This is truly a must-watch video for anyone interested in innovation and entrepreneurship, via TedX Oxford. Steven Berlin Johnson's book (same title as the video) also rocks; it's next in my Kindle cue. I will have the great pleasure of doing an Ericsson-presented panel discussion at the Mobile World Congress in Barcelona, next week, with him and some more great people. Stay tuned for updates - this should be good!
Update: my new book "The Future of Content" was just released on the Kindle
I want to start 2011 in a renewed spirit of generosity and sharing, so here are the complete PDFs of my last 3 books, for free; provided under a Creative Commons,non-commercial, share-alike, attribution license (see below). If you still want to buy the dead-tree versions of these books (or donate something for the free PDFs - yes, that's an option, too;), you can visit my Lulu Store, or go to Amazon.com, or check out my 'Paying for Gerd' page. You can also return the favor by blogging or tweeting of Facebook-liking my stuff. Thanks, and enjoy, and have a great 2011.
Pay with a tweet: Music 2.0 Pay with a tweet: Friction is Fiction Update: my free videos (50+ keynotes and presentations) are here, the iTunes podcast feed is here (just subscribe to download all videos to your iPod / iPad / iPhone, or computers), and my free slideshows (90+) are here, on Slideshare :)
Download Friction is Fiction 6.8MB PDF
Download The End of Control Gerd 8MB PDF
And be sure to check out my free iPhone and Android apps
These free books by Gerd Leonhard are licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License. Based on various works offered by Gerd Leonhard
I just ran across this pretty interesting presentation by JWT Intelligence on Slideshare - take a look. There's loads of interesting stuff in here, and it's presented very nicely. On my end, I will probably not offer any particular predictions for 2011 - it seems like there are so many good ones out there, already (browse my twitter feed for some of them), so, no need to add to the flood of great input, for now. Enjoy.
One of the world's leading futurists (and a great influence on me), Alvin Toffler, just published a pretty cool PDF depicting his 40 key trends for the next 40 years - a lot of food for thought here.
Download: Toffler: 40 for the Next 40 PDF
Here are some of the key findings that I find most valuable. Read here what FastCompany thinks
I am delighted to be able to share this brand-new translation with all my friends, tweeps and colleagues that speak Portuguese. The essay was kindly translated by Paula Neves, Analista de Marketing Digital at Approach (Brazil); be sure to visit her blog or Linkedin profile.
Gerd Leonhard: Conteúdo 2.0: ‘proteção’ está no modelo de negócio e não na tecnologia (pensamentos sobre o futuro da venda de conteúdo).
Download the PDF (1.8MB): Portuguese translation The original, english version is here.
Excerpt (download the PDF to read the whole thing, ie 6 pages):
Image by gleonhard via Flickr
Abastecido pelas agitações na indústria da música e, finalmente, com a transformação muito rápida dos livros para o formato digital, há bastante debate em torno do fato das pessoas compartilharem habitualmente isto é, redistribuírem conteúdo digital sem que os usuários paguem por isso. Como se pode monetizar o conteúdo se a cópia é gratuita? Essa pergunta é uma questão chave em todos os sentidos, seja com a música, com livros digitais, noticiários, editoração, TV ou filmes. Há o medo, claro, de que a partir do momento que um item digital foi comprado por uma pessoa, ele pode ser facilmente encaminhado para qualquer um se estiver num formato aberto, assim reduzindo significantemente a possibilidade de que outra pessoa pague dinheiro real por ele também (claro que o mesmo também é verídico para conteúdo digital supostamente trancado ou protegido – só demora um pouco mais). Não ter mais controle sobre a distribuição = não ter mais dinheiro. Certo?
Apesar do simples fato da GDD (Gestão de Direitos Digitais, ou Digital Rights Management em inglês) já ter se mostrado desastrosa no mundo da música digital (e agora já é praticamente o passado), medidas técnicas de proteção ainda vêm sendo investigadas como um método plausível de se garantir o pagamento, especialmente no efervescente setor dos eBooks. Isso me preocupa muito porque medidas técnicas de proteção são caras, atrapalham ou previnem a adoção em massa, encurtam ou matam o compartilhamento social, o que derrota o marketing usuário-usuário, normalmente limitam drasticamente o uso honesto, e são geralmente inúteis no combate aos piratas reais, isto é, os que têm intenções maldosas e criminosas de roubar conteúdo e vendê-lo para outros.
