I tend to agree with sentiment - crowd funding is becoming feasible. Nevertheless, it can be a very brutal experience for those who try it and fail, so... Beware of your expectations. Giving money is the utmost expression of giving attention, in a way, but it is also crossing a border between non-rivalrous goods and rivalrous goods.
"I’m a huge fan of the Kickstarter service and have backed several projects because I believe in what they are doing. The reason I’m a huge fan is they make it possible for a new company to get off the ground without angel or venture capital investment. More so, you can test a concept with little risk (on all sides) and tweak before you start manufacturing. This is enormously important in this economy, perhaps in any economy, because it is the enabler of an idea that myself and many others have hoped for. Kevin Kelly, of Wired fame and many other accomplishments, wrote a post a few years back called 1,000 True Fans and it he explains how an artist, inventor, creator, maker could build a viable following and thus a business by finding 1,000 True Fans. This is not far off given the trajectory of Kickstarter..."
This is what happens when you connect MSFT's Kinect platform with shopping. Via FastCompany: "A new augmented reality shopping platform for Xbox Kinect will allow users to try on clothes in true 3-D, share photos with friends, and store wish-listed items on smartphones for shopping on-the-go... "The customer can visually see what an object looks like on them without even entering a retail store," Steve Dawson, Technology Director for the Emerging Experiences group at Razorfish tells Fast Company. Unlike existing virtual shopping that shoehorns 2-D photos on top of body snapshots, "with Kinect, you can find the physical outlines of a person and map it to your body."
Via Techcrunch and the brilliant Erick Schoenfeld: "The keys to Amazon’s success are 1) the Internet imposes no limits on how much Amazon can sell; 2) its control of customer accounts and loyalty, and 3) and a growing ecosystem that is helping it cement its place in the world of digital goods as well. It’s instructive to see how Amazon has expanded over the years and moved away from its reliance on books, music, and movies. You also forget that along the way, Amazon piled up $3 billion in losses between 1995 and 2003. Now it’s got $34 billion in annual revenue, and is spitting out $1 billion a year on profits. Who says you can’t spend your way to profitability....."
The video covers just about all angles of the music industry and provides a great overview of everything that's wrong (and could be righted, I guess) in digital music, and Michael sure has all the right answers to some pretty tough questions. In fact, for most of it, I couldn't have said it better myself:). Check it out. Michael and me do have a few things in common, as far as the message goes, I guess...
Today I am delighted to officially announce my new company, The Futures Agency (TFA). TFA is based in Basel, Switzerland and is currently comprised of 15 amazing people i.e. Associates that are working with me on an independent basis; additional team members will be announced shortly. Think of us as a 'band' of futurists and foresight-experts, visionaries, advsiors and idea-curators ...and you'll get the idea.
I will serve as CEO and plan to grow this company into one of the most amazing agencies on the planet, employing these 5 key principles:
Knowledge grows when shared (therefore we share everything)
The purpose of TFA is to provide our clients with a lot more firepower and emotional intelligence when answering this key question: What does the future bring, and how do we prepare for it...?
Or, to put it more proactively (for those inclined to that sort of thing;): Which future do we really want to create?
TFA offers seminars, workshops, think-tanks and advisory sessions ranging from 3-5 hours to 3 days, with anywhere from 2 to 10 people, worldwide. Some of our thinktanks may use a format called the Disruption Experience which I have been finetuning together with my good friend and world-renowned leadership expert Didier Marlier, who lives in Switzerland as well. Other thinktanks may use our "FuturesExperience" format, and additional formats will be announced soon. As an example, a few weeks ago TFA undertook a really amazing mission for a one of the largest mobile operators and telcos in Africa; 3 days of serious future-thinking and plotting with the executive team. Hopefully I can share some of those stories with you in the future.
The garbage bin makes a sound when you throw something in, and the amount of garbage collected doubles - make something fun and it will work better is the lesson. Powerful thought. Thanks to Julian Treasure at TheSoundAgency for posting this video.
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.
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.
