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.

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

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Balzac.tv: video interviews with me, Joi Ito on 'La Belezza del Copyleft' @ Ars Electronica (in Spanish & English)

I did an interview with the On iOn Communication people for a show on Balzac.TV(Barcelona) at last year's 'New Cultural Economy' event at Ars Electronica in Graz, Austria. Today, Balzav.tv published the interviews (which also included Creative Commons CEO and all-around thought leader Joi Ito,  ARS CEO Gerfried Stocker, and Ronaldo Remos) online, and if you speak Spanish better than me I recommend that you check it out; the discussions in-between (with Gina Tost) are in Spanish, the Interviews are in English. 

More details via From the OniOn blog:
"Hoy se estrena un nuevo capitulo de Balzac TV, un trabajo realizado en cooperación entre los equipos de ON i ON comunicación y de Balzac TV, y protagonizado por las antagonistas “Gina copyleft” y “Gina copyright”. Con esta pieza queremos aportar una serie de reflexiones ajenas y propias acerca de un problema actual que parece de difícil solución si lo miramos sólo desde el lado del negocio: las limitaciones de la propiedad intelectual en la era digital. ¿Qué alternativas hay a la estricta interpretación del copyright, Creative Commons funciona, y bajo qué condiciones, y hay modelos de negocios viables basado en el copyleft?

A parte de la estupenda Gina Tost y sus alter egos, contamos con las aportaciones de Joi Ito (CEO Creative Commons), Gerfried Stocker (Director Artístico de Ars Electronica), Gerd Leonhard (Media Futurist) y Ronaldo Lemos (Creative Commons, Brazil). Os dejo con las Ginas peleonas…"

Balzac.tv: La belleza del copyleft

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Youtube vs. GEMA & PRS, Kindle vs Book Authors, Google's free Music in China: so what is the value of Content?

I think 2009 will be a key year for the content industries, the creators, media companies, platforms, labels, publishers and other middle(wo)men.

In 2009, the value of content - starting with music and news - is being redefined for the Internet age. The gloves are off: the music rights societies want more money for each play, many journalists and writers are fearing a gloomy future as newspapers stop printing and shift to digital publishing around the world, and the book-authors guild is quarreling with Amazon about the Kindle2's robotic voice renditions of their works.

The bottom line is that the core logic and operating mantra that the 'Western' content industries have employed until now is becoming unstable and, economically speaking, increasingly unworkable. The Internet has severely disrupted  the traditional value chains, and the promised land of advertising-supported free content has not yet materialized.

Let me outline these shifts and challenges a bit more:

A) Controlling the distribution of content - whether by technical or via legal means - is increasingly becoming an utter 'mission impossible' unless you want to adopt a seriously totalitarian Internet regime (as seems to be proposed in France last week I fear...)

B) Closed systems and walled gardens (yes, those of the telecoms and mobile operators, too) are leaking everywhere. Closed and centralized ecosystems are becoming very expensive and thus hard to maintain, e.g. Microsoft Windows versus the ever-mushrooming Google Web OS (soon to include voice communications), Android and Symbian mobile OS vs Windows Mobile, free streaming vs paid subscriptions such as Rhapsody, open API-based platforms such as Twitter and (now) the Guardian's Open Platform versus proprietary offerings such as iTunes or the WSJ, and so on and on.

C) On the Net, just about every mode of content consumption -aka listening, watching, reading- does in fact create copies, too, so the traditional legal distinction of 'free use/listen/watch but paid copy' is... well, toast, I would say. This creates significant legal uncertainty and pulls out the rug under the value logic of the traditional publishing industries.

I like to refer to this tectonic shift as 'The challenge of 21st Century Content Economics' (see a related swf movie here); riffing off a similar phrase I picked-up at Umair Haque's very inspiring blog.

