This nice-quality video was filmed on 10 am Sunday morning (ouch), January 24, 2010, at the annual Midem music conference, where I was giving a lecture on how I think record labels, publishers and artists can make money with music on the Internet, going forward. The slideshow was previously published here, but has been embedded below again, as well, so that you can click along with the video if you want. I really enjoyed the more intimate environment of the MidemNet Academy even though it meant that a lot of people that wanted to get in had to be turned away; maybe we can find a compromise for this, next year (150 people would be a good number of seats for this kind of thing, imho). This video is 55 minutes long and really packs in a ton of great "Music 2.0" stuff that I have accumulated throughout the year, so... dive in!
I will try to add this video to my YouTube channel as well but the 10-minute maximum rule really makes this a royal pain, so for now it's only available on my Blip.tv channel (you can subscribe to the free iTunes feed, here, in order to download all of my videos automatically) and as an audio-only version on my free iPhone and Android apps. Enjoy - and spread the word (use the options at the bottom of this post)
Yesterday, the Net was buzzing with news from Warner Music Group's earnings call, with Edgar Bronfman announcing his intention to not license 'free' streaming services any longer. Rather than rant about this (as tempting as that may be), I thought I would just share some ideas with you, and with Edgar, on what else WMG could do to become.....well, WMG 2.0. Some of these ideas were initially presented to another major music company about 9 months ago, btw. I don't know where this ended up, though - stay tuned.
Gerd Leonhard’s unsolicited thoughts: Creating Warner Music Group 2.0
Dear Edgar, based on what I have learned of my 16 years in digital music, and distilled from the 2 music-specific books I (co)-wrote (“The Future of Music”, and “Music 2.0”) here are a few ideas on how I think WMG could reposition itself and achieve future growth:
1) Create and offer a complete, cutting-edge online platform for your artists, writers, labels etc. Let’s call this the ArtistOS. It should pretty much mirror what Google already does for Internet users, in general, i.e. provide free access to very powerful and inter-connected Web2.0 tools that used to cost 100s of 1000s of $ to build but are now provided free of charge. These tools could include things such as music widgets and embeddable flash players for audio and video, twitter-API based marketing and communication tools, connecting tools based on Facebook- & Google-Buzz/Connect, multi-site upload and updating tools (similar to TubeMogul for videos), text/video/audio RSS feeds and syndication tools, ad-insertion tools and production technologies (for widgets and web pages), mobile phone applications for quick-launching artist and label apps (see MobileRoadie!), general content syndication and CMS tools, Google Buzz, Tumblr- and Friendfeed-like services for artists, Google-analytics-like tools for tracking and analyzing web traffic, and much more. Building (or licensing!) these tools would require some dedicated resources but this would not be a huge undertaking in terms of budget since most of these solutions are based on existing APIs, feeds and various open source offerings. Having the ArtistOS available to anyone that works with WMG would be huge strategic advantage, and would greatly simplify marketing and promotion tasks, as well.
2) Define, publish and promote a Collective, Global and Open Licensing Platform. The biggest obstacle for strong growth in the Music 2.0 era is the utter lack of global licensing standards for the legal use of music on the Net, and apart from the admirable Jim Griffin - led Choruss initiative WMG seems to still be following the old-school path of ‘ignore & deny’, here. Not good. The current licensing procedures are causing severe friction in the digital content ecosystem, and represent a significant hurdle to innovation - and thus to creating and nurturing new revenue streams. WMG 2.0 could solve this problem by pioneering a standardized and collective licensing platform that is open to everyone, transparent, flexible, and revenue-share based rather than fixed-fee based, therefore allowing for liquidity in the new digital market place. Providing a public, standardized yet flexible and open license to all streaming-on-demand services would be a very good way to start this process - and the time to do this is now. Yes, I know, advertising revenue splits are not bringing in much money, now - but they are dead-certain to do so within 18-24 months, when up to 25% of all advertising budgets will be shifting to digital, interactive, mobile and social platforms. Have some imagination. Build the Future (don't keep asking for it to be delivered to you).
3) Vigorously pursue flat-rate and bundling scenarios for the licensing of your entire catalog in return for flat fee payments, RAND-based revenue shares and fair splits of advertising and other revenue streams (similar to what Google has done in China, TDC in Denmark etc). Licensing access to music, rather than (just) copies, is the only way forward in a connected, always-on world that already equals listening with owning. Switch from relying on scarcity to monetizing ubiquity and abundance, and invent new models that fit this. Generate new revenues by engaging with ISPs, telecoms, ICT companies. mobile operators and search engines. Drastically reduce friction. Embrace ‘free’ models as long as somebody will pay somewhere.
