Content 2.0: sell what is scarce!

Context becomes as valuable as Content!

Reposting this: Robin Good, one of Italy's leading bloggers, produced a nice video with me, during my last trip to Rome. The bottom line: Context is becoming just as valuable as Content (maybe we should call it content about content i.e. Metacontent?) - therefore, soon, the link economy will be quite real.

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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!!)

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My presentation on "Content 2.0 - Monetization Examples" at MidemNet 2010

 Below is the PDF from the presentation I just did at Midem 2010 in Cannes / France (Sunday January 24, 2010, 5.30 pm). My MidemNet blog posts are here, and my presentation "Compensation not Control" from MIDEM 2009 is here. Please click through to the Slideshare site to download the PDF if desired. The video is now available, here, as well. Download: Content 2.0 Gerd Leonhard at MidemNet 2010 Public PDF 15MB

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Content 2.0: finding new ways to generate revenues

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MidemNet 2010 Presentation: The New Generatives - selling Music in a connected World

This is the PDF from my presentation at MidemNet 2010: Download Gerd MidemNet Academy new generatives for Music Public 25.1 MB PDF

Please note: this is slightly different from what I actually presented this morning - please stay tuned for the audio and video versions of this talk, via the MidemNet blog and Twitter.

The New Generatives: Selling Music in a Connected World

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Umair Haque on Google, China, Control and 21st Century Business Paradigms

Another brilliant post by Umair Haque via the Harvard Business Review - he spells out a lot of stuff that keeps coming up in my presentations, as well; so here's a bit of a remix of this juicy post, my comments are [...]

"On one side is the old high ground of the industrial era capitalism; on the other, the new high(er) ground of next-generation capitalism. The yawning chasm in between them is the gap between the 20th century and the 21st" [I call this the EGOSystem vs the ECOsystem, see more here and here]

"Currency intervention, breaking Copenhagen, crackdowns , collusion, corruption, coercion, and censorship: China's ongoing bad behavior as global citizen is, when we connect the dots, the gigantic elephant in the world's boardroom. What's driving it? The quest for monopoly, monopsony, and control" [I wrote about something quite similar in my 2007/2008 blog-book "The  End of Control", check out the free online chapters here, and a related presentation, here]

"That's yesterday's high ground, and China's focused like a laser beam on it. China's moves are the textbook stuff of b-school's blackest arts. Through larger distribution, fiercer litigation, greater exclusivity, cheaper and faster production, a bigger cash pile, advantage is gained. But the high ground has shifted. The new high ground is an ethical edge. It's not about having more; it's about doing better. It's not about protecting exports, pressuring buyers and suppliers, price discriminating against the powerless, and programming consumers to buy, buy, buy — it's about making people, communities, and society authentically better off. It's not about caring less — but caring more. It's not about ruthlessness. It's about mindfulness" [Couldn't have said it better, myself; here are just a few things I would add: in this new ecosystem that Umair is describing, we will need to develop web-native economic models and entirely new metrics for  evaluating them, friction will indeed be fiction (to a very large degree) and the importance of control will be utterly eroded by the steadily increasing power of trust, engagement and transparency]

"The old high ground was built for 20th century economics: sell more junk, earn more profit, "grow" — and then crash. An ethical edge operates at a higher economic level. It is concerned with what we sell, how profits are earned, and which authentic, human benefits "grow." It's a concept built for the economics of an interdependent world" [A key term, imo: an interdependent  world, i.e. not a broadcast world but a connected and networked world]

"An ethical edge just might be the ultimate cause of advantage. It's how better distribution, production, marketing, and pricing — all just proximate causes of advantage — ultimately happen. Jim Chanos's investment thesis says: without an ethical edge, new value cannot be created — old value can only be shuffled around (hi, Wall Street)....So here's the single question everyone should be asking. The old high ground is the new low ground. Yesterday's mountain is today's valley. Are you ascending to the new high ground?"

via blogs.hbr.org

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My presentation on "TeleMedia Futures" at BLPLaw in London

Here is the PDF from today's session in London. High-res and Slideshare version below - and stay tuned! 3.5 MB PDF: Telemedia Futures BLPLaw London Gerd Leonhard

TeleMedia Futures: the next 5 years in Media, Content and Telecom

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Crowdsourcing is real: German Translation of my RSA essay "The Price of Freedom - Reinventing the Online Economy"

Crowd-sourcing really works for me. Quite a few of my essays are now being translated into various languages, by some very kind people that donate their time because they simply like my writings and want to collaborate. Here is the latest result: a nice German translation of my 2009 essay in the RSA Journal "The Price of Freedom - Reinventing the Online Economy". Enjoy! 