First, here are some of the most common questions I keep getting about the Future of Content:

• If everyone gets to make use of content (music, video, news, images) 'for free' or for much cheaper than before the advent of the Net, if just about everything but my dinner can be shared and remixed and forwarded, won't we just see a 'rush towards the bottom', i.e. all content gets cheaper, all the time, until it stops making real $ altogether? And how will 'open' content make any money, anyway? Who will pay for something that can be gotten for free? How can you compete with free? And beyond that, if everyone thinks they can be a creator, producer or broadcaster, too, who will still pay for the 'professionals'?
• When access finally replaces ownership on a large scale, e.g. printed newspaper-reading goes away and reading on mobile devices takes over, or streaming music on my iPod Touch overtakes buying single tracks on Amazon or iTunes (ps: I think it already does), who should pay for what, when, where and how? Is this kind of universal access monetizable like the 'copy' was?  How is the current law going to help us with this... or not? When the very definition of COPY becomes unworkable, what happens to Copyright?
• If we agree that not making your content available online seems like an unrealistic option (as it indeed robs the creators of the most popular platforms and ways to present, market and promote themselves to their audiences) is the traditional right to refuse permission, based on the exclusive right of the author (or their representatives i.e. the publishers and labels, studios, rights organizations etc) still feasible and realistic?  Can the law as it is now still be used to monetize our creations, or will the insistence on these pre-Internet laws just render us irrelevant, attention-wise and dollar-wise?  And if we need to make our content more available, where will the new money come from? In other words, if not Control, then... what...how...when?

Here are some answers that I have been investigating (please bear with me for a few hours while I find the definitive solutions ;):

1) I think content can be both free or cheap, and very expensive. This sounds paradoxical, perhaps, but the reality is that in a system that is no longer based on selling units or copies (i.e. CDs, DVDs, books, single-track downloads, cable slots etc), the value of content is very likely to be constantly re-determined by a multitude of surrounding and incremental factors.

So the correct answer to that key question of 'what's the value of content' should probably be a solid: 'it depends'.  As much as that may make the job of getting remuneration so much harder, I think it is also potentially quite liberating that we will no longer need to worry about controlling distribution so that we can sell more copies. Instead, as would be the case with the flat rate for digital music that I have been pushing for for the past 7 years, we could then shift our entire focus to getting and keeping Attention and Trust - 2 factors which now are the very foundation of any commercial success. In fact, I would argue that because of the de-emphasis on copies most content marketing and promotion tasks will get a lot easier (and much less costly) since we can now use the content as a marketing tool, itself.

Image by gleonhard via Flickr

2) So what are those future value-determining factors? Here are a few from a long list that I have been compiling:

• The best quality experience, at the perfect time. Compare listening to a low quality audio-stream on your mobile, in the train, to enjoying an HD recording on your living room (or car?) sound system. The first one could be feels-like-free or bundled, the other one could be a premium, paid-for service. The difference is just my particular use case, not the 0s and 1s.
• A new, attractive and convenient package (or shall we say, alternate user interface?) A powerful and very recent example is  'The Presidents of The United States of America' iPhone app: the user pays a one-time fee of $3 for free, on-demand streams and videos from the last 4 albums, and lots of up-selling is built right into the app. iPhone users that are fans are very likely to shell out $3 to get this cool widget, and in a way I guess they are now actually paying for what they would otherwise have gotten for free, anyway (i.e. to listen to their favorite music, on-demand). Plus, the band now has a direct and totally unique path to their biggest fans - and that is the new gold, in my opinion. Sounds like a great deal to me: package it nicely and it will sell regardless of free alternatives.
• Also note that this same phenomena is what still sells printed books. The words i.e. the content anyone can probably get for free, somewhere, but the feel and smell of the paper, the physical format, the touch, the familiar and comfortable user-interface (UI) is what I am actually paying for when I buy the good old, dead-tree version. In other words, I pay for the design, the printing and shipping, and only implicitly for the 'words'. It is important to note, though, that nice user interfaces will soon be available on electronic reading devices, as well, therefore leading us to that very same, original question: what will we pay for when we buy content, ultimately? We may soon enter the age of content-as-software-packages: many of us may soon no longer order the printed versions of books (last not least because of environmental concerns) but we may happily pay a few Euros a month for a digital book subscription, or add it in a bundle via our mobile phone bill, only to then buy the 20 Euro multimedia / virtual world edition of a book we really like - except that it won't be printed and shipped but also downloaded to my mobile device.
• Authenticity and timeliness. I foresee a future where I will gladly pay a bit more to make sure that what I get is the bona-fide real thing, from the actual creator, in its correct version and without any shortcuts or changes. An authorized, paid-for English translation of the new Paulo Coelho book (digital or otherwise) would certainly be more enticing to me than 'free' copy that is not stamped with his approval. And if I can get it the moment that it's finished, even better (and I pay another premium).
• Selection, expert curation, filtering, culling, context, annotation. In my experience, few people have time to find the best music for a specific occasion. Why would I bother looking for a great selection of ambient 'space music' for my yoga sessions when a true, bona-fide authority such as Stephen Hill (Producer of the superb Hearts of Space / HOS online radio show) has already done this for me?  My payment to HOS would therefore be not so much for the actual songs, it's more for the service of having them filtered and annotated by a real expert.