4) Develop (or license) and deploy your own mobile music applications, on all platforms (iPhone, Android, Symbian, Windows etc); make mobile applications the center piece of all marketing and selling efforts, worldwide - the future of music is mobile, period. Think of mobile applications as the new CD; and therefore of music as....software. Roll out applications for all new releases, and for all your labels and brand. Make the basic apps free, but offer very attractive ways to upgrade, in all territories. It’s all about the packaging!
5) In terms of future sales, think Freemium, and think access not (just) copy. Offer things that used to cost money (such as listening to a song, on demand), for what I like to call feels-like-free (i.e. in return for the users’ attention); just be sure to find ways to convert 20-50% of those users (aka the friends, fans and followers) to all kinds of new premium services, such as high-definition versions, concert recordings and web-casts, special products, digital compilations etc. In addition, dramatically lower the price for physical products while providing all kinds of premium products - again, focus on selling access to music not just products.
6) Investigate the concept of crowd-sourcing new talent. Use the web’s increasingly useful collaborative powers to discover new artists, and draw bloggers and pro-sumers into the A&R process, worldwide. Bloggers, in particular, are the new Radio DJs! Combine some of the ‘wisdom of the crowds’ with your own professional A&R people. Do what P&G has done with Innocentive and their own ‘Connect and Develop’, and what DELL has done with Ideastorm, and what Kodak is doing in Social Media. The benefits seriously outweigh the risks!
7) Drop most if not all of the on-going law-suits, and switch your legal strategy to a 100% solution-oriented process. Compensation not Control is where the money is; all else is just posturing. The IFPI and RIAA-led efforts of enforcing control in an exponentially consumer-empowering media ecosystem have all failed miserably, and will not produce any monetary results in the future (except for enriching the lawyers). Here is a tough one for you: do you still need these lobbyists? Rather than spending most of the time preventing what the ‘people formerly known as consumers’ really want to do, all available energy should be put into exploring, building and co-developing those ‘new generatives’ for digital content, i.e. next generation advertising and branded content, packaging, bundling, flat rates etc.
8) Pursue drastic and large-scale innovation within - and on the fringes of - WMG. Bring the smartest possible people into the company; apart from content and talent (of course), focus on technology, mobile and next generation advertising and marketing. Invest in start-ups that can invigorate WMG 2.0 and provide significant strategic advantages.
9) Start to really talk to the music users, and have actual conversations with your customers. Engage on public conversation platforms, switch your PR and corporate communications from push to pull. Launch a WMG executive blog, start using Twitter; turn push into pull across the board. Do a Kodak - and go beyond! Create more transparency which creates trust which creates new business opportunities. Win back the trust of the consumer (better: the users) and the artists.
10) Offer profit-sharing arrangements with your artists: from a fixed pool of profit shares, each artist that is affiliated with WMG could receive a bonus payment that is proportional to their significance, every year. Do something similar with your staff.
11) Decentralize your distribution efforts, syndicate the music as wide as possible. Youtube gets 60% of its traffic from people embedding video players into their own websites - do something similar for your catalog. Instead of (or at least, along with) building or supporting central destinations, allow the users & fans to do the marketing for you, and syndicate your assets around the web. Think RSS, feeds, XML, API, not MTV.
12) Data is the new Gold - mine it! Making money around the music (not just from or with the music) is where the future is going. Investigate new business models that are based on data-mining, next-generation advertising and branded content, and behavioral targeting.
Note: once you’re ready.... there are a few good companies already working in most of these areas, and you could team up with them: just ask me.
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.
Techdirt's brilliant Mike Masnick wrote about this a few weeks ago: Corey Smith achieved massive success as an indie artist apparently based on some ideas outlined in my 2005 book "The Future of Music" (co-written with my buddy and BerkleeMusic chief Dave Kusek). Very cool! It feels really good to hear this; and to find that some of our work actually falls on fertile ground. May there be a lot more of this in 2010!
If you have similar stories please feel free to share them. If you want to read my follow-up book, Music 2.0, please go here to order it (dead-tree or PDF), or here to read it on your iPhone or blackberry (for free;).
"One of the things that he discusses in the podcast is that what really got him started down this road was realizing that it could be done. He read Dave Kusek and Gerd Leonhard's excellent The Future of Music, and it made him realize "hey, this is possible." And that, alone, made a huge difference. It's amazing what you can do once you realize that something is possible -- and one of the great things we've seen in writing about Corey and numerous other musicians and their success stories is that they, in turn, inspire many other musicians who realize that it really is possible to do quite well despite the naysayers and the doom and gloom. There are a bunch of people who seem to have a vested interest in tearing down the success stories (in many cases because they profit from having naive musicians sign over their lives), but the obvious success stories shine through and inspire many more who follow. It doesn't mean that every musician is guaranteed success. In fact, Corey's story highlights the amount of hard work and dedication that was needed, combined with some great music and a bit of luck as well, to make all of this work...."