[My other posts on crowdsourcing]

German Translation of "The Price of Freedom: by Rainer Classen : PDF: Preis der Freiheit  Kindly translated by Rainer Claßen (RC-WebService; his Blog)  

Original Version in English: Download

Other translations include:

Greek translation by Antonis Plessas: PDF: Gerd Leonhard Η τιμή της ελευθερίας - Αναδιαμορφώνοντας τη διαδικτυακή οικονομία

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

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

 

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Mobile Trends 2020: slideshow & wisdoms by some very smart people (must-read)

Fellow mobilist and DotOpen Founder Rudy de Waele has drummed up some great predictions, bottom-lines and other assorted wisdoms from 20+ really great people (including myself...for some odd reason; in any case I am really delighted to be asked to contribute - thanks Rudy!), asking us to provide input on out top 5 mobile trends for the next decade.

This effort produced a very nice slideshow that really packs a punch, see below. It includes some serious nuggets of wisdom from people such as  Howard Rheingold, Douglas Rushkoff, Marshall Kirkpatrick, Gerd Leonhard, Timo Arnall, Carlo Longino, Katrin Verclas, Atau Tanaka, Alan Moore, Marek Pawloski, Ajit Jaokar, Nicolas Nova, Inma Martinez, Tony Fish, Jonathan MacDonald, Willem Boijens, Carlos Domingo, Russ McGuire, Raimo van der Klein, Michael Breidenbruecker, Robert Rice, Steve O’Hear, Ted Morgan, Martin Duval, Andreas Constantinou, Fabien Girardin, Matthäus Krzykowski, Rich Wong, Andy Abramson, Ilja Laurs, David Wood, Stefan Constantinescu, Henri Moissinac, Kevin C. Tofel, Enrique C. Ortiz, Felix Petersen, Tom Hume...

Here is my stuff, excerpted (from slide #9)

1. Mobile advertising will surpass the decidedly outmoded Web1.0 & computer-centric advertising - and ads will become content, almost entirely. Advertisers will, within 2-5 years, massively convert to mobile, location-aware, targeted, opt-ed-in, social and user-distributed 'ads'; from 1% of their their budgets to at least 1/3 of their total advertising budget. Advertising becomes 'ContVertising' - and Google's revenues will be 10x of what they are today, in 5 years, driven by mobile, and by video. 

2. Tablet devices will become the way many of us will 'read' magazines, books, newspapers and even 'attend' live concerts, conferences and events. The much-speculated Apple iPad will kick this off but every major device maker will copy their new tablet within 18 months. In addition, tablets will kick off the era of mobile augmented reality. This will be a huge boon to the content industries, worldwide - but only if they can drop their mad content protection schemes, and slash the prices in return for a much larger user base. 

3. Many makers of simple smart phones - probably starting with Nokia- will make their devices available for free - but will take a small cut (similar to the current credit-cards) from all transactions that are done through the devices, e.g. banking, small purchases, on-demand content etc. Mobile phones become wallets, banks and ATMs. 

4. Quite a few mobile phones will not run on any particular networks, i.e. without  [I mean unlocked] SIM cards. The likes of Google (Nexus), and maybe Skype, LG or Amazon will offer mobile phones that [may eventually] will work only on Wifi / WiMax, LTE  or mashed-access networks, and will offer more or less free calls. This will finally wake up the mobile network operators, and force them to really move up the food-chain - into content and the provision of 'experiences' 

5. Content will be bundled into mobile service contracts, starting with music, i.e. once your mobile phone / computer is online, much of the use of the content (downloaded or streamed) will be included. Bundles and flat-rates - many of them Advertising 2.0-supported - will become the primary way of consuming, and interacting with content. First music, then books, new and magazines, then film & TV.

Mobile Trends 2020

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Some invitations left: Future of Telecom, Media & Technology (TMT) at BLP Law in London, January 13, 2010

If you are interested in attending please contact me (eMail, Twitter); they have very few places left. It's a free event but reserved for senior executives in the TMT sectors.

 The New Year Revolution - Event January 2010

We would like to invite you to The New Year Revolution: an insight into what's on the horizon in the technology, media and telecoms sector in 2010 (and beyond!)