3) For the very same reason that content can be simultaneously worth a lot or very little (i.e. because of its disembodiment and the shift from selling copies to providing access), it follows that many rightsholders and their agencies may no longer be able to get fixed fees per copy, or even per use of a piece of content. Simply because if they continue to do that they will make it impossible-by-design to comply with their rules and legally use their content in all but the most highly subsidized cases, because most of the time a fixed fee will not be obtained on the other end  (i.e. the users), either.

Youtube simply cannot pay a fixed 1 cent per stream - even with Google's deep pocket behind it - because the Youtube users will not pay 1 cent (or even a fraction thereof, for that matter) per stream, and advertising revenues that would support these kinds of license fees are not within reach yet (because, just like content, the web's advertising and marketing logic needs to be reinvented first, as well !). This new business needs to be build together, from the ground up.

We are seeing this hairy issue creep up everywhere: GEMA (the German copyright organization) reportedly wants up to 12.9 cents per music video that is played on Youtube in Germany; the reason being - and this is my personal guess - that they probably treat each video-play as an on-demand performance which would be charged almost as much as an actual copy (i.e. a download). And of course, the reality is that those digital natives  are in fact using Youtube as virtual jukebox - watching my 15-year old son hang out in his room I can certainly attest to that.

So GEMA's (and PRS') point is as correct as it is pointless: these on-demand plays are very much like a download, in terms of how the users are using the content. Access is replacing ownership.

But here is the tough part that cannot be avoided no matter what: it's not the users, or Youtube (or Last.fm or Pandora or Hulu or Miro or Boxee etc) that are at fault here, it's how traditional content industry entities such as GEMA and PRS define the value of music (and other content). For them, a piece of content still has its fixed and minimum value, and if you want it, you'll need to pay up according to those rules.

As I am investigating more alternatives I will keep you posted so... stay tuned!

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Why Google's free music deal in China is so important, and what it may really mean

Image via CrunchBase

I have mentioned Google's music-related activities in China a few times during the past 2 years; and just yesterday this topic seems to have heated up considerably. I think these developments are crucial and need further exploration.

As you may know, Google owns a good chunk (or all?) of the Chinese search engine Top100.cn, one of the biggest rivals of the Chinese super-portal and ruling search giant, Baidu. However, Google is still a more or less distant second in the Chinese search market (in 2008, Google had approx. 16.6% vs Baidu's 76.9%) and really needs its Top100 property to better compete with Baidu. The major issue here is - you guessed it - the availability of CONTENT- or rather, the simple displaying of links to millions of music & film files that those hungry freeloaders i.e. digital natives want to stream or download. Baidu allows this - in fact, thrives on it - while Google / Top100 does not (i.e. it filters and removes the links to the files). This is a huge handicap for Google, because the filtering of those content-links is basically driving away all of those 100s of millions of Chinese Internet users that are looking for just that.

Realizing that the real value of the users is in their participation and engagement, and then in paying-with-attention, Google has clearly pursued a strategy akin to the 'Music Like Water' model that I (and Dave Kusek, my partner-in-crime for  "The Future of Music") have also described countless times: Google will simply provide the platform where music can be turned into money, by connecting the user with the content they want right where they already are (i.e. the search page), while gradually but aggresively monetizing their presence and their clicks via 3rd party payments - and this does not mean just ads. Sounds simple but maybe this has not yet been financially feasible in the past - today, any new money for the music companies is welcome, I guess, so here we are, finally: Search with us and we'll give you Free Music. Kai Fu Lee Image via NYT.

