement, the higher the added values, the less you will have to worry about 'competing with free'.

33 Comments | Leave a Comment..

Related articles by Zemanta

• iPad: King of All Media? [Digital Daily] (digitaldaily.allthingsd.com)

Warner Music Group 2.0: my unsolicited advise on how WMG could embrace the Future

Image via Wikipedia

Yesterday, the Net was buzzing with news from Warner Music Group's earnings call, with Edgar Bronfman announcing his intention to not license 'free' streaming services any longer.  Rather than rant about this (as tempting as that may be), I thought I would just share some ideas with you, and with Edgar, on what else WMG could do to become.....well, WMG 2.0. Some of these ideas were initially presented to another major music company about 9 months ago, btw. I don't know where this ended up, though - stay tuned. 

Download the PDF: Thoughts on WMG 2.0 Gerd Leonhard Futurist

Related posts:

• "Book publishers: please learn from the mistakes of the music industry"
• "Content 2.0: protection is in the business model - not the technology"
• "The price of free: reinventing the online economy"

Gerd Leonhard’s unsolicited thoughts: Creating Warner Music Group 2.0

Dear Edgar, based on what I have learned of my 16 years in digital music, and distilled from the 2 music-specific books I (co)-wrote (“The Future of Music”, and “Music 2.0”) here are a few ideas on how I think WMG could reposition itself and achieve future growth:

1) Create and offer a complete, cutting-edge online platform for your artists, writers, labels etc. Let’s call this the ArtistOS. It should pretty much mirror what Google already does for Internet users, in general, i.e. provide free access to very powerful and inter-connected Web2.0 tools that used to cost 100s of 1000s of $ to build but are now provided free of charge. These tools could include things such as music widgets and embeddable flash players for audio and video, twitter-API based marketing and communication tools, connecting tools based on Facebook- & Google-Buzz/Connect, multi-site upload and updating tools (similar to TubeMogul for videos), text/video/audio RSS feeds and syndication tools, ad-insertion tools and production technologies (for widgets and web pages), mobile phone applications for quick-launching artist and label apps (see MobileRoadie!), general content syndication and CMS tools, Google Buzz, Tumblr- and Friendfeed-like services for artists, Google-analytics-like tools for tracking and analyzing web traffic, and much more. Building (or licensing!) these tools would require some dedicated resources but this would not be a huge undertaking in terms of budget since most of these solutions are based on existing APIs, feeds and various open source offerings. Having the ArtistOS available to anyone that works with WMG would be huge strategic advantage, and would greatly simplify marketing and promotion tasks, as well.

2) Define, publish and promote a Collective, Global and Open Licensing Platform. The biggest obstacle for strong growth in the Music 2.0 era is the utter lack of global licensing standards for the legal use of music on the Net, and apart from the admirable Jim Griffin - led Choruss initiative WMG seems to still be following the old-school path of ‘ignore & deny’, here. Not good. The current licensing procedures are causing severe friction in the digital content ecosystem, and represent a significant hurdle to innovation - and thus to creating and nurturing new revenue streams. WMG 2.0 could solve this problem by pioneering a standardized and collective licensing platform that is open to everyone, transparent, flexible, and revenue-share based rather than fixed-fee based, therefore allowing for liquidity in the new digital market place. Providing a public, standardized yet flexible and open license to all streaming-on-demand services would be a very good way to start this process - and the time to do this is now. Yes, I know, advertising revenue splits are not bringing in much money, now - but they are dead-certain to do so within 18-24 months, when up to 25% of all advertising budgets will be shifting to digital, interactive, mobile and social platforms. Have some imagination. Build the Future (don't keep asking for it to be delivered to you).

3) Vigorously pursue flat-rate and bundling scenarios for the licensing of your entire catalog in return for flat fee payments, RAND-based revenue shares and fair splits of advertising and other revenue streams (similar to what Google has done in China, TDC in Denmark etc). Licensing access to music, rather than (just) copies, is the only way forward in a connected, always-on world that already equals listening with owning. Switch from relying on scarcity to monetizing ubiquity and abundance, and invent new models that fit this. Generate new revenues by engaging with ISPs, telecoms, ICT companies. mobile operators and search engines. Drastically reduce friction. Embrace ‘free’ models as long as somebody will pay somewhere.

4) Develop (or license) and deploy your own mobile music applications, on all platforms (iPhone, Android, Symbian, Windows etc); make mobile applications the center piece of all marketing and selling efforts, worldwide - the future of music is mobile, period. Think of mobile applications as the new CD; and therefore of music as....software. Roll out applications for all new releases, and for all your labels and brand. Make the basic apps free, but offer very attractive ways to upgrade, in all territories. It’s all about the packaging!

5) In terms of future sales, think Freemium, and think access not (just) copy. Offer things that used to cost money (such as listening to a song, on demand), for  what I like to call  feels-like-free (i.e. in return for the users’ attention); just be sure to find ways to convert 20-50% of those users (aka the friends, fans and followers) to all kinds of new premium services, such as high-definition versions, concert recordings and web-casts, special products, digital compilations etc. In addition, dramatically lower the price for physical products while providing all kinds of premium products - again, focus on selling access to music not just products.

6) Investigate the concept of crowd-sourcing new talent. Use the web’s increasingly useful collaborative powers to discover new artists, and draw bloggers and pro-sumers into the A&R process, worldwide. Bloggers, in particular, are the new Radio DJs! Combine some of the ‘wisdom of the crowds’ with your own professional A&R people. Do what P&G has done with Innocentive and their own ‘Connect and Develop’, and what DELL has done with Ideastorm, and what Kodak is doing in Social Media. The benefits seriously outweigh the risks!

7) Drop most if not all of the on-going law-suits, and switch your legal strategy to a 100% solution-oriented process. Compensation not Control is where the money is; all else is just posturing. The IFPI and RIAA-led efforts of enforcing control in an exponentially consumer-empowering media ecosystem have all failed miserably, and will not produce any monetary results in the future (except for enriching the lawyers). Here is a tough one for you: do you still need these lobbyists? Rather than spending most of the time preventing what the ‘people formerly known as consumers’ really want to do, all available energy should be put into exploring, building and co-developing those ‘new generatives’ for digital content, i.e. next generation advertising and branded content, packaging, bundling, flat rates etc.

8) Pursue drastic and large-scale innovation within - and on the fringes of - WMG. Bring the smartest possible people into the company; apart from content and talent (of course), focus on technology, mobile and next generation advertising and marketing. Invest in start-ups that can invigorate WMG 2.0 and provide significant strategic advantages.

9) Start to really talk to the music users, and have actual conversations with your customers. Engage on public conversation platforms, switch your PR and corporate communications from push to pull. Launch a WMG executive blog, start using Twitter; turn push into pull across the board. Do a Kodak - and go beyond! Create more transparency which creates trust which creates new business opportunities. Win back the trust of the consumer (better: the users) and the artists.

10) Offer profit-sharing arrangements with your artists: from a fixed pool of profit shares, each artist that is affiliated with WMG could receive a bonus payment that is proportional to their significance, every year. Do something similar with your staff.

11) Decentralize your distribution efforts, syndicate the music as wide as possible. Youtube gets 60% of its traffic from people embedding video players into their own websites - do something similar for your catalog. Instead of (or at least, along with) building or supporting central destinations, allow the users & fans to do the marketing for you, and syndicate your assets around the web. Think RSS, feeds, XML, API, not MTV.

12) Data is the new Gold - mine it! Making money around the music (not just from or with the music) is where the future is going. Investigate new business models that are based on data-mining, next-generation advertising and branded content, and behavioral targeting.

Note: once you’re ready.... there are a few good companies already working in most of these areas, and you could team up with them: just ask me.

Related articles by Zemanta

• Future Adventures in Music... | Clash Music Exclusive General (clashmusic.com)
• Warner Dams Up Free Music Stream (readwriteweb.com)
• Warner Music Continues to Prove it Hates its Musicians and it's Fans (mymediamusings.com)
• Warner: No More Free Streaming Music For You (mashable.com)

Content 2.0: 'protection' is in the business model not the technology (thoughts on the future of selling content)

Fueled by the music industry's ongoing turmoils and, finally, books going digital at a very rapid pace, there is a lot of debate on how to deal with the fact that many people habitually share i.e. redistribute digital content without any of the upstream users making their own payment. How can you monetize content when the copy is free?

This question is a key issue across the board, whether it's in music, eBooks, news, publishing, TV or movies. The fear is, of course, that once a digital item has been purchased by one person it can be easily forwarded to anyone else if it is in an open format, thus seriously reducing the possibility that someone else will actually pay real $ for it, as well (of course, the same is true for supposedly locked or protected digital content as well - it just takes a bit longer). No more control over distribution = no more money. Right?

