Access to music - i.e. a simple click-to-play, anywhere, anytime, anything - is replacing ownership. This trend will quickly accelerate due to the massive global build-up in cheap wireless broadband connectivity, leading us swiftly to the point where listening to a song will be exactly the same as downloading it (at least in practical terms, from the users' perspective). Some of us would argue that this is already the case, of course, but in terms of mass-scale user adoption I would say we are about 18 months away from the pivot point in the so-called developing countries.
The music industry needs to urgently get ready for this: sell access not (just) copies. Bundle. Package. Develop those new generatives. "When copies are free you need to sell things that can't be copied" (Kevin Kelly, The Technium).
Another important trend to embrace is the move to mobile devices that will pretty much replace the computer as primary access point to the Internet i.e. to all digital content. Mobile applications for smart-phones will take the place of sound-carriers; music will be sold as/in/via/with software. Read how Pandora is doing this, in the U.S.
I made a very short video on the same topic last week (90 secs) and a lot of people have pinged me to make a longer version - so here it is, in 2 parts (thanks to Youtube's really annoying 10 minute limit).
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
Just received this file via MPJC podcast site; it's the audio version of my 30-minute speech on The Future of Media, get more details via my previous post on MPJC 2009. Note: the introduction (90 secs) is in Dutch but my speech is in English.
This is part 2 of my presentations at CommunicAsia 2009 in Singapore: The Future of Mobile Content, TV & Entertainment
The content industries are seriously challenged by the Internet's
disruptive forces - it may have taken longer but is really hitting home
now. Many trusted business models are no longer working, copyright and
value traditions are being challenged, and content consumption is
drastically changing, everywhere. Now that Internet access is becoming
a default part of just about every mobile phone, even more drastic
changes are on the horizon. Who will pay for what kind of content on
mobile phones, when, why, where and how? Will mobile TV and mobile
music finally take off, and what will be the future business models?
Where the opportunities are and where are the minefields and myths that
need to be discarded....
The State of the Mobile Marketing Industry and beyond: Consumer
generated content, social networking, online on-demand video,
engagement and the death of television as we know it - The velocity of
change only seems to be increasing. Zenith Optimedia estimates online
advertising spending will grow 8.6% in 2009, reaching $54.3 billion by
the end of the year, even as the overall market slumps by 6.9%, as
marketers increasingly leverage digital media and technology platforms
to establish a dialog with their customers, optimize messaging and
delivery and, ultimately, drive brand preference. How will the
looming recession impact on media and advertising? Will digital media
suffer along with other platforms or might our industry benefit from
these tough times as marketers shift a disproportionate amount of
spending to performance-based marketing channels?
Jeff Jarvis rocks - no doubt about it. I have been reading his new book "What would Google do" and in my view it's at least as important as Wikinomics or the LongTail. Check out Jeff's slideshow and video below (yes, you can fast-forward thru the first 8 mins of German intro;) - no matter what business you are in, this will give you some serious food for thought; if you're in the content business - well... watch it 5 times! Some of his key points:
The link changes everything
Do what you do best and link to the rest
Join a network / Be a platform
Think distributed
If you’re not searchable, you won’t be found
Everybody needs a little SEO
Life is public, so is business
Your customers are your ad agency
Small is the new big
Manage abundance (not scarcity)
Join the open-source, gift economy
The mass market is dead—long live the mass of niches
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?
The 3-minute daily AdAge video shows always provide some interesting morsels. In this short excerpt, below, Jason Kilar (Hulu's CEO) says: "We don't have a marketing department because
if our product isn't going to sell itself on its own merits we've got
bigger problems". This is very much how I look at the role of Marketing, going forward, as well. My 4 cents on this topic:
Design the marketing right into your product or service, from the get-go - if people will not want to share what you are offering, that's where you need to start!
Instead of paying to grab people's attention (which usually means disrupting them, several times), invest in your product to be so attractive, or better yet, addictive, that your users will promote it for you. Word of MOUTH and word of MOUSE is what will drive your success more than anything else, so that's where every cent is well spend
Once a good many people are using your product or service, enable and encourage them to share all that goodness with their friends and peers (great examples for that include Nike+ and the recent T-Mobile Life's for Sharing campaign); put 'share this' and 'tell your friends' links and widgets everywhere, and integrate things like Facebook Connect, Google Connect and Twitter.
The best way to activate your users as voluntary brand-messengers is to allow them to co-create, to engage, to get involved - and of course, to talk to them, to build relationships. This is the key to Twitter's rapid growth.
Twitter is indeed a game-changer and is quickly becoming a major force in social media, news, search and mobile communications. I have written about Twitter quite a few times, already, so today I will just share some really important Twitter-related stuff that I just discovered, myself (via the people I follow on Twitter, naturally ;)
"Open beats closed. Anyone can use Twitter, make friends with anyone else on Twitter, and read anyone else's Tweets, unless they're locked. Here's Oprah, for example. Openness is important because it unlocks 21st Century economics — the new economics of interdependence" The new economics of interdependence - that's a crucial term, in my view. I like to think about this as Egosystem becoming Ecosystem...;)
"Connection beats transaction. In the 20th Century, what was viral was mostly the flu. Today, Twitter is the master of viral economies.