Não somente conteúdo – Contexto! A meu ver, o pensamento de que a distribuição de conteúdo tem de ser controlada para que haja qualquer forma razoável de pagamento é fundamentalmente equivocado por causa dessa percepção não-tão-futurista: numa economia aberta e enredada (nota: estou falando sobre hoje e não amanhã!) editores de conteúdo têm de oferecer seus bens de uma forma que não mais considere a distribuição como o fator central. Não deve-se vender (somente) o conteúdo (ou seja, meros 0s e 1s) e sim também o contexto, os valores agregados, os vários outros itens em torno do conteúdo. Venda o que não pode ser copiado.
A tendência irrefutável é que a janela de oportunidade de se ‘vender cópias’ (isto é, iTunes, música digital, Kindle, etc) está rapidamente fechando, pelo menos na maior parte dos países desenvolvidos. A próxima oportunidade, e já muito presente, está na venda do acesso e serviços de valor agregado, e no fornecimento de experiências ligadas ao conteúdo.
Image by gleonhard via Flickr
A partir do momento que abarcarmos que os usuários – as pessoas dantes conhecidas como consumidores – não podem ser reduzidas a meros ‘compradores de cópias’, poderemos investigar como eles gostariam de pagar por todo o resto também. Por exemplo, ao comprar um eBook os usuários não deveriam pagar meramente pela autorização da distribuição, ou seja, a cópia legítima das palavras, e sim também poderiam ganhar acesso a comentários altamente especializados, amigos e colegas que possam ler esse livro, avaliações, explicações, apresentações de slides, imagens, links, vídeos, referências cruzadas, conexões diretas com o autor ou o editor e assim por diante. Sim: conectar com fãs + motivos para comprar (como o Mike Masnich do Techdirt já resumiu sucintamente diversas vezes)....
Today I am delighted to officially announce my new company, The Futures Agency (TFA). TFA is based in Basel, Switzerland and is currently comprised of 15 amazing people i.e. Associates that are working with me on an independent basis; additional team members will be announced shortly. Think of us as a 'band' of futurists and foresight-experts, visionaries, advsiors and idea-curators ...and you'll get the idea.
I will serve as CEO and plan to grow this company into one of the most amazing agencies on the planet, employing these 5 key principles:
(If you need more of my favorite memes please go here)
I am extremely pleased to have been able to gather some of the sharpest minds and greatest people, anywhere, including:
This amazing team of powerful individuals and collaborators is supported by Project Manager Gabi Ruttloff, in Zürich, and (Multimedia) Journalist, (Social) Scientist, Researcher & Creative Dr. Martin Strickman, in Cologne, Germany.
The purpose of TFA is to provide our clients with a lot more firepower and emotional intelligence when answering this key question: What does the future bring, and how do we prepare for it...?
Or, to put it more proactively (for those inclined to that sort of thing;): Which future do we really want to create?
TFA offers seminars, workshops, think-tanks and advisory sessions ranging from 3-5 hours to 3 days, with anywhere from 2 to 10 people, worldwide. Some of our thinktanks may use a format called the Disruption Experience which I have been finetuning together with my good friend and world-renowned leadership expert Didier Marlier, who lives in Switzerland as well. Other thinktanks may use our "FuturesExperience" format, and additional formats will be announced soon. As an example, a few weeks ago TFA undertook a really amazing mission for a one of the largest mobile operators and telcos in Africa; 3 days of serious future-thinking and plotting with the executive team. Hopefully I can share some of those stories with you in the future.
Some of us were already tweeting together at Futurefeed, but in addition we will now bundle all efforts as follows: Twitter (@futuresagency), the blog (RSS feed), Youtube and Slideshare.
Via this great Mashable post, and the embedded slideshow by Richard Edelman (a must-read, indeed).