There are a ton of really great kernels of wisdom and learnings in this open letter by Google's Jonathan Rosenberg. Be sure to read the whole thing; but here is the most essential part:
"Closed systems are well-defined and profitable, but only for those who control them. Open systems are chaotic and profitable, but only for those who understand them well and move faster than everyone else. Closed systems grow quickly while open systems evolve more slowly, so placing your bets on open requires the optimism, will, and means to think long term. Fortunately, at Google we have all three of these"
A passion for music and obsessive guitar-playing (me, here... yes, that was some time ago, and Jonathan, here), passion and fire for public speaking (me, him), a deep curiosity about 'the future of ..............(fill-in blank here)', and a vast network of great connections to some very interesting people, around the world (see Jonathan + himself, me + myself)
So over a few beers i.e. 'Mass' and Brezels & Ente (aka duck) at the Oktoberfest, it transpired that we both also have a serious passion for entrepreneurship and startups, and both of us are constantly talking to interesting new companies, trying out new services and ideas. Post beer-guzzling, we met in London and decided to launch a new company together - and thanks to the likes of Wordpress, Twitter and Blip.tv, today we proudly present Indicatr.
Indicatr's mission is simple: it's a service for investors that highlights the most promising
opportunities, based on a deep understanding of the technology,
internet, media & entertainment. For our clients, we identify major trends and immediate
future scenarios, and then suggest startups that will do well, based on
All our posts about new companies will be in video format; ranging from 2 to 5 minutes. We call this 'our hunches' and you can subscribe to all videos and thus our newest hunches (hopefully, at least one per week), over at our blip.tv channel. Our new Twitter channel, broadcasting our news and many more 'hunches', is here.
This is an interesting video about how Adobe is moving towards openness, with a dozen key Adobe technologies already released as open source (such as the open source FLEX SDK) and the key flash compiler (Tamarin) recently given to the Mozilla foundation. Interesting - so will open really be King, going forward, like I have been stipulating for the past 3 years...?
As to Adobe, it does seem that the public perception in the wider marketplace is that Adobe is not quite open enough, yet (read the comments on the Youtube page), and I do wonder about that, as well, but shall reserve my final opinion until I have had more time to accurately research this topic. In any case, the Adobe guy in the video does a pretty good job explaining Adobe's approach, defining open as: Open Source, Standards and Community. Quote: "The flash platform is about as open as it can possible be" I will look into this a bit further; in the meantime do check out the video below.
Update: a good comment by TelecomTV (Ian Scales) - I especially love their addendum to Spotify's logo: "Not Licensed to Kill" - great summary.
Before I get into the meat of this post, let me say this, for the record: I really like Spotify, the official new darlingamong the many on-demand streaming and interactive music services that try to go to the legitimate route and make deals with the rights-holders, ie. the record labels and the music publishers.
I like the Founders, I like some of their investors, I like what they are saying and how they do things. I even like their logo. We have met several times in the past - and something tells me Daniel et al may been reading my books and this blog, as well... all good this far.
So please note: this is not at all an attempt to rain on Spotify's well-deserved parade or discourage their investors. I am writing this post because I want Spotify to live, grow and prosper, not because I want it to crash. My comments, below, are simply meant to serve as a not-so-gentle reminder for a simple fact that we should keep in mind: while Spotify may look (or rather, sound) pretty, right now, no matter how hard they try and how much money they will raise, they cannot possibly succeed within the current music industry ecosystem, and they - by themselves - cannot possibly change that ecosystem single-handedly.
The primary reason for this is that there is no public (i.e. compulsory) license that is available for these kinds of services; therefore Spotify (and anyone else that streams music on-demand) has zero leverage whatsoever in the rights negotiations - and therefore, the entire pricing and overall economic model - with the record companies and publishers. In other words, they simply have to pay whatever it takes. And they are, indeed. Without a public license in place, this kind of situation is pretty much a suicide mission.