Despite the plain fact that DRM has proven disastrous in digital music (and now is pretty much history), technical protection measures are still being investigated as a plausible method of securing payment, especially in the exploding eBook sector. This worries me greatly because technical protection measure are expensive, hinder or prevent mass-scale adoption, curtail or kill social sharing which defeats user-to-user marketing, often drastically limit fair use, and are by and large useless when trying to thwart the real pirates i.e. those that have malicious, criminal intentions of stealing content in order to sell it to others.

Not just content - Context! In my view, the thinking that the distribution of content must be controlled to achieve any kind of reasonable payment is fundamentally flawed because of this not-so-futuristic realization: in an open, digitally networked economy (note: I am talking about today, not tomorrow!) content publishers need to offer their goods in a way that no longer centers on distribution being the key factor. It should not (only) be the content that is sold (i.e. the mere 0s and 1s) but the context, the added values, the many others items around the content. Sell what can't be copied.

 The irrefutable trend is that the window of opportunity of 'selling copies' (i.e. iTunes, eMusic, Kindle etc) is rapidly closing, at least in most developed countries. The next, and very much already-present opportunity is in selling access and added-value services, and in providing content-related experiences.

Once we embrace that the users -the people formerly known as consumers- can't be reduced to just being 'buyers of copies' we can investigate how they would want to pay for everything else, as well. For example, when buying an eBook users shouldn't merely pay for the authorized distribution i.e. the legitimate copy of the words but they could also gain access to highly curated commentary, known peers and friends that may also read this book, ratings, explanations, slide-shows, images, links, videos, cross-references, direct connections with the author or the publisher and so on. Yes: connect with fans + reasons to buy (as Mike Masnick of Techdirt has succinctly summarized many times before).

In this model, as a legitimate user, I would also get valuable context when I pay. I would get engagement, conversation, relevance, personalization, meaning... i.e. really valuable benefits to me as a person, not just a dumb, anonymous recipient of free zeros and ones. I don't get these benefits just because I get a free copy via email, Rapidshare, BitTorrent or some drop-box on the Net, because it is stripped bare of everything that really matters to me. This is the key to the future of monetizing content, and it will take many different shapes and forms depending on the content, and the culture that surrounds it.

 For example, in music, it is very likely that streaming-on-demand (and the temporary buffering i.e. offline playing of those streams) will be 'free' i.e. bundled and packaged by 3rd parties, while the context and those many added values will not. If I want a high-definition version of my favorite opera or that Blue Note Jazz Club concert from last night I can buy a premium package that provides it. If I want to share my personal play-lists, ratings  and comments with my Facebook friends, and get access to their content, I can add the 'social network option' to my package. If the price is right, I'll buy (btw: this relates directly to why people buy virtual items - perception of value, and purchase after deep engagement - see my Farmville/Facebook example: they sell 800.000 virtual tractors per day;).

As to pricing and making 'buying' irresistible: imagine if a download of a song would cost only $ 0.10 - would anyone still bother to scour the web to find badly ripped, virus-laced tracks for free? Yes, I know, that price point sounds ridiculous if you used to sell CDs for 20 Euros a pop but the argument for much cheaper access to digital content that is offered in open (i.e. copy-able) formats is really quite simple: if you can get 95% of the users to buy at a much lower price, and make them so happy they will do the marketing for you (i.e. share links;), instead of getting 5% of the market to buy an expensive product that they can't really share with anyone (i.e. iTunes music or Kindle eBooks), then you should be doing just fine. This has been my chief argument for proposing the music flat rate during the past 10+ years, and I think it still holds water (in fact, it seems to be proving itself with the recent developments at Spotify, MOG etc).

And yes: selling at a much lower price but much higher volume only makes sense if the low-priced (or flat-rated), access-based offerings actually connect directly to a multitude of up-selling possibilities, such as multimedia versions of eBooks, high-definition versions of radio shows, albums or concerts, in-depth analysis and audio/video commentary for news etc.

In most content industries, I think the key is to offer a wipe-out, ueber-attractive way to get started at an irresistible price-point, and then convert most of those happy users to other offerings at a much higher price.

Pricing and value: getting the new formulas right. It all comes down to pricing and values - and many decision makers in the incumbent content industry will need to accept who will set those prices i.e. who will be in charge of value perceptions: not them, but the users. Hard stop. Reality check.

If you agree that the sharing of content cannot really be stopped, and that therefore the value of a mere digital copy of content will invariably decline, we must urgently re-think how we address the issue monetizing sharing, and what we can do to create and nurture those new values - the New Generatives - that will replenish those that used to be derived from being able to control distribution.

Added values, all the time. The metrics of the content industries need to shift from getting a copy to rewarding engagement. As an example, let's assume I have just purchased and downloaded a movie in an open file format, and I have a hunch that 50 of my close friends would also enjoy it. I post the movie on my iDisk shared files folder (anyone on .mac can do this) and send the link to everyone. Now, if the only value of the movie is in having received a 'copy without paying', then my friends have received the movie's entire value 'for free'. But if the value of this movie is also in the user / viewer being part of something much larger than mere 0s and 1s, i.e. a conversation or another environment of added values that are available to each individual viewer because they actually purchased access to the movie, then the mere sharing of the file is not going to be very attractive, for the upstream users will not have access to all these other values.

Imagine, then, if a legitimate movie buyer (or more likely, bundled-access-user) would also receive access to a select group of fellow users - and, crucially, representatives of the creators, producers or distributors - that would provide a myriad of additional values such as viewing exclusive, movie-related pictures, slideshows and short clips with the actors, locations or props used in the film, or getting special offers for related products such as books, games, merchandise or even HD versions of the same film, or unlocking new features within the very same file that are otherwise hidden (something that could easily be done within a mobile application, for example)... that is where it starts getting interesting. 

Combined with a no-brainer price point, having a constant flow of added values available to legitimate customers would turn file-sharing into a marketing vehicle, i.e. surely I could somehow watch the movie 'for free' but would be barred from all that other cool stuff that I would have access to if I only paid my $2, myself.

The crowd and the cloud: new monetization possibilities not based on Control. Content hosting is moving from my own computer and my hard-drives to the cloud - and indeed, this is very good news for content creators, publishers and rights-holders because if makes it easy to engage and up-sell to the new generatives. In addition, it is reasonable to expect that content files will get larger and larger over the next few years, since many devices are now capable to handle much better resolutions and many users are tiring of bad audio, video and image quality. The age of squashed-sounding MP3s is ending as high-end audio is becoming a reality even in the smallest devices. Assuming those 2 trends (people receiving bigger and better files as well as accessing those files in the cloud rather than storing it on any specific piece of hardware), the key question is what 'sharing' will look like in the near future and what can be done to monetize it rather than try to curtail it.

The answer is in the cloud: I think many people will soon stop sharing the actual media files (since they are getting larger and larger, and therefore more unwieldy) and will share only the links, the bookmarks, the metadata or the tags, if the result is the same, i.e. if the shared content is made fully available to the recipient, without further ado or unwieldy registration procedures, buy-now pitches etc. How could this work? 

 Imagine you have purchased an ebook for 10 Euros and you want to share it with your wife so that she can read it to you while you drive, or with your son because he really should know about this great book. With a good, old-fashioned printed, dead-tree book, this is certainly not an issue, so why should it be such a problem for the electronic version? Why not create and deploy many extra values around this book (such as video, audio, images, slideshows, dictionaries etc), make the file a lot larger, and then still allow a buyer to share the book via a simple link or bookmark that provides all recipients with the  basic, 'words-only' version of the book but withholds the added values until they purchase it for a very low and attractive price, themselves? Once those added values become a significant part of the user experience most users will not want to miss them - protection will be in the business model, not the software!

The perfect testing scenario may unfold soon, exemplified by Apple's new iPad. Extending the concept mentioned above, rather than blocking my wife from sharing an eBook it would be much more reasonable if I could still read the book, 'for free', but all else would not be available without a micro-transaction on my end, i.e. I would not have instant access to videos, links, ratings... i.e. that valuable context. This would clearly drive me to purchase a 'copy' myself - if indeed I like the book enough - sounds like a fair deal to me.

Engagement, interactivity, conversation and a constant stream of added values that can be produced at very low cost is what will give content owners 'protection' from rampant free-loading - not DRM,  region-coding or HADOPI laws.

Sharism and Money. When thinking about digital music (my original, futurist starting point), imagine an unlimited music service at a feels-like-free price, supported by advertising, brand sponsorships, ISPs / Telecoms and mobile operators. A service that allows me to stream or download the music, and enjoy it online or offline (pretty soon, a rather pointless distinction, anyway). A service that is basically cloud-based but that allows me to make temporary sub-clouds on my personal device so that I can always get to what I like the most, much like the gMail offline reader, mobile RSS readers, the Instapaper iPhone app etc. While I may be inclined to share some of the music files with my friends, I would be highly unlikely to publish the complete access details to my personal cloud via, say, Twitter - I would risk watering down my profile and messing up my entire personalization efforts.  Avoiding profile and account 'pollution' can be a major driver of payment adoption, I think.