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;)
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!
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.
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").
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'.
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!
Question your assumptions: what do you still believe that is no longer really true...? (see the video below).
Full-resolution PDF and slideshow is embedded below - feel free to share, embed, download, forward. Some bottom lines: Music 2.0 is about the inevitable shift to OPEN: Open licenses - Open innovation - Open distribution - Open competition - Open partnerships - Open technologies - Open data standards. In Music, first, we urgently need either a voluntary, collective license proposal by the rights-holders, and / or legislation that legalizes and monetizes the usage on the Internet.
I have been very busy compiling my best essays, blog posts and other writings from the past 3 years, and have finally uploaded the most recent version to Lulu (my favorite print-on-demand book store). The new book is now called 'Friction is Fiction' and is available in 3 versions: 1) 158 pages, 6x9 inches / U.S. trade format, full-color, for $60.40, here (yes, it's quite pricey because of the cost of printing 4-color, on-demand) 2) the same dead-tree version, but in black & white only, for $19.98, here (much cheaper but a lot less cool;) 3) as a PDF, for a token price of $7.50, here.
I would be delighted if you would consider buying whatever works best for you - what better Christmas present could you possibly think of! Please note that this book will be updated every 3 months, to include my latest writings. If you want to share the book page please just send people to www.frictionisfiction.com - thanks.
As to giving away the free PDF, here is the deal: you can contact me anytime (via email, Facebook or Twitter) to request a free copy of the PDF if you just don't want to (or can't) spend the $7.50, and I will send you the download link. In return, what I ask from you is to pay me with attention, i.e. to write a review on Lulu, a blog-post, or a tweet about my book, with a link (all 3 is best;). Deal?
As to the title: I used to simply call this compilation 'The Best of Media Futurist' but while looking through all those posts - and spending a lot more time revising them - I found an important thread that goes through almost all of it and which therefore has become the new title: Friction is Fiction. So what does that mean? It means that if you are currently basing your success on maintaining or even constructing hurdles, difficulties or other bottlenecks somewhere in the system - i.e. if there is something that impedes the flow of information, or a transaction or purchase so that a higher price point or some other form of control over the can be obtained - then you are very likely to face diminishing revenues in the next few years. Building obstacles for users (fka consumers) used to work just fine but... no longer. Building walls is the fastest road to suicide in the digital economy.
The web has been utterly ruthless about finding these glaring points of friction, such as paying for eMail (remember that?), paying a ton of money for long-distance phone calls (remember those pre-skype days?), or consumers not having any access to travel booking systems, flight information or seating. These hurdles are being removed, one-by-one, and those 'people formerly known as consumers' are getting more powerful every single day. Banking on friction to increase your revenues has become like throwing matches into the river and asking it to stop - it's useless.
Friction was, of course, the main money-maker in the media, entertainment and content business, for a long time: certain CDs were only available in certain stores at certain times in certain countries, DVDs with those movies you really wanted were only available in certain countries and within certain 'windows', books had to be printed and shipped, and ring-tones could only be purchased from your operator. Basically, at every turn the consumer encountered have-to's and must's which essentially allowed a substantial level of control by the media and content companies - and thus, higher prices. In many cases, the more friction the higher the price you could ask for.
No longer. Read the book!
Related: my blog-book "The End of Control": download the first 6 chapters here. Also: My Music 2.0 book is available via Lulu, here
I had the great pleasure to speak at the Future As Music (FAM) conference in Madrid / Spain, today. This event was organized by AIE (the Artists and Performers Society of Spain) and I was delighted to present alongside one of my favorite colleagues, famed mobilist and mobile content guru Tomi Ahonen.
My talk and presentation was on the juicy topic of "The Future of Music & Digital Content: Mobile, Connected, Social, Open... and Paid?" and included comments on: 1) why it makes no sense to disconnect fans from the Internet and expect them to then buy more 'legal' music 2) why the music industry must adapt to the new behaviors of 'the people formerly known as consumers' asap 3) why we have a 'digital toll-booth challenge' (see my column on Spotify) and how we need to structure 'music sales' going forward 4) why music is first an experience and a service, and only then a product (and how the industry can monetize this shift) 5) where the New Generatives will come from 6) why a collective digital music license makes sense - and much more. Here is the slideshow, below (you can download the PDF via slideshare, as well). Enjoy and spread the word!