Clearly, it is much better for Google to offer and develop a new payment logic and mechanism for the music that is being used, i.e. to somehow license and pre-pay for it (I call this 'being the lubricant of the ecosystem') until such time where the revenues from advertising, up- and cross-selling are big enough to pay for everything, and quite possibly beyond that, as well. And as far as the music licenses are concerned - otherwise a no-go minefield that few Internet companies have crossed in the past - China is clearly a very good place to start as most of these new revenues will be 'found money' for the record labels.

Total Telecom reports:  "Record companies will take roughly half of any revenue from banner ads placed on the page users see when they are downloading or streaming songs, with Top100.cn taking the remainder. Google could benefit from increased traffic on its Chinese site, and can sell its trademark search ads on the search page" The bottom-line? For all parties, it is better to deploy new kinds of ads (think mobile - that will certainly be key), sponsorships and affiliate links while the music is being used (fka consumed;) and to thereby fund the pool of music licensing costs, then not to get involved and leave the turf to all the other guys that don't play by the rules, anyway.

Now, Google has apparently licensed 350.000 tracks from all major labels (how long did that take... I am afraid to ask... *rant alert) and many leading Chinese record companies and artists, and if you are logged into Top100.cn, and based in China (sorry - no access from EU / US), apparently all the music is yours to stream and download.

So: Google pays for the music to get our attention for their ads - sure sounds like a familiar strategy. Radio and TV broadcasting, anyone?

Another interesting morsel is that apparently streaming and downloading is treated as pretty much the same thing (again, from the WSJ coverage, see link below): "Google's Lee said songs on the service are downloaded or streamed around 1.5 million times a day, and he hopes the number will eventually be many, many times that".  I believe I have mentioned this basic fact of Internet music a few times before, too: streaming & listening IS downloading, access IS ownershop, and that's that. The legal artifacts remain, I guess...?

Now, just because I won't want to agree with the major labels and their lobbyists too much;) - here are my big questions:

If this works in China, why not do this everywhere else? If this works for Google, why not for telecoms, ISPs and mobile operators?  If this works for music, why not - sooner or later - for music, TV, video, books and newspapers?

First: China does not have much of a business of 'selling units', i.e. there are no Billions of $ in selling CDs or single-track downloads. Therefore, any money that the rights-holders (i.e. the record labels and music publishers, and hopefully the artists) can actually get from anyone in China is probably very welcome; and that is exactly what the Google / Top100 deal will provide. And even though it would be a fair bet to guess that this deal is probably not coming cheap for Google China, it is probably still quite doable since the 'competition' of physical music sales is negligible and so-called 'cannibalization' of traditional music sales is not a major concern for the record industry in China. This would of course be substantially different in the UK or Germany where CD sales and the omni-present iTunes still generate Billions of Euros per year. But this is the lesson: someone had to put some money down. Congrats to Google / Top100. Next: the telecoms - within 6-9 months, imho.

While the cannibalization prevention is, of course, entirely reasonable (if you still sell units), it does beg the question: why do those lucky Chinese Internet users - many of whom may never had to worry much about potential copyright issues, 3 Strikes+Out ideas or MP3-server raids - now get a de-facto feels like free music service, while we - the  more or less faithful and compliant residents of 'The West' - still need to pay 1 Euro / 1 $ for each single download on iTunes, $3 / month for Last.fm (ouch) or run off to the record store, or order on Amazon.

This clearly does not make sense: it  feels a bit like we are being penalized for having actually paid for our music until now. So, some will surely argue, does this mean we should stop paying for music until such deal is being offered in Europe as well? You tell me - but it's sure worth a discussion, I think. It seems to me that this model is workable around the world now - and not just for / with / via Google - and that it should be pursued in Europe and the US, as well. Give us a licensed platform provides 'feels like free' music to the users, based on collective and public blanket licenses that can enable anyone that wants to offer music with what they do, while paying for the licenses with the traffic that those offerings, the added values, the platforms, will generate.

