The price of freedom: Reinventing the online economy (RSA Journal July 2009)

I was delighted to be invited to make a contribution to the RSA Journal's July 2009 edition, the printed version of which was just send out I believe, and the online edition that just went up on their website.

The complete title of my piece is: "The price of freedom - reinventing the online economy: Gerd Leonhard explains why ‘free’ content can still pay in the long term" and I really enjoyed writing this for them.

Following my last presentation at the RSA, in April 2009, on 'The Future of Content and Creativity' I have had many good conversations about this topic. The audio track from this event is here, btw; and the video is embedded again, below. Enjoy. And RT;)

I definitely recommend that you check out the other great features in the Juy 09 RSA journal, as well, there's some great gems in there.

You can read the entire thing on the RSA page, so here is just an excerpt:

"Free information, free music, free content and free media have been the promises of the internet (r)evolution since the humble beginnings of the World Wide Web and the Netscape IPO on 9 August 1995. What started out as the cumbersome sharing of simple text, grainy images and seriously compressed MP3s via online bulletin boards has now spread out to every single segment of the content industry – and even into ‘meatspace’ (real-life) services such as car rentals. Without a doubt, ‘free’ has become the default expectation of the young web-empowered digital natives and now the older generations are jumping in, too.

On top of the already disruptive force of the good old computer-based Web1.0, we are witnessing a global shift to mobile internet – a WWW that is, finally, so easy to use that even my grandmother can do it. While five years ago, we needed a ‘real’ computer tethered to a bunch of wires to port ourselves to this other place called ‘online’ and partake in global content swapping, now we just need a simple smart phone and a basic data connection. With a single click of a button, we’re in business – or rather, in freeloading mode. 

As users, we love ‘free’; as creators, many of us have come to hate the very thought. When access is de facto ownership, how can we still sell copies of our creations? Will we be stuck playing gigs while our music circles the globe on social networks, or blogging (now: tweeting) our heart out without even a hint of real money coming our way?

Daunting as it may seem, we can no longer stick with the pillars of Content1.0, such as the so-called fixed mechanical rate that US music publishers are currently getting ‘per copy’ of a song ($0.091). Nobody knows what really defines a copy any longer when the web’s equivalent of a copy (the on-demand play of that song on digital networks) may be occurring hundreds of millions of times per day. No advertiser, no ISP and not even Google has this kind of money to pay the composer (or rather, the publisher), at least not until the advertisers start bringing at least 30–50 per cent of their global US$1 trillion marketing and advertising budgets to the table.

Traditional expectations and pre-internet licensing agreements are exactly what are holding up YouTube’s deals with the music rights organisations such as PRS and GEMA: this is what the rights organisations used to get paid for the music that is being copied, and this is what they want to get paid now. This impasse is causing significant friction in our media industries worldwide. Yet, below the top-line issue of money, there lurks an even more significant paradigm shift: the excruciating switch from a centralised system of domination and control to a new ecosystem based on open and collaborative models. This is the shift from monopolies and cartels to interconnected platforms where partnership and revenue sharing are standard procedures. In most countries, copyright law gives creators complete and unfettered control to say yes or no to the use of their work. Rights-holders have been able to rule the ecosystem and, accordingly, ‘my way or the highway’ has been the quintessential operating paradigm of most large content companies for the past 50 years.

Enter the internet: now the highway has become the road of choice for 95 per cent of the population, the attitude of increasing the price by playing hard to get is rendered utterly fruitless. Like it or not, a refusal to give permission for our content to be legally used because we just don’t like the terms (or the entity asking for a licence) will just be treated as ‘damage’ on the digital networks, and the traffic will simply route around it. The internet and its millions of clever ‘prosumers’, inventors and armies of collaborators will find a way to use our creations, anyway. Yes, we can sue Napster, Kazaa or The PirateBay and we can whack ever more moles as we go along. We can pay hundreds of millions of dollars to our lawyers and industry lobbyists – but none of this will help us to monetise what we create. The solution is not a clever legal move, and it’s not a technical trick (witness the disastrous use and now total demise of Digital Rights Management in digital music). The solution is in the creation of new business models and the adoption of a new economic logic that works for everyone; a logic that is based on collaboration, on co-engagement and on, dare we mention it, mutual trust – an ecosystem not an egosystem. Once we accept this, we can start to discover the tremendous possibilities that a networked content economy can bring to us.  