In my humble opinion, the chances of Spotify surviving beyond next 24 months, in the current music industry framework (call it '1.4' maybe - since we are still a long way from the Music 2.0 models that I and many of my readers and 'followers' have been discussing for the last, ouch... decade) are similar to... well, the likelihood of having a cold day in hell.
If Spotify - as a possible embodiment of those Music 2.0 concepts - is to live than the entire SYSTEM must be changed - no less, no more. If you like Spotify than this, below, is what you must ask for.
Spotify (and most other legal music ventures like it) won't survive unless:
A public, open, fully standardized, compulsory,multi-territorial and collective digital music licenseis agreed upon and instituted by law or by collective, voluntary action, SOON. Voluntary action seems highly unlikely at this point given the seriously monopolistic structure of the music industry, and the stellar 'my way or the highway'- track record of most industry bodies.
Just like the existing Radio and TV / Broadcasting licenses, such a Digital Music License will need to be a license that conclusively and pan-territorially (i.e. pan-EU, pan-Asia, US, and then, worldwide) regulates the basic commercial terms for the use of the master recordings and the underlying compositions for anyone that may want to offer or provide music online, regardless of whether it's streaming or downloading - because this decidedly 'Web 1.0' distinction is simply wishful thinking, going forward - access means copy, today. ISPs, search engines, social networks, telecoms, operators and Internet portals need to be able to avail themselves of a standard, ready-to-go license, just like anyone that starts a terrestrial radio station can use an existing license to calculate their music costs, today.
Anyone that has had the misfortune of wanting to 'do the right thing' and license music for any 'new media' i.e. online venture will agree with me on this: the current music rights licensing situation is nothing short of ridiculous, and to many outsiders the process feels like a cut & paste rendition of various "Twilight Zone" episodes. The ineffective and convoluted way that digital music rights are still being dealt with today is a disgrace that keeps causing continuous train-wrecks for anyone that wants to enter the business (and cares to do it legally), and the continuing inability of the industry's 'leaders' to solve these issues flies in the face of the massively increased consumer demand for digital music in all shapes and forms, across the globe.
I know... you may be ask: ok, yes that's not good, but if we were to license more efficiently...where's the new money? Here is my response, and I've said it many times: the problem is not that the 'people formerly known as consumers' don't want to pay for music - they just don't want to pay in those ways that the industry is currently asking them to. This is not a problem of total copyright disregard by the consumers - it's just a tollbooth-strategy question: provide real value and get real value - that is the only future there is! Maybe.. do what Google does?
But so far, all the music industry lobbying groups (e.g. the RIAA, the BPI, and the IFPI) and their brilliant lawyers have done is to ask Billions of people to change rather than consider changing, themselves, so that maybe they can actually start serving those people. Why is anyone still paying attention to these people?
Begging for mercy: Spotify's unenviable routine.
As a consequence of these stone-age business practices that prevail in the music industry, Spotify has to essentially jump off the cliff every time they license a new song, and beg to do things legally 24/7/365, i.e. beg for licenses, from each label and each publisher or rights society, in each country, every couple of months, and for every tiny change they make in their business model. For unlike Youtube/Google, Spotify has ZERO real leverage - while the international music conglomerates and legal rights-holders (reminder: not the artists!) have TOTAL CONTROL - if the deal is not to their liking they can just refuse a license thereby rendering Spotify either instantly illegal (i.e. unlicensed) or have their users evaporate quicker than you can spell 'dead'. There is simply no way that anyone can negotiate a win-win deal in a situation like this - especially when your potential deal partners have such a long history of using pre-Internet laws a weapon to kill competition and innovation.
This legal vacuum has led to a bizarre situation where the major record labels (as well as many large independents and / or their industry associations) can basically ask for anything - they simply have the exclusive rights for these recordings, so it's their way or the highway. The same goes for the publishers, and as long as refusal to license is a sustainable option this won't change (remember when the phone companies did not have to share access to their networks with other providers...?)