Here is another interesting quote from the WSJ: "I can't overstate how important the new Google service is, said Lachie Rutherford, president of Warner Music Asia Pacific, which is making its entire global catalogue available in China as part of the deal: until now, the online market in China has been completely un-monetized by the music business" 

This strikes me as a very interesting way of putting this: Lachie / WMG: isn't the entire Internet music-sharing economy (i.e. P2P, stream-sharing, drive-sharing etc) un-monetized, as well? And why is that? If WMG can do this in China because their is no previous unit-sales income worth mentioning, why not do it for the Internet, period? Why not license Google - and Facebook et al - and the ISPs in much the same way? Or will you just do this in places where nobody paid anything to begin with?

Techdirt has a very fitting comment, on this (see the link below):  "The fact that the labels are moving forward with this plan in China, given its reputation as the wild west of copyright infringement, undermine their contention that they can solve the supposed piracy problem with legal or technological means elsewhere. Furthermore, it exposes the reality that what's staring them in the face is a tremendous opportunity, not a problem" 

Not much to add here, except for my usual Lessig-esque mantra "Compensation not Control". Google + Telecoms - will you do that for / with us, please? This year?

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Compensation Not Control Music 2.0 Gerd Leonhard Midem Net 2009

View more presentations from Gerd Leonhard.

Marc Andreessen: "Not allowing your content to be used is entirely the wrong strategy" Me: IP Gridlock must end

Image via CrunchBase

Cross-posted from MidemNet blog (March 14)

I just finished watching a great Charlie Rose interview with the amazing Marc Andreessen (Founder of Netscape, now Founder of white-label social network platform Ning, among many other things). Marc is one the brightest people in this turf, and I definitely recommend that you check out what he has to say about the Future of Newspapers, and the Content / Technology space in general (Charlie Rose show link).

In the interview (see my short, slightly time-warped but still crucial excerpt below), Marc talks about the urgent need for all content to be blessed with an ok-to-use-license on social networks and social media. I totally agree with Marc on his key message: nothing can be achieved by removing your content, or by making the legitimate use of content so incredibly expensive and complicated that few companies can actually afford it.  Recent examples abound: WMG and Youtube, Youtube & the PRS, Amazon's Kindle2 versus the Authors Guild, Pandora's difficulties outside of the U.S., CBS and Boxee, my very own Sonific.com ... and the list goes on. When content is removed from sites that deliver audiences of 200 Million+, then it's the creators and the users that lose, flat-out - no buts and ifs. Why do you think Facebook (which is starting to drive traffic in exceedingly huge numbers) does not have a music or video service? You guessed it: there is no reasonable deal to be had with the representatives of the music, film, and TV companies.

In my opinion, we currently have a severe IP-Gridlock situation: content creators, owners and their representatives (and these are very often more of a problem than the actual creators, in my experience) are still basing their monetizing strategies on scarcity, on the right to refuse the deal, and on 50-year old copyright laws, regulations and traditions. These laws - as crucial as they were back then - afford the rights-owner the exclusive right to say yes or no to pretty much any kind of new Internet-based use of their music, films or TV shows, and therefore a common misconception is that - as it has been for the past 50+ years - more control actually equals more income. And it kind-of did - back in those days when refusal could sometimes be a very effective way of enforcing a higher payment.

Well, this was then, and the future is... already here. Adhering to this strategy of refusal and monetary revenge ('now that you're a big company we'll take all we can get', see Youtube vs PRS) is a huge mistake and will beyond a shadow of doubt devalue your content very quickly, in the next 2-5 years (depending on your specific domain).

In music, this pivot point has already been reached: if your content is not available (i.e. findable and listenable) on Last.fm, Youtube, Myspace, Spotify, Facebook, QQ and so on, it quite simply won't exist for the 1.5 Billion Internet users and the soon-to-be-online 3.5 Billion mobile phone users. That means you are losing out on reaching a huge audience, and on doing so in the most cost-effective ways. It means that new routes to monetizing - those so-called new generatives- cannot be tried and co-invented. It means that innovative and honest entrepreneurs are stifled and silenced while your content is still being dished up in other places, for free, anyway, and without your permission. It means that all the mad mole-whacking won't get you paid - it's just the lawyers that make a good living this way. It means that a new ecosystem cannot emerge because you are still insisting on doing business like it was done 20 years ago: with large advances, completely under your exclusive control, your way... or the highway.