Free, feels-like-free and freemium

Much has been written on the persistent trend towards free content on the net. It is crucial that we distinguish between the different terms so that we can develop new revenue models around all of them. ‘Free’ means nobody gets paid in hard currency – content is given away in return for other considerations, such as a larger audience, viral marketing velocity or increased word of mouth (or mouse). I may be receiving payment in the form of attention, but that isn’t going to be very useful when it’s time to pay my rent or buy dinner for my kids. Free is... well, unpaid, in real-life terms.

 ‘Feels-like-free’, on the other hand, means that real money is being generated for the creators while their content is being consumed – but the user considers it free. The payment may be made (ie sponsored or facilitated) by a third party (such as Google’s recently launched free music offering in China, Top100.cn); it may be bundled (such as in Nokia’s innovative ‘Comes With Music’ offering, which bundles the music fee into the actual handsets) or the payment may be part of an existing social, technological or cultural infrastructure (such as cable TV or European broadcast licence fees) and therefore absorbed without much further thought. Feels-like-free could therefore be understood as a smart way to re-package what people will pay for, so that the pain of parting with their money is removed or somewhat lessened – everyone pays, somehow, but the consumption itself feels like a good deal...."     Read on.  PDF: Download RSA - The price of freedom Gerd Leonhard July 2009

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"Where Is It Going": new Twitter-based video show with Futurist Glen Hiemstra: ready for your questions

I recently started a brand-new project with my friend and fellow futurist Glen Hiemstra, entitled Where Is It Going (WiiG). The concept is simple: we are taking questions from anyone, via Twitter, on any future-related topic, and we will record 5-8 minute long videos of Glen and myself attempting to answer as many questions as we can, on a weekly basis. We will also add a few other futurists from our network once we have solved a few technical issues. We have also started discussions with a potential partner that will help us with producing better videos -stay tuned.

 This is how you can participate in WhereIsItGoing (WiiG):

1. Be sure to follow @gleonhard and @glenhiemstra on Twitter
2. Tweet your futuristic questions to us, anytime, but be sure to use the hashtag #wiig (this way we can find your questions via Twitter Search, no matter if you addressed them to us or not)
3. If you want your tweets to be included on the live video of the twitter stream (#wiig) please be sure to tweet at 9 am PST / 12 noon EST / 6pm CET /12 midnight Singapore, and follow the live tweets via twitter search; we will publish the finished video on WhereIsItGoing.com soon afterwards. We will be on the tweet streams for at least 20 minutes.

Spread the word!

 

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TV generation vs Internet generation: no more monopolies of attention, the new control is...Trust!

The Net Generation (some call them the digital natives) is indeed drastically different than the TV Generation - see my bullets below. There is no way anyone can sell or market to them in the same way that still worked (well...somewhat) only 5 years ago. There is no way anyone can still monopolize their attention in the same way that mass media (TV, Radio, Print) did until now (sorry, IFPI and MPAA;). There is no way that anyone can 'own' or 'control the customer' any longer, period. The more you try to control your users, the less you will receive from them.

It's the End of Control and the beginning of Trust. If you want to know more - well, yes, you remember, I did write half a book on this in 2008, and it's still quite accurate, so check out the End of Control chapters (free PDFs, too), here. And please 'pay' for the book by spreading the word  - use the sharing tools provided below. Thanks!

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Broadband Culture and the Future of Broadcasting (new video)

Here is a new video that I have just uploaded to my GerdTube.net channel on Blip.tv (which offers full iTunes download feeds so you can watch all of my videos offline, too) . The topic: Broadband penetration is rapidly increasing around the world, and Internet access is no longer depending on computers but increasingly available on mobile devices such as smart phones. Soon, the kids i.e. the 'digital natives' will run the show, and they expect Radio & TV to deliver content in much the same way as the Net does: time-shifted, interactive, engaging, shareable and via any and all platforms. The imminent total convergence of the Internet and Broadcasting will bring many challenges to traditional broadcasters (commercial or public) but there are also  unprecedented opportunities - this video discusses the key trends and future scenarios.