Similarly, in books: let's assume, as a publisher, you'd allow people to log-in and get digital access to 10s of 1000s of books, at a low price (such as O'Reilly's Safari Books already does, for all those hardcore programmers and geeks around the world) - what would keep people from just sharing the log-in details and only pay for one account but have 2000 people getting everything for free?  The answer: once I am really involved with a platform I like, and use every day, I am not very likely to share the account details with everyone, because I don't want my profile to be polluted, and my own experience to be negatively effected. 

This is similar to having your family members use your eBay account for bidding on stuff they want to buy: not a good idea, since it will be your rating (which is the real currency of eBay) that will be negatively effected if your 15 year old son does not live up to the buyer's expectation on his last transaction. The same is true for Amazon: share your log-in details with your 12 year old daughter and you will make a mess out of your recommendations - she may love SuBo (Susan Boyle) but you don't want to keep seeing pitches for  stuff she may want, for the next 9 months.

The bottom line: content sharing isn't the real problem: high price points, outmoded toll-booth strategies, broken relationships and processes, low values, bad technology and service, and lack of conversation and engagement are. 
 
 


Here is my message to publishers and content owners: lower the prices to the point of unanimous excitement, use open standards that work for everyone, everywhere; bundle and package as attractively as you can (then: repeat). Remove all reasons that your users may have to avoid the toll-booth, and thereby side-step the conversion to 'paid'. The lower the hurdle for legitimate usage and paid engagement, the less you will have to worry about 'competing with free free'.

And do it now so you don't have to win people back from routing around you.

Image below via Somaya on Flickr (thanks!!)

Related articles by Zemanta

• Amazon Allows Some Publishers and Authors to Opt Out of E-Book DRM (readwriteweb.com)

My New Year's Message to the Music Industry: 9 points, 3 videos

Merry Christmas and a happy 2010 to everyone in the Music Industry! Below is a short video I made specifically for all you music industry people reading my blog (plus 2 other videos I believe you may enjoy, as well - if you need more, please go to my GerdTube channel on Blip.tv).

In addition, here are my top 9 ideas for what I think needs to happen in 2010, to move this industry forward. I am using mostly links here because, well, I have said it all already way too often in the past 5 years;) 

1. Stop pushing for more and more and...more legal or technical protection measures and lighten up on the constant quest for control: think (and act) compensation not control!
2. Access to music is going to replace ownership, very soon, so start thinking 'Selling 2.0' - if copies are abundant and can no longer be monetized in the same way as before, what else can you sell? This is crucial. You need to groom and build the New Generatives not push harder to pass laws to try and get the old times to magically return.
3. Friction truly is Fiction i.e. utterly wishful thinking, now, so you have a choice: get out of the way... or lend a hand (you have heard that song before). Reinvent your relationship with the artists and the 'people formerly known as consumers'. Stop hiding behind technological tricks and artificial hurdles: protection is in the business model not in the technology (need more? Check out my new book "Friction is Fiction").
4. Stop hanging on to that good old, comfortable EGOsystem paradigm - start building the new ECOsystem. The future is not in Google paying for all music online, or the ISPs paying for all music on their networks - it's in constantly moving, interconnected, fluid and tri-brid (that is hybrid+1) systems of 'I pay, you Pay, 3rd party pays'.
5. Collaborate - engage don't enrage, have real conversations not monologues, drop the big sticks and start growing more carrots. The time for Music 2.0 is now.
6. Offer a public digital music license that legalizes - and monetizes - all use of music online.
   
7. Music consumption via computers is getting less and less important - it's all moving to Mobile Devices (read my mobile Music 2.0 book and see the video below;)
8. The new money is in connecting the cloud (where the music is) with the crowd (where the money is) - access comes first now, ownership is second. And this is good news!
9. Question your assumptions: what do you still believe that is no longer really true...? (see the video below).

Related articles by Zemanta

• The Future of music and digital content: mobile, social and... PAID? (FAM09 presentation in Madrid) (mediafuturist.com)
• Video of my presentation at A2N Berlin: Music Like Water - the time is now! (mediafuturist.com)
• Some eBook industry 'leaders' are starting to sound exactly like the music industry 5 years ago (mediafuturist.com)
• Open letter to Lord Mandelson: here is how to solve the Internet Music Problem - Legalize It! (mediafuturist.com)
• Ericsson report: Telecom crucial for new media business... says Media Futurist;) (mediafuturist.com)

The Future of Digital Content and the coming Tele-Media Ecosystem (my presentation at Telco2.0 conference)

It was a pleasure and a privilege to be invited to the Telco2.0 Executive Brainstorm event in London, today, and to address a roomful of telecom  & media executives that were - as it says in the conference tagline - looking for a way to 'reduce the friction in the digital economy'. After having to listen to some rather bizarre and, sadly, rather 'retro' justifications about why those pesky Internet users and Digital Natives (i.e. our kids) really do need to be threatened with disconnection from the Net if they don't comply with the rules of yesterday's game, delivered with great pathos by the usual lobbyists from UKMusic and Universal Music Group executives (see the list of panelists below), I tried to get down to the bottom line of what the workable alternatives to their Control & Enforcement paradigms could be.

Funny thing is, that in the subsequent vote most people in the audience seemed to actually agree that disconnection and punishment are not going to change anything and are not a suitable path to new revenues... I always wonder why there seems to be strong consensus if people vote (or talk) individually, but if you hear them 'in public' everyone always delivers the good old party line of wanting more control and protection. Why is that? Whose bread we eat whose song we sing... is that it?

I will post a summary here, shortly. In the meantime, here is the slideshow (download the PDF via slideshare).  A

Enjoy and spread the word.

The Future of Tele-Media and Digital Content (Telco2.0 Conference)

View more documents from Gerd Leonhard.

Related articles by Zemanta

• New Content Logic: my presentation at TACD / Paris Accord Meetings (mediafuturist.com)
• Free...Feels-Like-Free...Freemium...? What in the world...? (mediafuturist.com)
• The Mobility Revolution and the Power of Social Media (presentation at the ACTE09 conference in Prague) (mediafuturist.com)
• The Future of Digital Content - Free vs Paid? My presentation at Tokyo 2.0 August 24 2009 (mediafuturist.com)

Book publishers: please learn from the mistakes of the music industry - my thoughts on what to do

I just received my new Kindle - the so-called International Edition - and as a result I have started to investigate the most recent electronic book developments. Apart from the Kindle (which I like but whose economic proposition is quite mad, frankly), I also own various Sony Readers and am a heavy Instapaper app user on the iPhone; I use it to read 100s of book-marked web-pages offline, saving 1000s of pages that I used to print.

Looking at what some large book publishers are starting to say about their digital strategies I have been getting a bit worried about a potential repeat of what happened in the music industry, i.e. of trying to keep or even expand 'control over distribution' while attempting a fruitful switch to a digital distribution model. In other words, many publishers seem intent upon using the advent of digital distribution as a way of fixing the 'flaws' of physical media (such as the CD or the book which can easily be traded, shared or lend to someone else).  Well, the reality is that in this new digital ecosystem, attaining total control is an impossible mission - and this flawed world view, I think, is main reason behind the global demise of the recorded music industry.

So here, below, is a summary of what I think non-fiction book publishers could learn from the digital music disaster that has been playing out in front of our eyes (and ears) for the past 10 years. Please note that in my opinion, the distinction between fiction and non-fiction publishing is crucial, because we must take socio-cultural contexts, existing user-habits and consumers UI (user-interface) preferences into account.

For one thing, I think that readers of business books are much more likely to adopt eBooks because they are often reading several books at the same time, annotate and bookmark heavily, skip chapters or like to search inside a book - all of which is becoming quite easy to do with the new generation of eBook readers. And many of them like gadgets, too, so that's a good fit. However, people who read novels or other fiction are, in my view, less likely to quickly adopt eBooks on a large scale since the good old interface of printed books still represents a much better emotional i.e. 'touch-feel-smell' value to them.

Let me also point out that while I think book publishers can learn plenty from what happened in digital music, the two businesses are really quite different, and whatever we may discover from the music debacle cannot just be transferred to the eBooks space.