So here is a wake-up call if you're still thinking that blocking the use of your content will get you more money: it simply won't work. Period. You can't fax a cat. Really.

As to the music business (recorded and publishing), this much is obvious: either the industry will start to dial back on Economic Egoism and their obsession with Total Control, or 4 Billion Internet users will simply route around them like a river routes around a rock. To make matters worse, governments will certainly step in to force an end to a clearly dysfunctional system that criminalizes 100s of millions of people while returning zero new revenues to the creators.

What will work is COLLABORATION, Trust and Mutual Respect in defining the new ways of how $$$$ can be generated for content creators - and there are plenty, once we question our  outdated assumptions.

Lastly, kudos to some companies and organizations that seem to be heading in a more positive direction:

• the new Featured Artists Coalition refused to be part of any scheme that penalizes Internet users
• the UK Guardian has launched an open API that makes all of its content available for 3rd parties

Need more food for thought? Watch my video from MidemNet 2009 "Compensation not Control" (pdf, too).
And: TALK BACK!

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Join us for an exciting evening at the Royal Society for the Arts in London (April 8): "New Media Futures"

If you happen to be in London on April 8, 2009 (6pm), please join me and my fellow speakers for a talk and presentation at the Royal Society of the Arts. The evening is entitled:  New Media Futures - what next for content and creativity? and promises to be quite entertaining;) Thanks to the RSA, this event is free of charge and seating is limited so be sure to register early. A few more details about this event:

"The internet is radically disrupting most of the traditional content distribution and selling models, starting with music and games, followed by TV, film, books and print publishing. Once everyone is always-on, mobile and hyper-connected, and everything is available everywhere, how will content be created, distributed, marketed, consumed, and paid for? Who will do what, for whom, and how will the traditional players such as broadcasters, record labels, publishers and distributors adapt? If new players, starting with telecoms, device makers, advertisers and brands, indeed move into the content business, what will be their challenges and opportunities. 

Given the challenging financial climate, how do we reconcile the need to reward enterprise and secure sustainable revenue streams, with the expectations and demands of the “freeconomics” generation? What kind of legal, regulatory and cultural framework do we need to ensure that this new eco-system of creators, consumers and intermediaries generates more benefits for all involved?  A panel of media visionaries convene at the RSA to predict the innovations in technology, business models and user behavior that will shape the media landscape in the coming decade.

Speakers: Gerd Leonhard, media futurist, author and blogger; Richard Titus, Controller of Future Media, Audio, Music & Mobile, BBC; David A. Smith, chief executive of Global Futures and Foresight (GFF). Chair: Ralph Simon, CEO, The Mobilium Advisory Group and Chairman Emeritus & Founder, Mobile Entertainment Forum - Americas.

Related stuff:
Plugg 2009 Video "Future of Media"
Authors@Google Talk March 2009

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The Printing Press brought us Copyright, the Internet brings... Usage Right!

I think creators now need to get paid for the USE of their work, not (just) for a copy. On the web, everything is a copy, every listen / watch / read / use is in fact a copy; computers are simply copy machines by default. If creators and rights-holders stick to the old definition of 'copy' and the corresponding, unit-based mode of how they used to get paid (e.g. the mechanical license for each download of a song), then we will continue to have a total mismatch between what 1.4 Billion Internet and the converging ~ 4 Billion mobile phone users are willing and / or able to pay, resulting in a drastic loss of revenues that could be harvested via revenue sharing, bundling and other collaborative, usage-based models. Check out the slideshow below. More on what I call "21st Century Content Economics" later today - I will publish a PDF with my Authors@Google presentation I am doing in San Francisco, today.

Copyright 2.0 and the Future of Music Gerd Leonhard Norway Think Tank June 2008

View more presentations from Gerd Leonhard. (tags: copyright immf)

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Facebook's CEO on the ToU debacle: "Governing the Facebook Service in an Open and Transparent Way" - Adios Control!