Please note that for some reason some of the transitions and animations are a bit delayed and don't sync 100% correctly with the voice; I have not yet figured out what how to solve this (I use Apple Keynote; and this problem happened when I exported the .key file with the voice-over to Quicktime - if anyone has an idea how to fix this please comment below - thanks). In the meantime, here is a pdf file with every single animation as one page so that you can click along with the video as I speak.  Download Broadband Broadcasting step by step slides Gerd Leonhard

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Content to Context: The Future of Media (short video)

Content to Context: The Future of Media (Gerd Leonhard)
Originally uploaded by gleonhard

As the web becomes ubiquitous, everywhere, and mobile access dwarfs computers, we are seeing a key shift in the way that people use (fka consume) content. While it used to be good enough to present high-quality and professional content (think traditional TV, Radio etc) now people aka USERS want and really value good CONTEXT, too, i.e. links, recommendations, ratings, comments... and the conversation around the content. Social media brings this into sharp focus: all the stuff around content (I like to call this meta-content) is now just as important as the content itself. This has significant impact on every player in the content industries.   Download the MP4 file: Download Content to Context shift MP4 (35MB)

More videos on my Youtube channel, iTunes video downloads via Blip.tv

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Joi Ito on Technology's Next Investment Opportunities (some key messages for the content industry)

Joi Ito is a great resource and inspiring thought leader. Here is a great video with 2.6 Minutes of solid wisdoms. The nuggets:

• People now want to pay to express themselves - not just to consume (and yes, this is generational)
• Open, mobile platforms will come, soon, for sure, and will become even more of a key trend, going forward
• Things that help you express, things that are mobile, things that are global, are the key to future success
• We are shifting emphasis from Content to Context; content commerce becomes less 'copy' and copyright-oriented and more personal and timely (Twitter has little content value but lots of context value!)

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8 key trends and some foresights for the next 5 years

Every now and then I get tempted into actually formulating some fore-sights. This time, the preparations for my upcoming speech on "New Media Futures" at the RSA in London have egged me on to share a few key points with you:

1) We will soon see the emergence of many different kinds of iPhone-influenced Netbook-like devices; some will be Apple-made but most will not. These devices may be 2-3 times the size of an iPhone and will connect to the Internet in every conceivable way, i.e. 3G/4G, LTE, Wimax, Wifi etc.  They will be touchscreen, zoom-interface enabled, cloud-computing, speech-controlled, location-aware, mobile-money equipped, socially hyper-networked, always-everywhere-on, HD-camera equipped and possibly project images and audio or even support basic holography.

In addition to the high-end, fully-loaded and perhaps still rather expensive versions that many of us in the so-called developed countries will gobble up, low cost and more basic editions for the developing markets will be sold in the 100s of millions (think India, China, Indonesia...). These smart gadgets will have very low energy consumption and therefore extremely long battery life, may even sport basic solar-power options, and may ultimately cost less than 30 USD, or even be 'free' (why bother to sell the box if you can make a lot more $ with selling services.... Nokia?).

It is these mass-market yet very smart and networked devices, together with cheap or free wireless broadband that will really revolutionize reading, newspapers, books and education; not to mention our music, TV and film consumption habits. Content commerce will be completely redefined as a consequence. As BTO told us a loooong time ago: "You ain't seen nothin' yet"

2) Very cheap or free wireless broadband - at fairly high speeds, i.e. at least 2MB / sec - will be available in most places, particularly in the booming new economies of Asia, India, Russia and South-America, and a bit later, in Africa. Funded by the likes of Google and by the future 'telemedia' conglomerates, governments, cities and states, wireless broadband will probably reach 3-4 out of 5 people on the globe within 5-8 years. User-generated & derived content (UGDC for those of you that must have an acronym ;), virtual co-production, mobile editing and instant network sharing will explode by a factor of 1000, making control of distribution a very distant concept of the past. UGC or UGDC may make up to 50% of the global content consumption by 2015. Consumers will be (co)-creators, marketers, sellers and buyers, and come in a hundred variations, from totally passive to totally active. Then, indeed, filtering, culling and curation will be the key to success.