The main shift is going to be away from the downloading of content and owning of CDs and more towards music in the cloud. That is going to happen with most media, starting first with music and then going into films and books. This is not just a music business issue. We are moving away from the copy to access. This is a very good model for the artist. In the past, most of the money was spent on the physical product – so the reproduction, packaging, shipping and retail store.
The artist basically got nothing in most cases. Skipping that whole process now means that the brand of the musician becomes the most important thing. This is very good news for the artist, the producer and the creator but less so for the industry as it’s much easier to sell a copy than it is to sell access. The idea that the artist just gets, say, 10% of the sold product is now out the window. Now the artist will give his agent or service agency some kind of fee – say 25% just as Nettwerk Records and other companies are already doing.
The issue is to get attention and clicks from consumers. If that attention is converted into a revenue share based on advertising, a subscription fee or an upselling process, then as soon as you have attention, you participate. We are still in the old system of counting on revenue per use. That won’t work in the future. The bigger your brand, the bigger the attention you will get and the more clicks you get, the more money you’ll make. I believe that consumers will ask for the access models to be free initially but then after they use it for a while they’ll be quite happy to pay so they can remove the ads or increase the quality of the stream for example. Music online will feel like free. There is plenty of money to be made from ads, but it’s just not there yet. It’s coming, though. We have seen that advertising just doesn’t work on the Internet.
It’s so easy to click away the ads or avoid them altogether. Advertising was essentially useless until now as today we are starting to see social advertising, such as on Facebook. Plus we have mobile advertising. Finally advertising is becoming more useful. The brands are no longer looking to spend 1% of their budget on social or mobile; they’ll be spending 10% or more. There is a total disconnect between the way a new business can be grown and how a lot of rightsholders perceive how the business will be paid for by Google or ISPs, for example.
That’s a very bad approach because it makes it impossible to legally grow a new model. You will be much more successful – like YouTube and Last.fm – if you don’t have the right licence and you just do it. That’s a real irony. I don’t think we’ll be able to support new services without a compulsory licence.
We need a compulsory licence for music use on the Internet so that companies like Spotify, MOG and we7 can use a licence rather than just bang their heads against a wall like they have in Germany and the US. A cloud-based model has to win out in the end, as the costs are so much lower, the sharing is so much easier. You can put all sorts of ads into cloudbased systems because you always know what the user is doing. There are lots of great benefits there. But the industry hates the cloud-based model as they lose control over distribution.
In July, I was invited to do the cover story for the International NewsMedia Marketing Association (INMA) and the latest edition of their Idea Magazine (available to subscribers, here), on the topic of how to monetize content in a digital, networked and mobile world.
The magazine has now been published and INMA allowed me to publish my story on this blog, as well so.... here it is, as a PDF:
Download Gerd Leonhard INMA future of content. Enjoy and spread the word.
Didier Marlier, a good friend and Founder of The Enablers Network in Switzerland, fellow professor at Fundacao Dom Cabral in Brazil and team member at TFA / The Futures Agency, has compiled a very important report on the work he has been doing with a top-level, CEO-education series at FDC, called COMn. The report skillfully and succinctly outlines the principles of what we have come to call "The Open Network Economy" and is a must-read for anyone that is interested in The Future of Business. So... download and spread the word: 600K PDF: Didier Marlier on the Open Network Economy FDC CEOs
In addition, here are 2 slideshows and a video I recently published on the same topic. Enjoy.
Last month, Mike Masnick invited me to do a guest-post on Techdirt.com one of my favorite online destinations. It went live last night and is getting quite a few comments - check it out here. Comments and discussion is here. Retweets are here.
Image by gleonhard via Flickr
If I received a dollar every time I get a question along the lines of "how can the content industries compete with FREE?" -- I would be traveling first class everywhere I go. Underneath this question I often find my favorite toxic assumption: "less control over distribution means less money."
This belief is as tired as it is poisonous: enforcing control (when trust is really what's needed) will yield instant disengagement, which swiftly and surely will translate into dwindling revenues -- as the music industry keeps proving again and again. If you believe in control rather than value and trust, the content business of the future is not a good hunting ground for you.