Taking this into account, here are my top 5 tips for book publishers:

1. Don't (just) sell the copy of the content - sell everything around it. In fact, consider making the mere 'copies of words' (i.e. the raw data, the file) a lot cheaper to obtain from authorized sources but also start creating and offering those added values that are only possible in this coming digital ecosystem. Start building - as Kevin Kelly says - those 'new generatives' that will, over time, probably make up 75% of your total revenues. What do I mean with that? Unique, non-copyable values such as context (e.g. being able to look up a definition of a word or phrase via Wikipedia, or find a precise topic from the book you are reading in other, related books), curation and packaging (e.g. being able to read 'the best' chapters of the top 25 business books in a single, new 'compilation', or having a book edited down to 20 pages or 3 hours of audio so that I can save time and read  / hear only the essential stuff), immediacy (e.g. getting the book delivered at the very moment that the last word has been written or edited), and social relevance (e.g. see what my peers are saying about this book, and what comments they may have shared). The exciting thing is that eBooks don't have to be linear any longer - now, they can be linked, amended and interwoven; and guess what: no-one but the author and the publisher can provide these kinds of values. Read my lips i.e. tweets:  Unique experiences by unique creators cannot be pirated. Imagine 10s of 1000s of people buying the basic eBook for a very low price but then 30% of them opting to pay an additional 'fan & follower' subscription fee to get all the updates, comments, links, videos and audio versions as well. My advise: look at the initial sale of 'the copy' only as the mere starting point rather than the only way to monetize, look beyond the mere copy. With eBooks, the copy is just the tip of the iceberg. 
2. Don't focus on protection: focus on engagement, on attraction, on enabling followers not pushing enforcement. Realize that the more you empower the user the more money (s)he will give you. Yes, that's the Google way. As trite as it may sound to some of you: in digital content, friction really is fiction: if you keep the price too high, if you don't offer a standardized and open platform, or if you impose burdensome technical restrictions then you simply will be pointing to, or shall we say, sending your customers to those countless illegitimate places where they can just download the free files without any of these hassles. You don't compete with free - you compete with better service, trust and added values!
3. Don't try to sell what's abundant - sell what is scarce. The 0s and 1s that make up a book's content are and will always be abundantly available to those savvy digital natives, and will be captured by those 'people formerly known as consumers', no matter what you may do to prevent it. No matter how much you hate the idea: copies of digital files are abundant, meaning... close to 'free' - and that's that. What can be sold - based on a powerful, legitimate, low-priced or bundled, ubiquitous, unrestricted and super-attractive access model - is the stuff that's actually scarce which includes my own time (a great example is how the 'Wired' guru and Longtail prophet Chris Anderson sells the edited audio version of his new book "Free" for $7.49 while the basic, long-form MP3 is free), powerful creation, extra services such as special audio and video versions, and so on.
4. Technical copy protection or so-called digital rights management measures (DRM/TPM) are guaranteed not to work unless they are 100% invisible and actually add value to the user experience - in which case they become more like CRM.  Most of the time, DRM is an insult to the legitimate buyers, and utterly useless in terms of actual protection simply because it is trying to solve a business problem with technological measures. It prevents (and insults) customer happiness and greatly deters future purchasing. It reduces sales and punishes those that actually do buy and pay real money for the content. Book publishers, repeat after me: DRM will cost you serious money to implement and it will do nothing to 'protect' your content. Remember: after a decade of stone-walling and criminalizing what consumers have always asked for, the big record labels have finally allowed most digital music retailers to remove the DRM and sell unprotected MP3s - and guess what: the retail of those MP3s has had zero impact on the issue of how many people 'file-share' music without permission. So, read my lips i.e. my RSS: the only protection you have is in the business model. Think bundles and flat-rates based on very personal, unlikely-to-share log-ins, the potential embedding of user-IDs and even some personal profile information into the purchase process as well as, possibly, into the file-metadata itself, and above all a powerful 'great price + service' policy that will make all those bad UI, lousy experience but free sharing sites obsolete. I also recommend to look at the concept of Social DRM.
5. There can only be one standard file format, and it needs to work on all devices. ePub looks good but DRM'ed ePub is a bad idea. As I said in my presentation at the eComm conference in Amsterdam, just yesterday: "the fastest way to economic suicide is to put walls around your content". Just like in digital music, where MP3 is what everyone has been using for the past 15 years, you need to go with an open, ubiquitous file format and not start a format war that will leave the consumers baffled and ill-served. The Kindle is nice, yes, but just like iTunes which is only now becoming DRM free it's a tightly walled garden that forces you to stay inside and enjoy yourself only within the existing confines. Now, for me, personally, if the pricing was drastically different maybe I wouldn't complain about the fact that I can't share these books, at all - maybe if I felt like I had some kind of real power as the consumer to influence how these economics works, maybe that would be OK. But the Kindle's paradigm is based on a 'take it or leave it' rule: expensive devices, delivery fees for each book that's purchased outside of the U.S., and eBook prices that are only slightly lower than the printed book...? This is certainly not going to get those digital natives excited about becoming a 'legal' user of eBooks.

The bottom line: don't worry so much about preventing sharing or copying. Offer more, cheaper, better and more connected services, get significantly more users at a much lower prices and re-invent your business model.

Related: Lending...2.0?

Related articles by Zemanta

• Why the e-reader market needs to kill DRM now (dvice.com)
• Is Book Sharing Really a Threat to Publishing? [Voices] (voices.allthingsd.com)
• Can E-Books Save Barnes & Noble? (businessweek.com)
• Open letter to Lord Mandelson: here is how to solve the Internet Music Problem - Legalize It! (mediafuturist.com)

Open letter to Lord Mandelson: here is how to solve the Internet Music Problem - Legalize It!

Basel, Switzerland, October 12 2009  Gerd Leonhard, Media Futurist

Open Letter to Lord Mandelson, First Secretary of State, Secretary of State for Business, Innovation & Skills (UK)

The Digital Music License (DML) – why and how a new public license for the legal consumption of music on the Internet would provide a solid alternative to the proposed '3 strikes' legislation

Update: Greek Translation here

Dear Lord Mandelson,

The proposed "3 Strikes" legislation is flawed in many more ways than I could hope to outline in this letter, and many of these issues have already been addressed in many other places. Therefore I shall provide only a quick summary of some of the key issues, and then move on to describe what a fruitful, realistic and decidedly more pragmatic alternative could look like.

Unauthorized use of music on the Internet is not a technical problem but a business issue. The reasons why the global ‘free’ sharing of music via the Internet (whether streamed or downloaded) is growing exponentially cannot be nullified by technological means. Rather, the digital music (r)evolution clearly poses a myriad of business and socio-cultural problems that require us to devise a new social contract that legalizes what people actually do, and then build new business models around it.

Anyone that has attempted to innovate within the music industry (including me) will attest to the fact that the largest hurdle for the monetization of music on the Internet during the past 15 years has been the astounding absence of new licensing schemes that actually fit the 'Internet Generation' i.e. the digital natives, and the new ways of consumption that connected consumers are rapidly adopting. Bottom line: the problem is not what consumers are doing - the problem is that the music industry has not blessed it with a license yet!

Therefore, any attempt to solve these business issues with technological measures – such as the proposed 3-strikes legislation – would, with utter certainty, be very expensive, have serious social and political consequences and yet fail miserably to deliver tangible monetary results for the content industries or indeed the creators; just like Digital Rights Management (DRM) which was pushed very hard by the music industry for over a decade and has now finally been acknowledged as the snake-oil it really always was. The only outcome of the proposed 3 Strikes legislation would be to further criminalize every single consumer that is interested in music, every fan and every potential customer.

So, again, let me be pragmatic: this idea means no money for the creators, no new revenues for the industry (but even more rejection by the consumer), and still no satisfaction for the music consumers. In my view, the most pressing objective must be to solve the very real problem of how music (and then, other digital content) can indeed generate new revenues via the Internet - for the old revenue streams are the past, beyond a shadow of a doubt - just look at what is happening to newspapers and print publishing! Technology will not and cannot solve problems posed by seriously outmoded business practices. 

 The bottom line: controlling the flow of digital files is ‘Mission Impossible’. The challenging but nevertheless indisputable reality is that the very idea of reliably and consistently controlling the distribution of music files on the Internet is basically a technical impossibility as well as a social, political and cultural minefield. Today, the simple act of listening or streaming, watching or reading anything on a connected computer or a mobile Internet device is indeed the same as copying the content; one cannot be done without the other. The Internet is a giant copy machine, by definition, by design, and now… by culture. We may not like it, and we not appreciate it, but just like the railway was hated by the people that made horseshoes and horse carriages we have no choice but to shift what we do, adapt, and reinvent ourselves. As your own kids or any so-called digital native will tell you, access is now the same as a copy i.e. ownership - in technical terms and in terms of user behavior and mindset. Crucially, of course, not yet in terms of the existing laws and prevailing licensing practices. And therein lies the rub.

I would argue that we are in fact trying to build a new business on top of the decidedly pre-Internet principle of total and exclusive copyright – a stark dilemma that has proven to create endless friction but produce very few new revenues. The very idea of being able to control the flow of files in order to extract earlier or possibly higher payments from the users is fundamentally flawed, and we must therefore look for ways to monetize it rather than to prevent it.