3) Collective blanket licenses that legalize and unlock legitimate access to basic content services via any digital network will emerge, and are likely to take over as the primary way of content consumption, around the world (but in Asia, first). Just like water or electricity which is readily available when moving into a new home, the basic access to content will be bundled into access to digital networks, i.e. via ISPs, operators, telecoms, portals etc. This shift is starting with music (as already done by TDC in Denmark, and Google in China), and will be quickly followed by films, TV, books and newspapers. Access may often - but in local variations - 'feel like free' to the user but will in fact generate 10s of Billions of $$ via blanket licensing fees (yes... those pools of money), next-generation advertising and branding, data-mining & sharing, up-selling, re-packaging and many other new generatives. This topic will, btw, be the gist of my RSA presentation tomorrow - if you can't be there in person, you may want to listen to the live audio, via this link.

I think that governments around the world will call for and / or support the implementation of collective content licenses that wil finally legalize content usage on the Internet, similar to how governments pushed for the radio and broadcasting licenses  approx. 100 years ago. Whether these blanket licenses will be voluntary or compulsory remains to be seen - in any case the only alternative is to perpetuate a severely dysfunctional telemedia ecosystem that criminalizes almost all users and stifles innovation while generating virtually zero new revenues for the creators.

4) Fuel-cells and other next-generation mobile energy sources are a certainty. A serious increase in mobile device power (and therefore, its use) will be achieved by employing next-generation technologies such as fuel cells that could provide for up to 500x the usage time that we have today. This is likely to become a reality in 3-5 years and will revolutionize how we use - and how much we rely on - our mobile devices, especially in countries where there the fixed-line power infrastructure is much less developed or non-existent.

5) Completely targeted and personalized advertising, delivered largely on totally customized mobile computing & communication devices, will turn the the $ 1 Trillion USD advertising and marketing services economy upside down. Behavioral targeting and user-controlled advertising will, of course, become an even hotter potato and a much discussed challenge, but the good old deal of 'I give you attention & personal data and you give me value e.g. content' will be even more pronounced on the Net. In fact, advertising as we knew it is already more or less outmoded and will, during the next 2-3 years, be completely reinvented. Privacy and Trust are the #1 issues here.

The implication is that if your data (within your specific sets of permissions and opt-ins)  is used to bring you perfectly synchronized advertising, than advertising really becomes more like content, too. Watch this play out in the mobile advertising space, starting this year, and quite possible boost the global value of advertising-content by more than 100% by 2015. Google will be the main driver here, plus Facebook, Nokia and yes... Twitter (soon to be = Google).

6) We will witness the more or less complete decline of most forms of physical media within 7-10 years. The very definition - and thus the core economic business models - of newspapers, magazines, CDs, DVDs and books will be completely re-written, and new forms of content packaging will rapidly emerge. We can already see a preview of how this may work in the current mobile applications boom: content as part of software packages; paying for the packaging, the curation, the bundling, the personalization - not just for the zeros and ones that are 'the copy'. This trend is important not just because it will reflect the users' (or better... followers') new consumption habits but also because because of the increasing need to save energy and material costs - and moving from content products to content services will certainly go a long way in this regard. The total decline of printing in people's homes, and for personal use, will commence, as well.

7) Paying for privacy will become a distinct option. Today we pay to go online and connect; in the future we may end up paying for the luxury to go offline, disconnect, enjoy the quiet, and give our brain some rest. Maybe if we don't want to share our click-trails and usage data, we will be able to make cash payments instead - and the more you pay, the more private you can be..?

8) Travel 2.0: alternatives to 'actually going there' will explode: immersive, 3D video, virtual rooms, holography. This is a key development that will nurture new forms of entrepreneurship, education and group working.

Please talk back!