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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)
It was a great pleasure to be invited to contribute to the Sao Paulo / Brazil-based Fundacao Dom Cabral's innovative CEO leadership program, led by my colleague and Swiss-Brazilian collaborator and leadership guru Didier Marlier, as a visiting professor. Below is a fairly large and long (95 pages - do not print!!) slideshow with most of the important stuff I presented; needless to say this was not the usual 45-60 minute session but took pretty much the entire afternoon. I was extremely impressed with the organization and their hosts (FDC / Dalton Sandenberg) as well as with the fast and agile minds of the CEOs that attended - we had some very inspiring conversations. And Caipirinias, too;). Update: Low-res download of PDF here: PDF 11.5 MB Open Network Economy Gerd Leonhard FDC SP Low-res
Enjoy. Share. Retweet. And get my free iPhone app before it turns 'freemium'.
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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.
Download the PDF: Thoughts on WMG 2.0 Gerd Leonhard Futurist
Related posts:
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.
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Fueled by the music industry's ongoing turmoils and, finally, books going digital at a very rapid pace, there is a lot of debate on how to deal with the fact that many people habitually share i.e. redistribute digital content without any of the upstream users making their own payment. How can you monetize content when the copy is free?
This question is a key issue across the board, whether it's in music, eBooks, news, publishing, TV or movies. The fear is, of course, that once a digital item has been purchased by one person it can be easily forwarded to anyone else if it is in an open format, thus seriously reducing the possibility that someone else will actually pay real $ for it, as well (of course, the same is true for supposedly locked or protected digital content as well - it just takes a bit longer). No more control over distribution = no more money. Right?
Despite the plain fact that DRM has proven disastrous in digital music (and now is pretty much history), technical protection measures are still being investigated as a plausible method of securing payment, especially in the exploding eBook sector. This worries me greatly because technical protection measure are expensive, hinder or prevent mass-scale adoption,
curtail or kill social sharing which defeats user-to-user marketing, often drastically limit fair
use, and are by and large useless when trying to thwart the real pirates i.e. those that have malicious, criminal intentions of stealing content in order to sell it to others.
Not just content - Context! In my view, the thinking that the distribution of content must be controlled to achieve any kind of reasonable payment is fundamentally flawed because of this not-so-futuristic realization: in an open, digitally networked economy (note: I am talking about today, not tomorrow!) content publishers need to offer their goods in a way that no longer centers on distribution being the key factor. It should not (only) be the content that is sold (i.e. the mere 0s and 1s) but the context, the added values, the many others items around the content. Sell what can't be copied.
The irrefutable trend is that the window of opportunity of 'selling copies' (i.e. iTunes, eMusic, Kindle etc) is rapidly closing, at least in most developed countries. The next, and very much already-present opportunity is in selling access and added-value services, and in providing content-related experiences.
Once we embrace that the users -the people formerly known as consumers- can't be reduced to just being 'buyers of copies' we can investigate how they would want to pay for everything else, as well. For example, when buying an eBook users shouldn't merely pay for the authorized distribution i.e. the legitimate copy of the words but they could also gain access to highly curated commentary, known peers and friends that may also read this book, ratings, explanations, slide-shows, images, links, videos, cross-references, direct connections with the author or the publisher and so on. Yes: connect with fans + reasons to buy (as Mike Masnick of Techdirt has succinctly summarized many times before).
In this model, as a legitimate user, I would also get valuable context when I pay. I would get engagement, conversation, relevance, personalization, meaning... i.e. really valuable benefits to me as a person, not just a dumb, anonymous recipient of free zeros and ones. I don't get these benefits just because I get a free copy via email, Rapidshare, BitTorrent or some drop-box on the Net, because it is stripped bare of everything that really matters to me. This is the key to the future of monetizing content, and it will take many different shapes and forms depending on the content, and the culture that surrounds it.
For example, in music, it is very likely that streaming-on-demand (and the temporary buffering i.e. offline playing of those streams) will be 'free' i.e. bundled and packaged by 3rd parties, while the context and those many added values will not. If I want a high-definition version of my favorite opera or that Blue Note Jazz Club concert from last night I can buy a premium package that provides it. If I want to share my personal play-lists, ratings and comments with my Facebook friends, and get access to their content, I can add the 'social network option' to my package. If the price is right, I'll buy (btw: this relates directly to why people buy virtual items - perception of value, and purchase after deep engagement - see my Farmville/Facebook example: they sell 800.000 virtual tractors per day;).