The value of music is no longer (just) in the copied file. We urgently need to understand and accept that the value of music is no longer (just) in the mere copies of the digital files. Our attention needs to shift from the old - and dying - business of ‘selling the copy’ to selling everything else i.e. the many other values around that copy (some people call that 'service' ;) but starting with providing very low-cost or flat-rated and bundled access, and then creating many new revenue generators on-top of the bundled, legalized access to music. Once legal and unlimited music distribution is build-into Internet access - when Access is Content - a revitalized music industry can focus on talent, curation and marketing, i.e. the attention-getting and the conversion of that attention into actual income. And yes, there is serious commercial value in the music industry once we regulate distribution (I call this Music 2.0 - if you care to read my free book on this... here it is)

The DML: the alternative to the proposed '3 Strikes' legislation. 80 years ago, the answer to the challenge of a then-new and vastly popular technology called 'Radio' was to legalize it and provide new licensing schemes to remunerate the content creators. The same thing happened with CableTV and with the copy-machine, and the very same logic needs to be applied to music on the Internet. A public, collective, standardized and open license for music on the Internet needs to be either voluntarily created by the music industry, or mandated i.e. enforced by the government - and the sooner the better for everyone. The DML would - similar to the existing radio & broadcasting licenses that are already in effect around the world - make music available on public, standardized terms and conditions, and therefore allow any and all businesses that want to use music to do so without the utterly crippling uncertainties that exist in the current marketplace.  

Revenue shares and flat rates - not fixed license fees per song. The objective of the DML is to create a new, vast, and constantly replenishing ‘pool of money’ for music, i.e. to grow the revenue potential along with the growing number of users, as well as via the many new kinds of usages that will be spawned by the DML.

In my opinion, the most crucial component of the DML is this: the license fee needs to be calculated on a revenue-sharing basis rather than on a per-unit i.e. per song fee, whether streamed or downloaded. The current practice of a fixed per-track fee (usually amounting to about 1 cent U.S. per song, for the use of the master recording) for a stream and around 70 cents (U.S.) for a download has proven to be economically detrimental and utterly unrealistic for the market participants (such as Omnifone, Spotify, Rhapsody, Napster, We7 and Yahoo). Why is this? Because of the still-very-nascent stage of the digital music ecosystem, the fact that large-scale advertising revenues for new forms of media are always 2-3-5 years behind, and given that a very large number of users - potentially all UK consumers - are likely to listen to quite a bit of music in this way.

In its formative stage, this new market does not and will not bear license fees that are fixed in this manner and that are totally unrelated to actual incoming revenue streams. Instead, the DML would need to be calculated on a flat-rate or percentage-of-revenue basis, possibly combined with a minimum 'floor' that could prevent unfair and unintended use of 'free' music as a loss-leader (if needed).

Initial DML's reserved for ISPs, telecoms and operators. Since there are many different kinds of businesses that would benefit from having legalized music available (e.g. telecoms, operators, search engines, social networks and communities, blogs, web portals, online magazines etc) but their business objectives and parameters are so vastly different, I would propose to initially make the DML only available to ISPs, mobile network operators and telecommunications providers. This would have several important advantages: 1) once ISPs and operators are able i.e. licensed to offer music bundles and flat rates, they will have every incentive and reason to monitor (i.e. count not control!) which songs are used on their network, 2) they have very large user bases which will provide for a critical scale of payments to be obtained immediately (thus significantly lessening the perceived threat of revenue loss in the physical music market), 3) they have strong potential for the integration of next-generation, user-friendly advertising integration 4) and they already have build-in billing and payment mechanisms.

A flat fee license per user, generated in a multitude of ways. When licensing ISPs, mobile operators and other telecommunications companies it will be crucial to offer flat-rate licenses rather than to pursue revenue shares which are not going to be an acceptable way of generating music revenues from this process, at least initially. Rather, I believe that a fixed, flat-rate license fee per user, per week or month, would be the most suitable way provided that suitable 3rd parties (see below) will also engage to contribute to the funding of each user’s license fee. We must not simply declare the license fee payments to be the ISP’s problem - because it isn't, and because the solution is in the creation of a new Ecosystem, a new business logic, and not in creating tax-like burdens for individual industries.

Economic experts have already done a lot of work on the flat rate model. Far from being an economist myself, I would add that a payment of 1 GBP (in the UK) or 1 Euro (in Germany, France etc) per week per user seems to be economically feasible; however the exact price point will of course need to be negotiated with all involved parties, and possibly be adapted on a yearly basis until the market is more fully developed and each party’s ultimate value position can be determined. In any case -and this is crucial - the DML must clearly be so utterly affordable that every single ISP, operator and telecommunications company would immediately apply for a license.

In terms of the actual use of the music and the subsequent accounting for remuneration purposes, I propose that it should not make a difference if a song is downloaded or streamed (i.e. played on-demand while online), and - similar to CableTV - it should not make a difference if a user would use music 24 hours a day, every single day, or just download 3 songs every now and then. All music usage would need be counted, anonymized and reported, and artists would get paid fully proportional to the actual use of music i.e. according to their popularity (see below for details).

A calculation example: a pool of 2.6 Billion GBP per year for music, in the UK. As an example, a DSL provider and mobile network operator with 20 Million UK users would need to generate funds to pay for a DML of GBP 80 Million per month, i.e. 960 Million GBP per year.

Assuming, for mere calculation purposes, an average of 50 Million eligible UK residents i.e. a large percentage of the entire UK population (~ 61 Million) generating 1 GBP per week, the revenues for the music industry would amount to a very substantial 50 Million GBP per week i.e. 2.6 Billion GBP per year, which represents almost twice the UK's recorded music revenues in 2008 (1.36 Billion GBP). Any argument of ‘cannibalization’ of existing revenue streams such as CDs or iTunes would pale against this figure. And yes, iTunes would do just fine with and on-top of the flat-rate: remember they don't sell music, they sell iPods and iPhones!

How to fund a DML of 1 GBP per week per user. The key question is, of course, how exactly the ISPs and telecoms would raise the money to pay for the quite significant cost of the DML, every week, per user. This is a crucial issue since,a gain, under no circumstances should the ISPs, operators or telecoms be made solely responsible for the financial solution of this problem; it is absolutely crucial to position the DML as a business solution that will unlock strong new revenue opportunities and will be more than cost-neutral in a fairly short time.  In my view, the job of building the financial support mechanisms i.e. the ecosystem that the DML will require should be handled by a mutually respected, knowledgeable and neutral advisory board whose mission would be to 'collate' this new ecosystem and to get device makers, advertisers, premium-service providers and other interested parties aboard as quickly as possible. 

Advertising is only one of the many ways to fund the DML. Of course, as in television and radio, advertising is one of the key factors that will subsidize the DML fees. The concept of advertising-supported content is not new but what will be drastically different, going forward, is the type of advertising that we will see on digital networks in the very near future. Concepts such as advertising becoming content, itself (such as in mobile phone applications) and social advertising will blossom once permission for the legal use of music is given, creating much higher advertising revenues than we are currently seeing online.

The global advertising spend currently amounts to roughly $ 670 Billion USD, per year. The UK advertising & marketing spend is forecast at approx 25 Billion GBP in 2010 (eMarketer), with - by 2012 - an estimated 25% i.e. 6.25 Billion GBP going to digital and mobile advertising. Yet, digital and mobile advertising would only be one piece of this new puzzle: handset makers could pay subsidies to get preferred i.e. 'presented by' access to users (basically a network-centric variation of the existing ‘Nokia comes with Music’ concept), social networks could contribute subsidies to legally integrate ISP-hosted music into their own networks via the DMLs that operators and ISPs would already have; search engines and portals could do the same. Imagine if Google could sit on-top of this new system of fully legalized, feels-like-free music - this is similar to how Google has already made legal music (streaming and downloading) 'feels like free' in China.

After an initial set-up period, it would be crucial that an ISP or operator that makes use of the DML would be able to fully recover the DML costs through a multitude of new revenue streams, such as next-generation advertising, the sale of mobile applications based on the unlimited availability of music (such as social music and play list applications), subsidies by CE companies i.e. handset and device makers, data-mining and cross-selling (with careful consideration to consumers’ data protection and privacy, of course) and various forms of up-selling of other product and services (including music-related premiums) such as the games industry has been offering for the past decade, already, or even by re-packaging some of the license costs to their users.

The DML is NOT a tax.  Any indication that the DML essentially amounts to a tax or is yet another compulsory payment scheme levied onto the consumer (such as the existing TV & Radio licenses) or a particular industry needs to be avoided, at least in the UK market where such a proposal would probably be politically unwise. The DML is simply a new license that is made available to businesses that want to use digital music, with the funding being generated from the market participants, themselves.  

Monitoring of usage and fair payment to content owners. Every song that is performed i.e. streamed or downloaded on the Internet would need to be tracked and accounted for, using already available software solutions such as Gracenote or Shazam. This data would need to be made anonymous using a mathematical formula that would protect each user’s private data while still providing actuarial tracking of which song has been used how many times, on any given day, week or month.