The End of Control and the Future of Content: new Video of my Authors@Google Talk in San Francisco

The Google guys have just published a video with my talk at Authors@Google, in San Francisco, March 2, 2009 (see the details here Pdf: The End of Control Gerd Leonhard at Google SF PDF *22MB). Due to some technical issues my fancy slides (i.e. the stuff on the screen) come across very nicely in this video while I am left a bit 'in the dark' - but if you use the HQ version on the Youtube site you can still get a much better idea of what my face actually looks like (I guess always wearing black is not ideal when the lights are bad;).  Anyway, I do think this is one of my best talks, so... watch the entire 55 Mins 22 Secs.  As far as the End of Control Book is concerned, I will have an announcement on my plans within the next 10 days...stay tuned.

Here is the official Google Talks description: The End of Control & The Future of Content:  The tough issue of control emerges, again and again, as the key contention point within TV companies, publishers, record labels, and broadcasters: How can a commercial venture that is based on so-called intellectual property thrive and prosper in an environment that seems to continuously and progressively remove control from the creators/owners/providers of content, and hands it over to the people formerly known as consumers (aka the users), effectively making them more powerful every single day?  But the reality is that every click inadvertently makes another case for the consumers ever-increasing rise in importance. Within all the conversations I have had about things like commercial content versus shared content, about the read-only or the read-write web, and about copyright versus Fair Use, the crucial question always seems to boil down to WHERE IS THE CONTROL HERE, i.e., questions such as Who will control this new media universe and How much control do I need to run a revenue-generating business?

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The End of Control and the Future of Content: My presentation at Google San Francisco (March 2, 2009)

Image by gleonhard via Flickr

As promised, here is the PDF with most of what I presented at my Authors@Google Talk in San Francisco, today (March 2, 2009). Hopefully we will have a video available very soon as well.
The End of Control Gerd Leonhard at Google SF PDF *22MB

Some snippets: Bottom Lines: The fight for Control was a fight for Distribution. The flight for Attention is a fight for Trust. The beneficiaries of Control were Monopolies. The beneficiaries of Trust are those that Collaborate. Advertising 2.0: Information becomes Conversation.  Interruption becomes Engagement. Annoyance becomes Entertainment. 'This is an Ad' becomes 'This is Content'.  The Sharing Economy Logic: Sharing...the Output (i.e. publish, re-mix, co-create, life-stream...) the Input  (i.e. remuneration in cash, attention, reputation...) ... the Thruput (i.e. usage data, meta content, attention trails >> New Data Economics)

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The End Of Control and the Future of Content: Futurist Gerd Leonhard Authors@Google (San Francisco)

View more presentations from Gerd Leonhard. (tags: gerd gerdleonhard)

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

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

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Jeff Jarvis: what would Google do (book and video)

Image via Wikipedia Jeff Jarvis is a leading thinker as far as the future of media is concerned; I have been reading his blog and his books for a few years already, and I can guarantee you: he's inspiration pure!  So, I just ordered his new book "What would Google do" and really look forward to reading it - the topic is a perfect theme for anyone looking at future trends, obviously. Here is a short video with Jeff where he talks about the lessons we can learn from Google ("make mistakes and make them well")- check it out.

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

Drop.io rocks! More details on Futuretalks are here. The IT / Media Conversations pages and podcasts are here.

Discover Simple, Private Sharing at Drop.io

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Funny video: Monty Python Channel on Youtube (maybe there's money to be made)

Image by gleonhard via Flickr

This is really a funny yet revealing video - it reflects the growing trend to look among the larger content owners to look for monetization of their video clips on Youtube rather than sending take-down notices.

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Strike.TV: a good example for changing only if and when the pain gets big enough?

Peter Hyoguchi, the CEO of Strike.TV has posted an interesting write-up on AlwaysOn, here. The idea behind Strike.TV is to give the troubled screenwriters and their colleagues a place i.e. website where they can produce and show i.e. stream their own original shows. To quote Peter: "In total, Strike.TV has forty new web series created by the writers of The Office, The Daily Show, Die Hard, Child’s Play, Robot Chicken, Malcolm in the Middle, The Black Stallion, Star Trek, Top Gun, ...many, many more. To date, this is the largest collection of original Hollywood produced content ever created for an Internet audience". I checked this out a bit, and some compete.com stats on Strike.tv are here - obviously this is still very early - but I shall be watching! 

