Warner Music Group 2.0: my unsolicited advise on how WMG could embrace the Future

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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

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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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Announcing my new book on Lulu: "Friction is Fiction" - write a review and get the free PDF!

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

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Nokia video on mixed reality: watch this and... think!

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Don Tapscott: Anybody that thinks we come out of this recession and get back to business as usual is deeply mistaken

Don Tapscott (whose voice eerily reminds me of Marshall McLuhan) is one of my favorite writers and thinkers. As part of the really cool 'Penny for your Thoughts'(PFYT) series, the FreedomLab people have just  published a great video with Don's comments on what's really happening in this economic crisis - the headline is "Re-Industrialize the Planet". A quick summary:

• The web is creating a global infrastructure for collaboration (which leads to disruption and confusion)
• As a result, all of our institutions have come to the end of their life-cycle
• The current recession is a crucial punctuation point in human history - the point where we said that we need to reset, the point where the industrial economy has finally run out of gas
• This paradigm shift is creating a crisis of leadership
• The Digital Natives are inheriting this situation - and they think very differently
• Kids are now the authority on many issues
• We have 40 years to re-industrialize the planet

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Music in 2015 - Totally Secure, Really (like... completely) Scarce and So Very Very Valuable (again)

Warning: this is fiction. For now.

June 1, 2015

The herculean efforts of the world's most eminent legitimate music rights- and intellectual property owners, represented by the RIAFPIAAMP (the all-encompassing global content producers' organization led by former U.S. President George 'Hard Work' Bush whose favorite battle cries "We have a right to get paid a lot more, dammit" and "Copyright-is-worth-dying-for" are now found even on free coffee-mugs and roadside bulletin boards) and the organization's numerous allies from law enforcement, the military and leading anti-terrorist experts around the world have finally been victorious: Music is now 100% scarce again, and the threat of hardened juvenile criminals and the so-called Digital Natives freeloading via the Internet without restraint has been eradicated.

The War on Sharing was costly, indeed: tens of billions of $s, Euros, Yens and Rupees were spend and some unfortunate collateral damage had to be absorbed as well, but finally the battle has been won by the rightful leaders of the global music industry corporations  - music is, once again, totally and permanently secured and under the rights holders' exclusive and unflinching control. Copyright is sacred again - hallelujah.

No device can play any music whatsoever unless it has been authorized by the Central Music Device Approval Authority in London. All music recording devices are forbidden, period, and special permits are required to even mention their existence. Robotic device-control-squats patrol the subways, clubs, bars and schools around the globe, looking for RFID pings from any device that could be used to engage in stealing. Unless a device is properly authorized to deploy music, a user attempting to do so will get a recorded and looped message alerting him to the fact that the device is illegal and that he needs to cease his activities immediately.

Repeat offenders that do not follow the warnings may suffer severe burns on their fingertips, courtesy of the new BurnThoseThieves hard- and software that is now embedded in all audio devices, thereby making these criminals easily identifiable to the global MP7 (Music Protection Prevention Prohibition Purposeful Peer Panic Production) task force that has been set up since the Criminal Music Consumption Act (CMCA) was passed in 2011. Hospitals everywhere are fully collaborating.

No ISP, telecom or wireless operator can move even a single 0 or 1 of any registered piece of music (and  soon, film or TV show, photo, logo, txt file, pdf or any other of the 387 indexed file formats) through the network unless it is listed on the 'approved for network distribution' list. All telecoms around the world must get written approval for any data transfer that could be perceived to contain intellectual property; apart from voice (and even that is monitored as well - see below).

This slows things down things just a tiny bit but one can still get a 12k stream on the paid-for and authorized on-demand music providers pretty much any day; this is hugely popular in penal colonies, on arctic cruise-ships and at genetic food research labs all over Siberia and New Mexico. Finally, ISPs can keep their noses & pipes clean and concentrate on running their networks without worrying that copyright crimes will be committed through them - a great relief to everyone!

Consumer-to-consumer bluetooth file transfers using cell phones and other mobile devices were disabled years ago, when the RIAFPIAAMP sued Samsung, Nokia, Motorola and Apple for 250 Billion dollars - and won. This was directly after the UMMFFRECUR  (the United Music Managers for Forced and Really Equitable Content Use Remuneration) and the CPFELC (Content Publishers for Eternal Life of Copyright) teamed up with the RIAFPIAAMP to force BT, France Telekom, Verizon, China Mobile, T-Mobile and Vodafone into shutting down their networks until they could finally clean out the music pirates, for sure. 18 months without wireless services sure taught everyone a lesson!