Each artist and rights-holder would then receive a monthly payment that is proportional to the actuarial use of their music during each tracking period, e.g. if a given artist’s music was used 1.3% of the time (e.g. in any given month), he or she or their representatives (record labels and publishers) would receive 1.3% of the total pool of money collected. All participating creators (e.g. writers, lyricists, composers, producers etc) would get their proportional payment from the same pool. I am advocating a 50-50 split between the composer and the performer (i.e. recording and publishing), at this time. Overlaps with existing rights schemes (such as public performance on the Internet, and so-called web-casting and Internet-radio) would need to be investigated and addressed, as well.

 Existing examples: similar models to the proposed DML are already in place, or are being investigated in:

1) China, where Google is providing free and fully legal streams and downloads of music via their Top100.cn property, in return for a share of advertising revenues (and in full collaboration with all major labels) 2) Denmark, where the ISP and mobile network operator TDC has already made music ‘free’ to all of their subscribers, in return for paying a flat fee per year to the music rights organizations 3) The U.S.,  where Warner Music Group, via Jim Griffin and the his Choruss project, is rolling out a flat rate music license for universities and colleges 4) Korea, where SK Telecom’s MelOn service has been providing flat rate music access to most the population (11 Million subscribers at ~$ 5 USD per month) for a few years, already 5) Canada, where the Canadian songwriters are lobbying the government for  a new flat for digital music 6) The Isle of Man Music Flat Rate project, headed by Ron Berry.

I look forward to discussing this with you.

Best regards

Gerd Leonhard

Please note: this short letter cannot possibly answer every question that may arise if this proposal is further investigated or realized. Rather, I intend to make the case for why the DML would solve the pressing problem of legalizing and at the same time monetizing the many new ways that consumers use music on the Internet.  Please keep in mind that most of the suggestions outlined above are still quite basic; prior to making any precise recommendations in regards to possible implementations a lot more research and input from all involved parties is required.  Also, while my suggestions should be applied to digital music only, at this time, I do foresee similar developments within other digital content sectors such as motion pictures, TV and books - albeit within a wider timeframe (i.e. 3-5 years).

Related articles by Zemanta

• Spotify rocks - but without a compulsory, public digital music license they are doomed (mediafuturist.com)
• The price of freedom: Reinventing the online economy (RSA Journal July 2009) (mediafuturist.com)
• AMBC Music Conference: Kevin Burmeister and the new Altnet / Kazaa - back to the stone ages of digital content? Deep packet inspection? DRM? R u Serious? (mediafuturist.com)
• UK government: disconnect those that share, return to Total Control asap? (mediafuturist.com)
• Music Industry: The Browser is the new iPod, and the Mobile Application is the new CD (mediafuturist.com)
• BPI Unhappy With Techdirt, Seeks To Correct The Record... But Still Gets It Wrong (techdirt.com)
• Tracking the Copyright Consultation Discussion Forum: Final Results (michaelgeist.ca)

Carta Abierta de Gerd Leonhard a la industria de música independiente: Spanish translation of my Open Letter to the Independent Music Business

Image by gleonhard via Flickr

Once again, the power of networked communities on the web has been a great benefit for me: Carolina Botero from Columbia ran cross my 2007 "Open Letter to the Independent Music Industry" and I guess she liked it so much that she decided to translate it into Spanish, which must have been quite a serious undertaking given the convoluted English I sometimes lapsed into;).  I have pasted some excerpts below, to read the whole thing please go to Carolina's blog.  Download the English version (Pdf). Check out the French version. Try a bit of Portuguese. Related: my Music 2.0 book:  Lulu store (for dead tree version), or download the free PDF.

Basilea, Suiza, 1 de julio 2007

El 29 de junio de 2007, mientras estaba en London Calling, fui invitado a hablar a un pequeño grupo de líderes de sellos independientes en su reunión anual AIM / WIN en Londres. Aproveché esta oportunidad para dar un vistazo a lo que debe suceder para que las compañías de música independiente realmente puedan sacar provecho de la nueva economía de la música que se está desarrollando en estos momentos. Así que … algunos de mis pensamientos se comparten a continuación.

Hoy quiero presentar mis opiniones sobre lo que me gusta llamar “Música 2.0″ – la próxima generación de la industria de la música que se está creando en estos momentos. Este nuevo modelo es radicalmente diferente. Muchos de las viejas formas de hacer las cosas, muchas de las relaciones anteriores y muchas de las viejas tradiciones no pueden y no van a sobrevivir.

Quiero seducirlos, a ustedes los líderes de la industria de la música independiente, a recorrer este nuevo camino conmigo, para dar un salto, para dejar algunas de sus presunciones y sus ‘religiones’ a un lado, y hacer jugadas audaces – porque esto es lo que se necesita para darle la vuelta a este barco. Scott Fitzgerald, el famoso novelista, dijo: “La prueba de una inteligencia de primer orden es la capacidad de tener dos ideas opuestas en la mente al mismo tiempo, y todavía tener la capacidad de funcionar”. Este claramente es el desafío de la industria de la música para avanzar!

Las innovaciones técnicas y económicas durante los últimos 10 años han despojado de muchas tradiciones, jerarquías sociales y económicas y monopolios a la industria de la música, y si hubiera una cosa que pudieramos decir con seguridad creo que sería que ahora es tiempo del show, que finalmente la industria de la música ha llegando a un punto de inflexión importante: 10 años después de que la primera empresas .com sacudió la tierra. Le tomó mucho más tiempo de lo que todos pensamos pero la está golpeando mucho más duro ahora: las ventas de CD han caído entre un 20 – 40% en lo que va del año, y las ventas digitales no están haciendo la diferencia en el corto plazo – y la carrera de un solo caballo que es iTunes claramente está en un callejón sin salida.

Nos estamos acercando rápidamente a un punto donde nos vemos obligados a sumergirnos en lo que me gusta llamar “Music2.0″ – un nuevo ecosistema que no se basa en la música como un producto, sino en la música como un servicio: primero se vende el acceso, y sólo entonces se produce la venta de copias. Se trata de un ecosistema basado en la ubicuidad de la música, no la escasez. Un ecosistema basado en la confianza mutua, no el miedo.Como dice Don Tapscott, en su gran libro “Wikinomics”, podemos pensar en Web 1.0 – la “antigua” web – como una especie de periódico digital, mientras que Web 2.0 es un lienzo que permite que la información sea presentada, compartida , modificada, y remezclada. Se trata de la interactividad, las opciones de envío y recepción lo que la hacen útil y «especial». Y sobre todo en la música, que siempre, desde el principio, ha sido acerca de interactividad, de compartir, de participar – no de vender-vender-vender...

Related articles by Zemanta

• Great video by Don Tapscott: Rebuild the World (mediafuturist.com)
• Balzac.tv: video interviews with me, Joi Ito on 'La Belezza del Copyleft' @ Ars Electronica (in Spanish & English) (mediafuturist.com)

Pre-Web Content Economics vs Web-Native Content Economics

I'll make this brief since I am at the NRT lounge going back to ZRH in an hour. Here are some of the key trends for the immediate Future of the Content Industries that I wanted to share with you.

Pre-Web Content Economics: Consumers. Scarcity. Centralized. Computer = Internet Access. Professionals only. Everyone watching the same thing. Friction generates a nice flow of $. Total Control is crucial. EGOsystems. Content is King. Exclusive Copyright. Content Monopolies, Rights Cartels and Oligopolies. Enforcement. Push. The large Networks rule. Walled Gardens bear fruit. Near-time Web & Database Search. Marketing = Monologs: Listen to Me. Consumers trusting Companies. Advertising = Interruption. Privacy = 'On' by Default. Mass-Media Rules. Broadcasting. All stuff is on my Machine. Pay Cash or Leave. Free = Bad. Distribution = Power. Power = Money.

Web-Native Content Economics: Users & Followers. Abundance creates new Scarcities... of Attention. Everything is decentralized. Mobile = default Internet Access. Professionals, prosumers, usators, users... all at the same time. Utter Fragmentation. Friction is Fiction. Trust is crucial (i.e. Money). ECOsystems & Interdependence. ConTEXT is King. New Usage Rights & Ubiquitous Licensing. Open Content Platforms. Engagement. Pull & Attraction Economy. Networked not Networks. Walled gardens wither. Real-time Web & Social Search.  Marketing = Conversations: Listen to each other, then talk. Trusting People Like Me. Advertising= Engagement. Privacy = 'On' is an action I must take. Mass-Niches Rule. Narrowcasting. All my stuff is in the Cloud. Pay with Attention (and Cash). Freemium=Good. Influence = Power. Power = Money - and many other kinds of rewards.