In any case, Peter's story made me think on another level: do we only really get going when the big is big enough? When the screenwriters went on strike did the pain-level finally increase sufficiently to actually allow or shall we say force people to make some of those changes we have been talking about since the rise of the Net and the Netscape IPO, to do things differently, and on their own. Would Strike.TV have happened if it hadn't been for the strike that fueled it, and all the pain that went with it? 

What does this tell us about Change - looks like disruption, and to some degree destruction, needs to happen before we are ready to make real changes. The pain pushes until the vision pulls - as Michael Beckwith says? If so I guess some of us could argue that right now a lot of change is gearing up, since there is a lot of pain around, given the current economic circumstances. Will this force us to reinvent, to actually let go of the old vine and seize new ones?  Let's hope so.

Here are some more quotes from AO and Peter Hyoguchi: "... 2007 was a perfect storm. New electronic inventions were unleashed setting off the largest tectonic shift Hollywood has ever known. Looking back at the history of motion pictures, there's nothing really to compare it to..Making movies has always been reserved for the very rich... At a hundred dollars a minute for 35 millimeter film, only the super elite can afford to make movies. Until now. Last year HD video cameras came out that equal the image quality of 35mm film cameras, instantly changing the cost of shooting movies from hundreds of thousand of dollars to just a few thousand. In 2007, inexpensive software was released which allows you to edit professional, high definition video on a laptop. Also last year, streaming HD video over the internet became virtually free. Without the need for millions of dollars to make and distribute professional quality movies, creators have instantly been given incredible freedom over their medium. We are witnessing the dawn of a Hollywood Renaissance..."

A brief comment on this last piece: probably more like the dawn of a movie-making renaissance since all these changes will probably mean that's is no longer about the location 'Hollywood' but the occupation 'Hollywood'? 

No matter what business we are in, I think we can learn something from what Peter says, further:  "Strike.TV represents the opportunity for creators in Hollywood...to tell their stories totally unchanged and unaltered. Their vision exactly realized for the audience. A first in Hollywood history. And because they don't have to make back X amount to pay the huge costs the networks and studios need to cover their vast overhead, these shows can be as odd-ball, strange and as niche as they want to be. They don't have to make millions of dollars. They don't have to appeal to Everyone. A smaller audience who really digs it is enough to support the show."  Another argument for the rise of niche-markets in the future, indeed - the Longtail, take 2 (pain-enforced)? But how long will this take?

"And the coolest thing of all, Strike.TV's shows are totally free. No cable bill. No movie ticket. No video rental charge. Strike.TV works in a new economic model that is still being tested. Ad-supported entertainment". This is a very, very important point: free or feels like free to the user / viewer / listener, but still creating revenues for the creator. The scary part is that we are soooooo early in the process of generating those new revenues - this cook-book isn't written yet, and there are even very few recipes.

But Peter goes on to explain: "The reality is there's nothing new about it. Shows in the Golden Age of TV like Kraft Television Theater, Ford Theater, Goodyear Television Playhouse and others were funded directly from Madison Avenue. History repeats itself. Right now, the Internet is where television was before it’s first hit. Cynics were saying TV is a fad. A gimmick. There's no money to be made in TV. Then Howdy Doody became the first smash hit and a whole economy was created around TV. We now are standing on ground zero of the Golden Age of the Internet. We are pre-Howdy Doody. And of course there will be a hit Internet show. And that show will be a Global phenomenon. A new economy will be created around original web shows. There will be modest niche hits and out-of-the-ballpark mega-hit shows..."

Not much too add here - this is right on-the-money. Now let's get to work - and not just for TV content.

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Great slideshow on Video 2.0 (via Jo Sanku, KTH, and Slideshare)

Very nice slideshow by Jo Sanku, VP Business at KTH (Korea Telecom), found via slideshare (the best place for connecting with other people that share their work - a real treasure trove of great ideas). My shared shows are here.

video2.0, new horizon of online video

View SlideShare presentation or Upload your own. (tags: tv on)