Download LOW RES 5MB PDF Future Music Media Open and Paid Public
This was one of my best presentations on the topic of the music flat rate - the PDF and more details are here.
From the intro on the A2N Berlin
site:
"Digital music is in a serious gridlock: everyone is using it, very few
are paying for it, and nobody except for Apple has yet succeeded in
making a business of it. At the same time, broadband penetration in Europe is exploding, mobile
devices are getting ever more powerful, and almost a Billion people
will be always-online at high speeds, within 2 years, sharing music on
social networks and via all kinds of digital networks. Attempts at making ISPs and telecoms reponsible for solving the
business model problems of the industry have failed, 95% of the Digital
Natives in Europe are guilty of copyright infringement, and this logjam
is becoming a major cultural, political and economic issue. Meanwhile, flat-rated, collective music licenses for the digital music
are being trialled in Denmark, the Isle of Man, Turkey and China. For
the past 6 years, Gerd Leonhard has been suggesting that Music on the
Internet needs to be licensed like Radio: collectively, publicly and
compulsory, and a revenue-sharing basis, so that a new, web-native
music ecosystem can unfold..."
Many of you may have already downloaded my free Music 2.0 book as a PDF, or read it on the iPhone using Instapaper via my very basic mobile page, or even purchased the dead-tree version (note that Amazon is sold out now, all future orders should be done only via Lulu.com)
Today, I am delighted to announce that a much better mobile-optimized version of the book is finally available here - and yes, it's still free. However, I really don't mind if you make a payment for the free PDF via Lulu.com;)
As you can see, below, this includes all of the chapters in an easy-to-read, mobile-native format, and all kinds of ways to share it via eMail, Twitter and Facebook. The best thing is, however, that you can now add all of the chapters of the book to your Instapaper app (iPhone only, I think) with just one click, and then read the whole thing offline, as well. Way cool! We are also working on a 'real' iPhone app.
Note: Instapaper was covered on the new Indicatr site, yesterday, as well). Please spread the word - and don't forget: if you are entirely and utterly mobile-only you can track most of my tweets and shared items here.
Today, Jeff Pulver's 140 Character conference in London presented a whole new challenge to me: make a presentation on "The Future of Content" with less than 140 characters i.e. in true twitter style (at least as far as the headlines and bullets are concerned), and deliver it in 10 minutes. At least, that is the challenge I prescribed to myself - and those are usually the hardest. Talk about a tall mission: here are those 140 characters - see if you can make any sense of it. My own, personal favorite: the music is 404 (page not found). And GWHTLC (glad we had this little chat;)
So these were some of the topics I talked about at Peter Jenner's annual music industry think-tank event in Kristiansand / Norway: 1) What is this new framework for the music industry - which facts and trends do we need to consider? 2) What are the key value shifts (pricing, and access versus copy), and what do they mean? 3) Why we need that 'new social contract' and thereby legalize digital music (and the discussion of the proposed digital music license) 4) The new logic of bundled access, embodiment and experience, and the need for a new 'pool of money' (to quote Jim Griffin) 5) The irreversible shift in the perception of 'copies' of content 6) Future revenues based on Attention 7) Why the future is not in selling what is abundant but what is scarce 8) Why content creators and rights-holders do not compete with free ... and much more fun stuff;) Enjoy. Re-tweet. Facebook share. Comment!
It was a pleasure and a privilege to be invited to the Telco2.0 Executive Brainstorm event in London, today, and to address a roomful of telecom & media executives that were - as it says in the conference tagline - looking for a way to 'reduce the friction in the digital economy'. After having to listen to some rather bizarre and, sadly, rather 'retro' justifications about why those pesky Internet users and Digital Natives (i.e. our kids) really do need to be threatened with disconnection from the Net if they don't comply with the rules of yesterday's game, delivered with great pathos by the usual lobbyists from UKMusic and Universal Music Group executives (see the list of panelists below), I tried to get down to the bottom line of what the workable alternatives to their Control & Enforcement paradigms could be.
Funny thing is, that in the subsequent vote most people in the audience seemed to actually agree that disconnection and punishment are not going to change anything and are not a suitable path to new revenues... I always wonder why there seems to be strong consensus if people vote (or talk) individually, but if you hear them 'in public' everyone always delivers the good old party line of wanting more control and protection. Why is that? Whose bread we eat whose song we sing... is that it?
I will post a summary here, shortly. In the meantime, here is the slideshow (download the PDF via slideshare). A
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