Related articles by Zemanta

• Some recent Twitter-related wisdoms you should read for sure (mediafuturist.com)
• The Future of Digital Content - Free vs Paid? My presentation at Tokyo 2.0 August 24 2009 (mediafuturist.com)
• The Future of Business in a connected world (my presentation at ACCJ Tokyo) (mediafuturist.com)
• Chris Anderson on "Free": Crap is in the eye of the beholder, scarcity and abundance side by side (mediafuturist.com)
• The Future of Advertising: become like... Content (mediafuturist.com)

Announcing Futerati: my favorite Twitter people all in one place (Futurists, Thinkers, Authors, Startups...)

I think you may have noticed by now - I really like Twitter. Twitter and my tweeps have been a huge influence on my work. 

One of the  most important realizations that has recently transpired via my Twitter pipeline is how much I am gaining from the ever increasing Sharism i.e. by what others are sharing with me. I am indeed very, very lucky to be connected to so many brilliant and like-minded people that are publishing their thoughts freely and openly, using platforms such as Twitter, Friendfeed, Facebook, Slideshare and of course, their blogs. All of you deserve a big THANK YOU.

The increasing scope of the 'Proudly Found Elsewhere' approach (PFE) has become a very important component of my work; and vice versa I am hoping that my output is also PFE'd by others; the social web's "give and you will receive" approach has indeed worked out great for me.

So I figured it's time to give some more explicit credit to all those great people that have influenced me, and I maybe a good way to do that is to list them on a special, Twitter-API-based site such as Futerati; and maybe send some attention their way, in return. Futerati went online a few days ago, and much like Electric Artists' cool TrackingTwitter site (but a lot more personal) Futerati is presenting 6 constantly updated categories (Futurists, Thought Leaders Authors, Activists, StartUps and Others) with people that I follow, their latest tweets, the current number of followers, and with some brief comments on why I like them. With each featured twitter user, you can click straight through to their tweets or their profiles and easily connect with them, as well.

Please note that Futerati is a constant work in progress and therefore not complete at this time; I will be adding a lot more people as I dig through my 7400 network connections, during the next 4-6 weeks.  So, if I should have listed you but have not done so yet please post something on Twitter (use @gleonhard) or use the hashtag #futerati or DM me via Twitter, or email, or comment on this blog. If we haven't 'met' yet but if you still want to be listed please ping me with your details so that I can take a look at you; in any case please note that every single connection I list on Futerati is personally selected by me. Enjoy - and RT!

Related articles by Zemanta

• Rolodex 2.0 - the social web is becoming our address book (mediafuturist.com)
• WhereIsItGoing: first audio podcast of twitter-based session, answering 'futuristic' questions posted via Twitter (mediafuturist.com)
• HOW TO: Get Retweeted on Twitter (mashable.com)
• Twitter Founders Say They're In for the Long Haul (bits.blogs.nytimes.com)

The price of freedom: Reinventing the online economy (RSA Journal July 2009)

I was delighted to be invited to make a contribution to the RSA Journal's July 2009 edition, the printed version of which was just send out I believe, and the online edition that just went up on their website.

The complete title of my piece is: "The price of freedom - reinventing the online economy: Gerd Leonhard explains why ‘free’ content can still pay in the long term" and I really enjoyed writing this for them.

Following my last presentation at the RSA, in April 2009, on 'The Future of Content and Creativity' I have had many good conversations about this topic. The audio track from this event is here, btw; and the video is embedded again, below. Enjoy. And RT;)

I definitely recommend that you check out the other great features in the Juy 09 RSA journal, as well, there's some great gems in there.

Update (January 10, 2010):

English Version as downloadable PDF: Download RSA Gerd Summer 2009

German Translation by Rainer Classen : RSA German Translation: Preis der Freiheit

Spanish Translation by Carlos Perez Vellila: Spanish Price of Free RSA

Italian Translation by Federico Ciappi: Download Il prezzo della libertà RC1

You can read the entire thing on the RSA page, so here is just an excerpt:

"Free information, free music, free content and free media have been the promises of the internet (r)evolution since the humble beginnings of the World Wide Web and the Netscape IPO on 9 August 1995. What started out as the cumbersome sharing of simple text, grainy images and seriously compressed MP3s via online bulletin boards has now spread out to every single segment of the content industry – and even into ‘meatspace’ (real-life) services such as car rentals. Without a doubt, ‘free’ has become the default expectation of the young web-empowered digital natives and now the older generations are jumping in, too.

On top of the already disruptive force of the good old computer-based Web1.0, we are witnessing a global shift to mobile internet – a WWW that is, finally, so easy to use that even my grandmother can do it. While five years ago, we needed a ‘real’ computer tethered to a bunch of wires to port ourselves to this other place called ‘online’ and partake in global content swapping, now we just need a simple smart phone and a basic data connection. With a single click of a button, we’re in business – or rather, in freeloading mode. 

As users, we love ‘free’; as creators, many of us have come to hate the very thought. When access is de facto ownership, how can we still sell copies of our creations? Will we be stuck playing gigs while our music circles the globe on social networks, or blogging (now: tweeting) our heart out without even a hint of real money coming our way?

Daunting as it may seem, we can no longer stick with the pillars of Content1.0, such as the so-called fixed mechanical rate that US music publishers are currently getting ‘per copy’ of a song ($0.091). Nobody knows what really defines a copy any longer when the web’s equivalent of a copy (the on-demand play of that song on digital networks) may be occurring hundreds of millions of times per day. No advertiser, no ISP and not even Google has this kind of money to pay the composer (or rather, the publisher), at least not until the advertisers start bringing at least 30–50 per cent of their global US$1 trillion marketing and advertising budgets to the table.

Traditional expectations and pre-internet licensing agreements are exactly what are holding up YouTube’s deals with the music rights organisations such as PRS and GEMA: this is what the rights organisations used to get paid for the music that is being copied, and this is what they want to get paid now. This impasse is causing significant friction in our media industries worldwide. Yet, below the top-line issue of money, there lurks an even more significant paradigm shift: the excruciating switch from a centralised system of domination and control to a new ecosystem based on open and collaborative models. This is the shift from monopolies and cartels to interconnected platforms where partnership and revenue sharing are standard procedures. In most countries, copyright law gives creators complete and unfettered control to say yes or no to the use of their work. Rights-holders have been able to rule the ecosystem and, accordingly, ‘my way or the highway’ has been the quintessential operating paradigm of most large content companies for the past 50 years.

Enter the internet: now the highway has become the road of choice for 95 per cent of the population, the attitude of increasing the price by playing hard to get is rendered utterly fruitless. Like it or not, a refusal to give permission for our content to be legally used because we just don’t like the terms (or the entity asking for a licence) will just be treated as ‘damage’ on the digital networks, and the traffic will simply route around it. The internet and its millions of clever ‘prosumers’, inventors and armies of collaborators will find a way to use our creations, anyway. Yes, we can sue Napster, Kazaa or The PirateBay and we can whack ever more moles as we go along. We can pay hundreds of millions of dollars to our lawyers and industry lobbyists – but none of this will help us to monetise what we create. The solution is not a clever legal move, and it’s not a technical trick (witness the disastrous use and now total demise of Digital Rights Management in digital music). The solution is in the creation of new business models and the adoption of a new economic logic that works for everyone; a logic that is based on collaboration, on co-engagement and on, dare we mention it, mutual trust – an ecosystem not an egosystem. Once we accept this, we can start to discover the tremendous possibilities that a networked content economy can bring to us.  

Free, feels-like-free and freemium

Much has been written on the persistent trend towards free content on the net. It is crucial that we distinguish between the different terms so that we can develop new revenue models around all of them. ‘Free’ means nobody gets paid in hard currency – content is given away in return for other considerations, such as a larger audience, viral marketing velocity or increased word of mouth (or mouse). I may be receiving payment in the form of attention, but that isn’t going to be very useful when it’s time to pay my rent or buy dinner for my kids. Free is... well, unpaid, in real-life terms.

 ‘Feels-like-free’, on the other hand, means that real money is being generated for the creators while their content is being consumed – but the user considers it free. The payment may be made (ie sponsored or facilitated) by a third party (such as Google’s recently launched free music offering in China, Top100.cn); it may be bundled (such as in Nokia’s innovative ‘Comes With Music’ offering, which bundles the music fee into the actual handsets) or the payment may be part of an existing social, technological or cultural infrastructure (such as cable TV or European broadcast licence fees) and therefore absorbed without much further thought. Feels-like-free could therefore be understood as a smart way to re-package what people will pay for, so that the pain of parting with their money is removed or somewhat lessened – everyone pays, somehow, but the consumption itself feels like a good deal...."     Read on.  PDF: Download RSA - The price of freedom Gerd Leonhard July 2009

Related articles by Zemanta

• The Future of Music & Media: Gerd Leonhard at Plugg 2009 (blip.tv)

8 key trends and some foresights for the next 5 years

Every now and then I get tempted into actually formulating some fore-sights. This time, the preparations for my upcoming speech on "New Media Futures" at the RSA in London have egged me on to share a few key points with you:

1) We will soon see the emergence of many different kinds of iPhone-influenced Netbook-like devices; some will be Apple-made but most will not. These devices may be 2-3 times the size of an iPhone and will connect to the Internet in every conceivable way, i.e. 3G/4G, LTE, Wimax, Wifi etc.  They will be touchscreen, zoom-interface enabled, cloud-computing, speech-controlled, location-aware, mobile-money equipped, socially hyper-networked, always-everywhere-on, HD-camera equipped and possibly project images and audio or even support basic holography.