As to pricing and making 'buying' irresistible: imagine if a download of a song would cost only $ 0.10 - would anyone
still bother to scour the web to find badly ripped, virus-laced tracks for free? Yes, I know, that price point sounds ridiculous if you used to sell CDs for 20 Euros a pop but the argument
for much cheaper access to digital content that is offered in open
(i.e. copy-able) formats is really quite simple: if you can get 95% of the users to buy at a
much lower price, and make them so happy they will do the marketing for you
(i.e. share links;), instead of getting 5% of the market to buy an
expensive product that they can't really share with anyone (i.e. iTunes
music or Kindle eBooks), then you should be doing just fine. This has been my chief argument for proposing the music flat rate during the past 10+ years, and I think it still holds water (in fact, it seems to be proving itself with the recent developments at Spotify, MOG etc).
And yes: selling at a much lower price but much higher volume only makes sense if the low-priced (or flat-rated), access-based offerings actually connect directly to a multitude of up-selling possibilities, such as multimedia versions of eBooks, high-definition versions of radio shows, albums or concerts, in-depth analysis and audio/video commentary for news etc.
In most content industries, I think the key is to
offer a wipe-out, ueber-attractive way to get started at an
irresistible price-point, and then convert most of those happy users to other
offerings at a much higher price.
Pricing and value: getting the new formulas right. It all comes down to pricing and values - and many decision makers in the incumbent content industry will need to accept who will set those prices i.e. who will be in charge of value perceptions: not them, but the users. Hard stop. Reality check.
If you agree that the sharing of content cannot really be stopped, and that therefore the value of a mere digital copy of content will invariably decline, we must urgently re-think how we address the issue monetizing sharing, and what we can do to create and nurture those new values - the New Generatives - that will replenish those that used to be derived from being able to control distribution.
Added values, all the time. The metrics of the content industries need to shift from getting a copy to rewarding engagement. As an example, let's assume I have just purchased and downloaded a movie in an open file format, and I have a hunch that 50 of my close friends would also enjoy it. I post the movie on my iDisk shared files folder (anyone on .mac can do this) and send the link to everyone. Now, if the only value of the movie is in having received a 'copy without paying', then my friends have received the movie's entire value 'for free'. But if the value of this movie is also in the user / viewer being part of something much larger than mere 0s and 1s, i.e. a conversation or another environment of added values that are available to each individual viewer because they actually purchased access to the movie, then the mere sharing of the file is not going to be very attractive, for the upstream users will not have access to all these other values.
Imagine, then, if a legitimate movie buyer (or more likely, bundled-access-user) would also receive access to a select group of fellow users - and, crucially, representatives of the creators, producers or distributors - that would provide a myriad of additional values such as viewing exclusive, movie-related pictures, slideshows and short clips with the actors, locations or props used in the film, or getting special offers for related products such as books, games, merchandise or even HD versions of the same film, or unlocking new features within the very same file that are otherwise hidden (something that could easily be done within a mobile application, for example)... that is where it starts getting interesting.
Combined with a no-brainer price point, having a constant flow of added values available to legitimate customers would turn file-sharing into a marketing vehicle, i.e. surely I could somehow watch the movie 'for free' but would be barred from all that other cool stuff that I would have access to if I only paid my $2, myself.
The crowd and the cloud: new monetization possibilities not based on Control. Content hosting is moving from my own computer and my hard-drives to the cloud - and indeed, this is very good news for content creators, publishers and rights-holders because if makes it easy to engage and up-sell to the new generatives. In addition, it is reasonable to expect that content files will get larger and larger over the next few years, since many devices are now capable to handle much better resolutions and many users are tiring of bad audio, video and image quality. The age of squashed-sounding MP3s is ending as high-end audio is becoming a reality even in the smallest devices. Assuming those 2 trends (people receiving bigger and better files as well as accessing those files in the cloud rather than storing it on any specific piece of hardware), the key question is what 'sharing' will look like in the near future and what can be done to monetize it rather than try to curtail it.