Read Zuck's post: Facebook | Governing the Facebook Service in an Open and Transparent Way.
When Facebook changed their Terms of Use last week, making it look a lot more 'controlling', all hell broke loose.  Even in Switzerland (where I live), the national TV news reported on the uproar that followed. Everyone hated Facebook's new ToUs and lots of people were considering ditching their accounts. Even though their new ToUs did not surprise me, and I already consider everything I do on Facebook to be kind of  'in public domain' (under the Creative Commons license I use for pretty much anything), I do think that they way they have gone about this left a lot to be desired. Their brilliant and decidedly Web2.0 move was to immediately back-paddle and return to the old ToU - very smart, and something that probably got them extensive media coverage all over the world (hey - there's a lot more room to grow, from their measly 160 Million or so users;).

So Zuck wrote in this blog-post:  "Our main goal at Facebook is to help make the world more open and transparent. We believe that if we want to lead the world in this direction, then we must set an example by running our service in this way. And... we came to an interesting realization—that the conventional business practices around a Terms of Use document are just too restrictive to achieve these goals. We decided we needed to do things differently and so we're going to develop new policies that will govern our system from the ground up in an open and transparent way. Beginning today, we are giving you a greater opportunity to voice your opinion over how Facebook is governed"

Well-done. Sure sounds a lot like Facebook will be more like a 'Public Utility' ... kind of like the BBC, maybe? Now, there's another blog-post, right here!

But here is the key point, for me: It is now abundantly clear that the WE-THE USERS can control and influence what happens - not (just) the 'Network Owner' or 'Provider' or 'Media Company' or 'Studio' or 'Label' or "TV / Radio Network".  If we-the-users, the people formerly known as consumers, don't like it, we'll leave, taking all our friends with us, deflating the platform's value very quickly - just imagine what would happen to Google if we pulled our trust from them. Control has now shifted to the Users - and that's a good thing.

This is,  of course, the topic of my next book (download some previews, here).  More soon.  Facebook ToU tag cloud by Flickr, AuntieP

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The Future of Broadcasting, and the End of Control (videos of my keynote at NPOX 2009)

Finally, here are the videos from my keynote speech at NPOX 2009 in Hilversum, courtesy of OMROEP, the Dutch broadcasting organization which invited me to speak about The End of Control, the People formerly known as Consumers and the Future of Broadcasting (Radio and TV), at their annual gathering and conference, NPOX.  The PDF and slideshare stuff is here.

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Compensation not Control - The Future of Music: video & audio versions of my presentation at MidemNet 2009 (*one of my best ;)

Finally, here is the video and audio version of my presentation at MidemNet 2009, in Cannes France. I put a ton of work into this presentation and, well, honestly... I think it's one of the best I have ever done on this topic.  Hope you enjoy it - and please comment, below, and / or spread the word!  Thanks to the Midem organization for providing the DVD with this video.

The topics: why the music industry needs to license the Internet just like it has licensed Radio (i.e. with a collective license), why criminalizing the users & fans will not work - and why those efforts should be re-directed to the creation of a new 'Music 2.0' ecosystem that actually produces growing revenues, where those new revenues will come from, and how the music flat rate - aka music like water - would work. See my previous blog post for more details and the PDF of this presentation. The MidemNet blog is here. My free book, Music 2.0, is here, btw;)

Youtube versions here.  MP3 file download: Compensation not Control Futurist Gerd Leonhard MP3

Audio via Soundcloud, below  

Compensation not Control Futurist Gerd Leonhard at MidemNet 2009 by gleonhard

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Compensation not Control: Music 2.0 (my presentation at the MidemNet event in Cannes)

Compensation not Control Futurist Gerd Leonhard at MidemNet 2009 by gleonhard

Update here

If you were at my MidemNet presentation in Cannes / France, today... here it are my slides (I will add more details later... it's 2.30 am now ;). Hopefully MIDEM will make the entire video available soon, as well. Be sure  to check the MidemNet blog for updates (and the Kyte channel! 3MB PDF: Compensation not Control Music 2.0 Gerd LeonhardMIDEMNet 2009 low res

High resolution version viewing and downloading via Slideshare:

Compensation Not Control Music 2.0 Gerd Leonhard Midem Net 2009.Key

View SlideShare presentation or Upload your own. (tags: isps leonhard)

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Pirates Prisons Project: watch these videos, have a good laugh, and then... think again)

Go to PiratesPrisons.com

Great read on "Intellectual Property and new Copyright Law" with some nice Media Futurist -ic Quotes (via Japaninc.com)

This is a must read: Intellectual Property and new Copyright Law | Japan -- Business People Technology | www.japaninc.com.  Best snippets:

"But are things really that dire? Some would argue that these industries are healthier now than they ever have been. With the spread of information at a never before seen level, pieces of journalism are being read more now than ever, music artists are able to reach a broader audience than ever (some by bypassing the record labels all-together), and movies are being watched by more people in more countries..."