In addition to the high-end, fully-loaded and perhaps still rather expensive versions that many of us in the so-called developed countries will gobble up, low cost and more basic editions for the developing markets will be sold in the 100s of millions (think India, China, Indonesia...). These smart gadgets will have very low energy consumption and therefore extremely long battery life, may even sport basic solar-power options, and may ultimately cost less than 30 USD, or even be 'free' (why bother to sell the box if you can make a lot more $ with selling services.... Nokia?).

It is these mass-market yet very smart and networked devices, together with cheap or free wireless broadband that will really revolutionize reading, newspapers, books and education; not to mention our music, TV and film consumption habits. Content commerce will be completely redefined as a consequence. As BTO told us a loooong time ago: "You ain't seen nothin' yet"

2) Very cheap or free wireless broadband - at fairly high speeds, i.e. at least 2MB / sec - will be available in most places, particularly in the booming new economies of Asia, India, Russia and South-America, and a bit later, in Africa. Funded by the likes of Google and by the future 'telemedia' conglomerates, governments, cities and states, wireless broadband will probably reach 3-4 out of 5 people on the globe within 5-8 years. User-generated & derived content (UGDC for those of you that must have an acronym ;), virtual co-production, mobile editing and instant network sharing will explode by a factor of 1000, making control of distribution a very distant concept of the past. UGC or UGDC may make up to 50% of the global content consumption by 2015. Consumers will be (co)-creators, marketers, sellers and buyers, and come in a hundred variations, from totally passive to totally active. Then, indeed, filtering, culling and curation will be the key to success.

3) Collective blanket licenses that legalize and unlock legitimate access to basic content services via any digital network will emerge, and are likely to take over as the primary way of content consumption, around the world (but in Asia, first). Just like water or electricity which is readily available when moving into a new home, the basic access to content will be bundled into access to digital networks, i.e. via ISPs, operators, telecoms, portals etc. This shift is starting with music (as already done by TDC in Denmark, and Google in China), and will be quickly followed by films, TV, books and newspapers. Access may often - but in local variations - 'feel like free' to the user but will in fact generate 10s of Billions of $$ via blanket licensing fees (yes... those pools of money), next-generation advertising and branding, data-mining & sharing, up-selling, re-packaging and many other new generatives. This topic will, btw, be the gist of my RSA presentation tomorrow - if you can't be there in person, you may want to listen to the live audio, via this link.

I think that governments around the world will call for and / or support the implementation of collective content licenses that wil finally legalize content usage on the Internet, similar to how governments pushed for the radio and broadcasting licenses  approx. 100 years ago. Whether these blanket licenses will be voluntary or compulsory remains to be seen - in any case the only alternative is to perpetuate a severely dysfunctional telemedia ecosystem that criminalizes almost all users and stifles innovation while generating virtually zero new revenues for the creators.

4) Fuel-cells and other next-generation mobile energy sources are a certainty. A serious increase in mobile device power (and therefore, its use) will be achieved by employing next-generation technologies such as fuel cells that could provide for up to 500x the usage time that we have today. This is likely to become a reality in 3-5 years and will revolutionize how we use - and how much we rely on - our mobile devices, especially in countries where there the fixed-line power infrastructure is much less developed or non-existent.

5) Completely targeted and personalized advertising, delivered largely on totally customized mobile computing & communication devices, will turn the the $ 1 Trillion USD advertising and marketing services economy upside down. Behavioral targeting and user-controlled advertising will, of course, become an even hotter potato and a much discussed challenge, but the good old deal of 'I give you attention & personal data and you give me value e.g. content' will be even more pronounced on the Net. In fact, advertising as we knew it is already more or less outmoded and will, during the next 2-3 years, be completely reinvented. Privacy and Trust are the #1 issues here.

The implication is that if your data (within your specific sets of permissions and opt-ins)  is used to bring you perfectly synchronized advertising, than advertising really becomes more like content, too. Watch this play out in the mobile advertising space, starting this year, and quite possible boost the global value of advertising-content by more than 100% by 2015. Google will be the main driver here, plus Facebook, Nokia and yes... Twitter (soon to be = Google).

6) We will witness the more or less complete decline of most forms of physical media within 7-10 years. The very definition - and thus the core economic business models - of newspapers, magazines, CDs, DVDs and books will be completely re-written, and new forms of content packaging will rapidly emerge. We can already see a preview of how this may work in the current mobile applications boom: content as part of software packages; paying for the packaging, the curation, the bundling, the personalization - not just for the zeros and ones that are 'the copy'. This trend is important not just because it will reflect the users' (or better... followers') new consumption habits but also because because of the increasing need to save energy and material costs - and moving from content products to content services will certainly go a long way in this regard. The total decline of printing in people's homes, and for personal use, will commence, as well.

7) Paying for privacy will become a distinct option. Today we pay to go online and connect; in the future we may end up paying for the luxury to go offline, disconnect, enjoy the quiet, and give our brain some rest. Maybe if we don't want to share our click-trails and usage data, we will be able to make cash payments instead - and the more you pay, the more private you can be..?

8) Travel 2.0: alternatives to 'actually going there' will explode: immersive, 3D video, virtual rooms, holography. This is a key development that will nurture new forms of entrepreneurship, education and group working.

Please talk back!

Best of my 2008 slides: The Future of Content, Media, Advertising and Marketing

Slide.com rocks - they even had a great track by one of my favorite artists, Alanis Morissette,  "Underneath" which I think is a perfect fit for my slides. Whoever licensed this to Slide.com - well done, and brilliant marketing!  The Music is not auto-on btw - so hit the PLAY button (i.e. speaker icon); it's worth it.

Related articles by Zemanta

• The Future Of Social Media Presentation by Futurist Gerd Leonhard Blogres Slovenia June 2008
• Social Media Futures: Engage or be Tivo'ed (Future of Advertising & Marketing)
• Gerd Leonhard Presentation Music2.0 Barcelona June 2008
• The Future of Business, Marketing and Communications - my presentation at the Future Event in Trinidad, today (Oct 8, 2008)
• The Future of Telecom - The End of Control

My Christmas gift to all my readers (more details)

Image by Nicolai Kjærgaard via Flickr

A lot of people have asked me to post my Christmas gift message (LinkedIn, Facebook etc) to my blog, as well, so... here it is.  Share!

Here is my humble Christmas gift to my readers, followers, digital & real-life friends, feed-receivers, LinkedIn peers, and connected fellow travelers: Free Premium Content. Loads of it.

Enough to keep you reading, listening and watching for most of your Christmas holidays, and then some...

• Free PDF with my "Best of 2008 Blog Posts & Essays" (66 pages, US letter size, 10MB)
• Free PDF with my 2007 "Music 2.0 / More on The Future of Music" book (8MB)
• iPhone versions of Music 2.0 and "Best of 2008" (using the Instapaper iPhone app)
• 28 free slideshows on the future of media, content, advertising, telecom, marketing, copyright...(via Slideshare)
• Many other PDFs, including all of the 2007 End of Control preview chapters
• 29 videos on the same topics (stream or download via iTunes), on Blip.TV, streaming-only via Youtube
• My entire Futuretalks DVD (late 2007), with fellow futurist Glen Hiemstra, moderated by Ralph Simon, 222 minutes, for download or streaming, via my Drop.io sharing account (please use the guest password: future), for more details and free audio podcast versions of the DVD please go to IT/Media Conversations / Futuretalks.com
• Approx. 500 photos and illustrations via my Flickr page
• More ephemeral stuff: my Media Futurist blog RSS feed, Twitter updates RSS feed

All content is free and Creative Commons Non-Commercial & Attribution licensed. Please feel free to re-use, with reference to Gerd Leonhard and link to www.mediafuturist.com

Enjoy!

Please note: if you feel like spending $2.50 on the PDFs - just for the sake of showing that some content is worth a few $ - please feel free to go to my Lulu.com page and order the PDF from there (they take Paypal, too). Lulu also offers the actual dead-tree books for less than $10, nicely printed on-demand and send anywhere in the world. For the Best of 08 book please be sure to select the correct version (not the letter size). The Music2.0 book at Lulu is $17.75

Media Futurist 2008 by Gerd Leonhard, Media Futurist is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License.