The answer is in the cloud: I think many people will soon stop sharing the actual media files (since they are getting larger and larger, and therefore more unwieldy) and will share only the links, the bookmarks, the metadata or the tags, if the result is the same, i.e. if the shared content is made fully available to the recipient, without further ado or unwieldy registration procedures, buy-now pitches etc. How could this work?
Imagine you have purchased an ebook for 10 Euros and you want to share it with your wife so that she can read it to you while you drive, or with your son because he really should know about this great book. With a good, old-fashioned printed, dead-tree book, this is certainly not an issue, so why should it be such a problem for the electronic version? Why not create and deploy many extra values around this book (such as video, audio, images, slideshows, dictionaries etc), make the file a lot larger, and then still allow a buyer to share the book via a simple link or bookmark that provides all recipients with the basic, 'words-only' version of the book but withholds the added values until they purchase it for a very low and attractive price, themselves? Once those added values become a significant part of the user experience most users will not want to miss them - protection will be in the business model, not the software!
The perfect testing scenario may unfold soon, exemplified by Apple's new iPad. Extending the concept mentioned above, rather than blocking my wife from sharing an eBook it would be much more reasonable if I could still read the book, 'for free', but all else would not be available without a micro-transaction on my end, i.e. I would not have instant access to videos, links, ratings... i.e. that valuable context. This would clearly drive me to purchase a 'copy' myself - if indeed I like the book enough - sounds like a fair deal to me.
Engagement, interactivity, conversation and a constant stream of added values that can be produced at very low cost is what will give content owners 'protection' from rampant free-loading - not DRM, region-coding or HADOPI laws.
Sharism and Money. When thinking about digital music (my original, futurist starting point), imagine an unlimited music service at a feels-like-free price, supported by advertising, brand sponsorships, ISPs / Telecoms and mobile operators. A service that allows me to stream or download the music, and enjoy it online or offline (pretty soon, a rather pointless distinction, anyway). A service that is basically cloud-based but that allows me to make temporary sub-clouds on my personal device so that I can always get to what I like the most, much like the gMail offline reader, mobile RSS readers, the Instapaper iPhone app etc. While I may be inclined to share some of the music files with my friends, I would be highly unlikely to publish the complete access details to my personal cloud via, say, Twitter - I would risk watering down my profile and messing up my entire personalization efforts. Avoiding profile and account 'pollution' can be a major driver of payment adoption, I think.
Similarly, in books: let's assume, as a publisher, you'd allow people to log-in and get digital access to 10s of 1000s of books, at a low price (such as O'Reilly's Safari Books already does, for all those hardcore programmers and geeks around the world) - what would keep people from just sharing the log-in details and only pay for one account but have 2000 people getting everything for free? The answer: once I am really involved with a platform I like, and use every day, I am not very likely to share the account details with everyone, because I don't want my profile to be polluted, and my own experience to be negatively effected.
This is similar to having your family members use your eBay account for bidding on stuff they want to buy: not a good idea, since it will be your rating (which is the real currency of eBay) that will be negatively effected if your 15 year old son does not live up to the buyer's expectation on his last transaction. The same is true for Amazon: share your log-in details with your 12 year old daughter and you will make a mess out of your recommendations - she may love SuBo (Susan Boyle) but you don't want to keep seeing pitches for stuff she may want, for the next 9 months.
The bottom line: content sharing isn't the real problem: high price points, outmoded toll-booth strategies, broken relationships and processes, low values, bad technology and service, and lack of conversation and engagement are.
Here is my message to publishers and content owners: lower the prices to the point of unanimous excitement, use open standards that work for everyone, everywhere; bundle and package as attractively as you can (then: repeat). Remove all reasons that your users may have to avoid the toll-booth, and thereby side-step the conversion to 'paid'. The lower the hurdle for legitimate usage and paid engagement, the less you will have to worry about 'competing with free free'.
And do it now so you don't have to win people back from routing around you.
Image below via Somaya on Flickr (thanks!!)
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