Apart from Bluetooth transfers which are just not legal, period, wireless file transfers of any kind must now be approved by the CWCTA, the Central Wireless Content Transfer Authority in Guetersloh, Germany, but most consumers don't even dare to apply for a permit since they would be certain to have their names entered into their MicroGooHoo NetworkID file system which prevents undesirable individuals from entering places where any attainable content could be found, such as clubs, bars, music stores, airports, libraries and schools.

Automatic 1strike+out(TM) network disconnection is build into all computers,digital Radios, TVs and mobile devices, worldwide. Playing any piece of music that is longer than 1.2 seconds and that is not properly approved results in immediate disconnection from the Internet. The software was developed by the German Army and it's doing a fabulous job here. Anyone that has been disconnected must apply for 'reinstatement of connectivity' to the Internet Re-Connection Investigation and Approval Authority in Dublin, Ireland, led by a subsidiary of a well-known music management and artist branding company that has been able to patent the serious-infringer-detection technology back in 2008. 

Anyone that is caught capturing  and uploading an image or a video of an artist that is represented by the RIAFPIAAMP or their sister organization, the World Content Ownership and Administration Committee (WCOAC) will face immediate remote destruction of all memory contained on his or her equipment. In order for this to work flawlessly, all memory chips and hard-drives are now wirelessly connected to the Central Content Security Database in Langley, Virginia and Nice, France. Repeat offenders will be barred from buying any digital equipment, whatsoever (including coffee makers, watches, washing machines or toasters) and anyone lending such equipment will be considered guilty of contributory infringement.

Since 2011, all private phone calls are monitored by United Phone Call Screening Systems (UPCSS) in Mumbai, India, on behalf of the WCSC, the World Content Security Council (based in Geneva, Switzerland) since the rapid increases of unauthorized public performances of music on mobile phones has led to losses of billions of dollars to the rightful owners and wardens of the master recordings and compositions. People calling each other to listen to music has been officially declared THEFT in the 2012 Singapore Total Rights Forever Treaty (STRFT). The system is working so very very smoothly that only those pre-approved and fully licensed users that have adequate legal representation in at least the 100  WCSC signatory countries can actually listen to music via digital devices at this time -everyone else's attempts at enjoying music without proper permission has been thwarted so that the monetary value of music can be maintained, and even elevated, again.

Thankfully, a new format, the UeberCD, has been launched by AppSonips a year ago and that's pretty much the safest and cleanest way you can get music now - pay before you listen, while you listen, and after you listen - the way it should be! Everybody has to buy UeberCD players and sound carriers in the UeberCD format, and there is only one authorized place in each country that can produce them. Each player unit and each UeberCD is equipped with a  wifi / wimax / GSM chip as well as with RFIDs, making it easy to find out how many times people are playing the music, where, and when, and helping honest people stay honest, and not exceed the permissible maximum of daily plays.

All UeberCDs that leave the country where they were produced automatically lock-up and stop working, and the self-destruct. In most cases, the authorities are alerted, leading to many arrests of hardened criminals all over the world.

Music making is restricted as well, and subject to a 'official creator license', since many people disguising as musicians had taken to secretly listening to the artists and songs that they liked a lot, using old analog equipment of the late 90s, and were thereby influenced by ideas and inspirations that they had absolutely no rights to, whatsoever.

Now, with the new government 'License to Rock' Version 2.98 it is finally possible to produce new music without constantly flirting with accidental or inadvertent copyright infringement: musicians and composers must subject to a strict clearing procedure by the Creators Approval Committee before they are allowed to use one of the many RIAFPIAAMP's Creative Bunkers where they can go about their work in total isolation for a minimum of 15 months before they can surface again. Now that's what we call clean! 

All in all, this is a great world to live in: clean, orderly and all-paid-for, all the time - welcome to Music 2015.

Some of this story is influenced by a recent read of Cory Doctorow's book 'Overclocked'

Photo Credits (long live Flickr!!!)
RIAA can't play song: Geek&poke
Sharing Music via Bluetooth: Larsklfem
iPod No Music: dpicker
Department of Precime: Gea-Suan
Your CD and You: Alexis Jarvis