We are delighted to welcome Gerd Leonhard, TMT futurist as our keynote speaker.

Gerd is renowned for his presentations and think-tank appearances, which are hard-hitting and provocative yet inspiring and motivational.  His clients include Nokia, Google, Sony-BMG, Siemens, ITV, the BBC, The Financial Times and many others.

Following Gerd's keynote there will be a session bringing you up to date on important law changes for 2010.

Date: Wednesday 13 January 2010

Time: Registration, breakfast and networking at 8.30am.  Seminar 9.00am to 11.00am, including time for questions. There will be more time to network when the seminar has concluded.

Venue: Berwin Leighton Paisner Adelaide House, London Bridge, London EC4R 9HA.

via www.blplaw.com

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Tim O'Reilly on Safari Books Online: a Cloud Library as an alternate model for ebooks (and other key learnings for online content)

Image via Wikipedia

Back in October 09, Tim O'Reilly ( someone that I really admire for his cutting-edge and very wise thinking on the future of content and technology) published a very important piece on ebook publishing, on the occasion of the Safari eBook portal relaunch.

I think that most of us working in the content industries can learn a lot from this post, no matter if it's about books, magazines, news, music, film or software. I will therefore summarize his most important bottom lines, below, and provide some comments and context where needed.

• "Recent releases of O'Reilly ebooks as iPhone applications have even outsold the same books in print" Comment: in my view, this trend will happen with most business books, and text books, in the next 2-3 years (beyond the iPhone, of course, i.e. for all kinds of mobile devices)
• "Most people thinking about ebooks are focused on creating an electronic recreation of print books, complete with downloadable files and devices that look and feel like books. This is a bit like pointing a camera at a stage play and concluding that was the essence of filmmaking" Comment: this is a crucial point - publishers and distributors urgently need to let go of the idea of merely recreating offline sales models online.
• "Everything is always in sync because your library is in the cloud; an ebook cloud works the same way the web itself works. It provides ubiquitous access and shared experience" Comment: amen. indeed.
• "One of our mottos at O’Reilly is to "create more value than you capture."

And from Tim's 1995 (!) piece Publishing Models for Internet Commerce, here are some more morsels:

"Some of the characteristics of the print publishing market:

• Barriers to entry are low. Especially with the advent of desktop publishing, almost anyone can produce a book, a magazine, a newsletter.

• Niches abound. Over 50,000 books are published each year in the U.S. alone. A major bookselling chain such as Borders keeps literally hundreds of thousands of unique titles in inventory. And despite major industry consolidation,and focus on a small number of bestsellers, there are still thousands of publishers, ranging in size from those who publish only a single book to those who publish thousands. What's more, there are about 3500 general circulation magazines and tens of thousands of newsletters and other limited circulation publications.

• So do business models. Books are sold "by the piece." They are also available for free in the library, though in limited circulation. Magazines and newspapers may be had for free (perhaps subsidized by advertising or membership), for a single-copy newsstand price, or for a recurring subscription fee. Prices range from a few dollars to hundreds or even thousands of dollars for specialized newsletters.

• No one "owns" the market, or needs to. A bestselling book might sell a million copies or so. The largest circulation magazine in the country, the AARP's membership magazine, has a circulation of about 7 million, Reader's Digest about 5 million. No one else comes close. It's possible to have a successful book selling only a few thousand copies, a newsletter a few hundred, and a four color magazine a few tens of thousands.

• The same technology is available to everyone...

• There is a rich ecology of mutually successful players. Authors sell to publishers. Publishers screen material, edit and produce it to add value, develop a marketing campaign, and build a network of distribution relationships to get the book to the ultimate consumer. Publishers may sell books directly to the consumer, through major retailers, and through wholesalers to smaller retailers whom they don't serve directly....

• Access is universal and non-exclusive..."

via radar.oreilly.com

If you are in the content business, be sure to read his entire post, and watch his 2009 Web2.0 video, here. There sure is a ton of stuff to chew on. Enjoy.

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Via the official Google blog: the meaning of Open (a definitive must-read)

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"

via googleblog.blogspot.com

Coincidentally, in 2008, one of my my most popular speaking topics was "Open is King". Check out these resources, below.