"The issue is control, and the embodiment of that control is copyright. The music industry is perhaps most illustrative of the issue..."

"Currently in Japan, new copyright laws are being debated which could make average users subject to civil law suits from record labels or movie distribution companies. Within the walls of mega-forum 2-Channel and the Japanese blogosphere, debate has been raging over the laws and what they will mean exactly for the average user. Specifically the outright banning of illegal downloads—music, movies and games being the main points of interest—is currently being investigated by a sub-committee appointed by the central government. Presently, Japan’s copyright law makes an exception in the case of downloads for personal use..."

"The industry veteran [IFPI's John Kennedy] says he believes a large increase in resources will not be needed to govern the Internet—warnings and enforcements will just need to be carried out in a similar way to any other law. “People call the Internet an ‘Information Super Highway.’ Well like any normal highway, it can be governed. If someone is speeding you give them a ticket and in extreme cases you take away their license.” But how about finding them? “People sit in their rooms and think they are anonymous but they are not—their IP address says exactly who they are,” says Kennedy..."

"Media futurist Gerd Leonhard [Me] says that in a globally networked world, with an expected 3.5 billion mobile users and Internet speeds increasing exponentially within the next two to four years, the traditional Western concept of exclusive copyright must be reviewed. “It is the purpose of copyright to generate sustainable and growing revenues for the creators, not to prevent new uses of their works that may eventually result in those new incomes. He believes that in the future, “many of these models will be more like flat-rated or bundled access models, rather than unit-sales based models.”

***"A recent case involving Google may help provide a blueprint for content creators. In October, Google settled a dispute with authors and publishers over its scanning of 7 million books for digital versions of printed material. The company paid $125 million to publishers and authors and will, from now on, provide a percentage share of the profits from ads and downloading fees. Under the agreement, Google would receive 37 percent of revenue while publishers and authors would get the rest. The settlement could pave the way for similar agreements within other industries..."

"Ito continues, “While it is important to protect copyright and the incentives that copyright (and intellectual property) provide, it is important that we do not prevent many of the basic things that people want to do with content or prevent some of the potential new ways that people will be expressing themselves and sharing this expression.”

"Futurist Leonhard says the key to making money in a post super-connected world is to embrace the concept of losing control. He believes that “a continued loss of control over IP and copyright and most other measures of restrictions is absolutely inevitable; and in fact, the less control we will have the more new revenues will surface.” Leonhard believes that “The future of creativity, content and media is bright, as it is the human creativity and its embodiments that will be even more valuable in a world of ubiquitous access and huge growth of output. It is the value and dollar system and logic that we need to rebuild and adapt—and the law is, of course, there to support this, and will therefore be adapted. This process is not new, just more drastic since the Web is often removing many old ways to get money out of scarcity while not yet offering the same profit in a plausible new way yet. This new logic needs more than 3 percent of the global population on broadband, and always-on, to generate increasing revenues from those new ideas. Another 24 months and we should have a much better take on this.”

This is really well-written and nicely researched, balanced column by Michael Condon - kudos!

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Video: Lose Control and Gain Audience (Audiences 2.0 event)

This is a short video clip with a summary of my presentation at the Partnerships 2.0 event in Scotland, in October (where I was speaking for the Scottish Arts Council, more details and PDF here). A quick summary:

• The future of content is digital (of course) and decentralized
• The rise of Broadband Culture means we lose control over what people 'copy' and do with our content
• Protecting our creations is pretty much 'mission impossible'
• We need a boat to float down the digital river - not throw sticks in it
• It's the crowd and the cloud!

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Stream of the entire Futuretalks DVD with Glen Hiemstra *220 minutes

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