And you can bet we are not just talking money here - we are talking about having to give equity to the (large?) labels, for the mere pleasure of being legal, and for being mercifully allowed to reinvent how music is being monetized. This has not changed since the days of my own streaming music widget company, Sonific - you can read all about what happened to us, here. I have been there, done that, and this industry is STILL at the same place: the music licensing system is simply dysfunctional and the markets will NOT self-regulate. Vivan Reding and the EU Commission: are you listening?
There will be no real solution for this problem until the monopolies that currently serve as the foundation of the music rights society system in most countries (not in the U.S. btw!) are done away with; until pan-European or global licensing can be achieved via a one-stop, digital, fluid and transparent service platform. And just to preempt the obvious responses on this: when I say that the monopolies need to go I am not at all saying that these societies need to go. Absolutely not. However, if you base your very existence on the practice of merely extracting value rather than adding value I don't see how you could possible expect to have a role to play in a digitally networked future, either. So, while the concept of licensing collectives are and will remain crucial, they cannot be very useful in the digital economy unless they are constantly adding value and become 100% open and transparent. Monopolies just don't fit in this concept - or do they?
Back to Spotify: because they are enormously successful and popular right now, and because of all the other players in this turf that have paved the way and are still in the running (Last.fm, iMeem etc), and because of all the other players that tried and gave up (Yahoo Music, Musicload, MSN Music) or are about to give up (Napster, Rhapsody, MSFT), we need to make this issue a public, political, cultural and wider business issue.
We need music to be licensed for the Internet just like we license it for radio, today: with a public, open, collective and standardized license that does away with the monopolies of permission that have held us back for a decade, already.
I guess really this is POLITICS now - even the European Commission has already stated that "The failed music industry business model is causing online piracy" - so if you like Spotify it's time for action (hey - there's another post - but here is a preview of my 2 cents)
Finally, let me borrow some authority here: "Change will not come if we wait for some other person or some other time. We are the ones we've been waiting for. We are the change that we seek" (President Barack Obama)
Just ran cross this via Digital Media Wire: "Southwest Airlines’ Rapping
Flight Attendant, David Holmes, explains Generally Accepted Accounting
Principles (GAAP) in a “GAAP Rap” at the 2009 Shareholder’s Meeting
held at the Company’s Dallas headquarters on Monday 20th" Really funny, and a very unique way to bring some really boring points across.
I just ran across this video from the NYT (below). This is another very interesting reflection of the strong trend towards content delivered as software. Just like bands and record labels deliver their music on iPhone apps (and even charge for it much like a CD), the NYT now delivers their content to any computer that can run Adobe Air - and I just love the way they put this - good going, NYT!
I already blogged about the Youtube / PRS show-down (hey - that's a great word for this) in the UK, earlier today. After reading, twittering and talking to lots of 'real' people about this today, this is my conclusion: This conundrum is not Google's 'fault' but still: Google needs to really, materially and boldly get involved with facilitating the construction of a new content logic and economy, and lead content creators, owners and representatives into a new ecosystem that will actually work for all involved parties. Because it can.
Conflicts like Youtube vs. PRS are unavoidable because the canyon between Google - imho still pretty much the primary driver of Net-fueled innovation and disruption- and the content creators (never mind the industry) gets bigger by the minute. And, in my humble opinion, Google isn't doing nearly enough to explain this to them, and to guide them more conclusively into this new domain where content isn't always king, and where it won't matter if it is or not (if it ever did).
I talked about this in my speech at Authors@Google in SF last week; hopefully we will have that video available soon. The bottom line is that this will take deep, serious, multi-lateral, honest and open collaboration between these (and other) key constituents:
Content creators and the content industries (in that order;)
Telcos, ISPs, mobile operators and other telecommunications companies
Advertisers, brands, and their agencies
Social media and social networking platforms (of course all Internet companies, other search engines and portals)
Governments and governmental bodies
Welcome to a new Data Economy, a new Advertising Economy, and a New Content Economy.
Your turn, Google.
I will write more about this, but here's a quick illustration (thanks to Kevin Kelly for the power-lines & copy pic)