Open is King (video), presentation at the Experience Economy Lab in Amsterdam (January 25, 2008, get the pdf / slides here)

Gerd Leonhard Futurist At Jakarta Broadband Summit "Open is King - The Future of Media

View more documents from Gerd Leonhard.

Futurist Gerd Leonhard on Open is King - The Future of Music, Canadian Music Week 2008

View more documents from Gerd Leonhard.

And here's a German video (Telekom Trendforum 2008)

Link:

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• The Future of music and digital content: mobile, social and... PAID? (FAM09 presentation in Madrid) (mediafuturist.com)
• Legalise it: the Digital Music License - my presentation at OpenRights Group event in London (mediafuturist.com)
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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).

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• Some eBook industry 'leaders' are starting to sound exactly like the music industry 5 years ago (mediafuturist.com)
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Some eBook industry 'leaders' are starting to sound exactly like the music industry 5 years ago

I just read this very interesting piece in PaidContent.org (one of my favorite sites): "Steve Haber, president of Sony’s Digital Reading Business Division... at the MediaBistro eBook Summit... decried the emphasis on the $9.99 price point for e-books. “The $9.99 price point is not a money-maker,” he said. “Certain bestsellers are sold at that price for retail, competitive reasons. But you need to have a range. You could go from $10 to $20 even to $100 for an e-book. There’s no sweet spot and it’s certainly not $9.99. When you walk into a bookstore and there are a range of prices. It should be the same for an e-book store.” Haber went on to defend the use of DRM, which he doesn’t see going away for awhile. “You need an orderly process to sell books and DRM makes that possible, mainly because it allows content creators and distributors to make money from that content"

Ouch. Have you not learned anything from happened in digital music during the past 10 years - where have you been hiding? Let me summarize it for you:

DRM is a total - and much discussed - nuisance and significant deterrent to legal consumer behavior, and it does ZERO to prevent sharing of copyrighted content online. DRM just turns users that have legal, fair and honest intentions into guinea pigs for digital rights protection schemes thought up by people who still have their emails printed for them. Wake up: protection is in the business model - not in technology. I may even concede that DRM may work in some (but increasingly rare) cases, but for books and for music...? No chance. Imho, you have to be kidding if you think these kinds of remote-controlled-rights schemes will make you any money in the future. In my opinion, anyone that still talks about DRM being a chief part of their eBook strategy should consider taking a longer vacation, and do some serious reading and thinking (sure... you could start with my own new book "Friction is Fiction" - ask me for the free PDF if needed; )

Face it: the price point for digital books has to be lower - much lower - than the price point for a real i.e. dead-tree, printed, shipped, physical book. Just because you can't seem to figure out how to reduce your costs across the board, start to add significant value in new areas and still turn a profit, that does not mean consumers will massively adopt eBook-reading at those price points (Kindle etc) or even above (as seems to be suggested above).

This looks like a very lame 
rerun of the classic and most disturbing mistakes of the music industry: the incumbent market leaders really thought they could actually increase their margin as well as their ability to control the usage (!) when selling music online, i.e. have much lower distribution and marketing costs, keep the artists down to the same old, tiny percentage, and - yes ! - increase the prices on a per-track basis.

Ask yourself this simple question: what would have happened if a download had been priced at $0.20 or even 10 cents per track (or even, yes, a flat-rate), instead of $1 - would anyone still have bothered to try and download it for free, somewhere else? Could the value of those active, engaged and happy buyers be captured, and then be extended to other things you can sell them? Clearly, the answer is YES. 

This is my message to the eBook industry and the publishers: do not head into the ill-fated direction of wanting to sell digital content for the same price as the physical content (or even above...ouch) - it is a pipe-dream!

Instead, make eBooks drastically cheaper, offer unique bundles and compilations, add new values all the time (cross-media anyone?), invent new packages (think mobile), and stop focusing on just selling UNITS. Flip the pricing logic before it flips you: lower prices, infinitely more engaged and legal users, and new Generatives on top!

Finally, here is something that wasn't touched on at Paid Content but that is crucial: If you think that the traditional deals with the authors will carry over into the eBook environment you are deeply mistaken. Witness what happened with Random House's eBook initiative, here. The authors (and their agents!) will need to be brought in as PARTNERS not minor players, as they have been in the past. Accept, adapt and move forward.

 

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Will this be the way we read magazines in the near future? Videos: SI.com & Wired tablet versions

I have a hunch it may well be... check it out. This is amazing stuff - the only limit is our time, and attention;)

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