I got this awesome link from you got it from he got it from them. In
the 21st Century, virality can make many different kinds of value
activities significantly more efficient and productive..." Circuits beat channels. Twitter isn't building a new
media channel. It's turning yesterday's channel into a circuit. ...Twitter has dropped a neutron
bomb of real-time feedback into the heart of media: yesterday's inert,
rigid channel becomes a flexible, ever-shifting, reconfigurable set of
circuits instead. Efficiency is gained — and monopoly is vaporized — as
demand coalesces around supply, and vice versa"
In short, the most fascinating thing about Twitter is not what it's doing to us. It's what we're doing to it.
For as long as we've had the Internet in our homes, critics have
bemoaned the demise of shared national experiences, like moon landings
...But watch a live mass-media event with
Twitter open on your laptop and you'll see that the futurists had it
wrong. We still have national events, but now when we have them, we're
actually having a genuine, public conversation with a group that
extends far beyond our nuclear family and our next-door neighbors
Put those three elements together — social networks, live searching and
link-sharing — and you have a cocktail that poses what may amount to
the most interesting alternative to Google's near monopoly in
searching
One of the most telling facts about the Twitter platform is that the
vast majority of its users interact with the service via software
created by third parties [I call this the Rise of the API Culture - and it's a crucial driver of 21st century content economics]
As the archive of links shared by Twitter users grows, the value of
searching for information via your extended social network will start
to rival Google's approach to the search [This is often called Social Search - and imho, it will beat the pants of Search 1.0 within 9 months. Another reason why Google will buy Twitter, for sure]
Today the language of advertising is dominated by the notion of
impressions: how many times an advertiser can get its brand in front of
a potential customer's eyeballs...but impressions are fleeting things, especially compared
with the enduring relationships of followers. Successful businesses
will have millions of Twitter followers (and will pay good money to
attract them), and a whole new language of tweet-based customer
interaction will evolve to keep those followers engaged: early access
to new products or deals, live customer service, customer involvement
in brainstorming for new products.
In its short life, Twitter has been a hothouse of end-user innovation:
the hashtag; searching; its 11,000 third-party applications; all those
creative new uses of Twitter — some of them banal, some of them spam
and some of them sublime. Think about the community invention of the @
reply. It took a service that was essentially a series of isolated
microbroadcasts, each individual tweet an island, and turned Twitter
into a truly conversational medium.
Video: The Future of Content & Telecoms: Flat Rate Content Bundles and Social Media (Gerd Leonhard) via the eComm blog. Note that eComm Europe was just announced, as well (Oct 28-30, in Amsterdam).
Summary of topics:
" Imagine a world where unfiltered and limitless access to content is
bundled directly into your access to the networks. A world where 'your
cloud' holds all kinds of content, your social network connections,
your community, and your context (i.e. meta-content), your meta-data
and your interaction-trails, and where access to all of this is
feels-like-free, legal, always-on and fully mobile, on any and all
platforms. This is the future we are heading into, and telecoms,
content-owners and brands / advertisers must forge entirely new
partnerships. We are starting to see content creators and
rights-owners aborting their long-standing quests for total control,
and instead looking to build their audiences and share revenues. So
where is this trend going to take us, what do we need to do in order to
turn content (music, video, TV, news, games, books...) into a new and
truly growing business that is really web-native, where are the
big opportunities for telecoms, operators, social networks and
rights-holders, and what will the new business models look like? In
this context, Gerd will also address topics such as the flat rate for
digital music, ISP/Operator + Content bundling examples in Europe and
Asia, copyright 2.0 and the future of content commerce, the shift from
control-economy to attention & trust economy, the latest
developments in next generation advertising, and the growing economic
power of those 'new generatives' (> Kevin Kelly)..."
I just found this audio stream (below) via a link to Gravity Lab Media; the RSA event on April 8 was great so it's worth blogging on it again. A reminder of the topics that were discussed: "The
internet is fundamentally disrupting the traditional mainstream content
distribution and selling models, starting with music and games,
followed by TV, film, books and print publishing. Soon everyone will be “always on”, mobile and hyper-connected, and
everything will available all the time. 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 adjust to the new landscape? 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..."
If you live in Singapore or happen to be there June 18-21 2009 please come by CommunicAsia for my speeches: June 18 speech & presentation on Mobile Marketing http://ow.ly/9iZo; June 19 Talk on Mobile Content http://tinyurl.com/qnetx8
Keynote Address June 19, 10 am The Future of Mobile Content, TV & Entertainment: The content industries are seriously challenged by the Internet's
disruptive forces - it may have taken longer but is really hitting home
now. Many trusted business models are no longer working, copyright and
value traditions are being challenged, and content consumption is
drastically changing, everywhere. Now that Internet access is becoming
a default part of just about every mobile phone, even more drastic
changes are on the horizon. Who will pay for what kind of content on
mobile phones, when, why, where and how? Will mobile TV and mobile
music finally take off, and what will be the future business models?
Where the opportunities are and where are the minefields and myths that
need to be discarded? Gerd will present the most crucial trends,
examples and future scenarios and preview some of the findings from his
upcoming book 'Broadband Culture'
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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. ![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=7d8e6328-1d47-418b-bd32-757aa729f7ee)
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