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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Kwout: a nice tool for sharing web content, and quoting

Lorraine at Rostant Advertising in Trinidad send me the link to an interesting Web 2.0 tool called Kwout. They provide tools that allow you to take a snapshot of any piece on any webpage - mostly for quoting purposes I would think -, make a widget out of it, and re-use the quote, intact will all links etc, on your own page - pretty cool, even though the image quality could be better.  Talk about Sharism!

Below is a snippet from one of my favorite essays called 'Better than Free' by Kevin Kelly, and from a blog post by me that is based on the same concepts... check it out.

MediaFuturist: Edge: BETTER THAN FREE By Kevin Kelly via kwout

The Technium: Better Than Free via kwout

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The Future of Advertising: become like... Content

When ads become so targeted, personalized, contextual, location-based, meaningful and relevant that I will want to see them (or at least not try to avoid them), then we are getting somewhere. I think that "Advertising IS Content" will be the key to web-native (and therefore mobile-native) advertising and marketing - all else will fall short of getting great results.  I wrote about this in June 2008, here, and in yesterday's presentation at CMMA 2009 (the future of mobile marketing).

Some nice examples that are heading in this direction are the BMWZ4 Paint by Powerslide iphone application (a great example for branded apps), Jeep's 'have fun out there' campaign, and Apple's 'second opinion' commercial on the NYT website (thanks to Frank at MediaArts in LA, btw). What we really need is cutting-edge creative work that is based on a complete and real-time understanding of how people are starting to mix real-life experiences, the web, mobile and social media.

Picnic Interview: Gerd on Social Media Marketing

This is from the Picnic Conference blog, taken from a telephone interview with me, last week. Please note that I am firm believer that there is NO COOKBOOK for success in social media (whatever that means!), at least as far as I can tell. And there is no certainly not a definitive correlation between your mere numbers of followers or friends, and the quality or merit of your work. We are still very much in the very first, embryonic phase of social media marketing (and the related personal branding options), and it would be very premature to equal success in numbers with success in business or even any real degree of influence.  I am experimenting with this just as much as everyone else... so, read this below, in that spirit! 

Btw - the Picnic conference in Amsterdam (Sept 23-25, 2009) will be well worth attending (and not just because I'll be speaking ;). Last year's event was thoroughly entertaining as well as inspirational, if sometimes a bit overwhelming due to the sheer number of topics and attendees.  Check out my 2008 Picnic presentation on The New Music Ecosystem, here.

From the Picnic site (comments by me are in[...])

"Last Friday, the team at PICNIC had the opportunity to pick Gerd Leonhard’s brain about social media marketing and what has made him successful. Gerd is a well-known media futurist and a regular PICNIC participant. He travels the world speaking about the future of media, content, technology, communication, business and entertainment.

In less than six months Gerd accumulated over 5000 followers on Twitter and his website traffic [and RSS feed users] increased by 300% (60% of which comes from Twitter). As a result he decided to completely stop communicating with his 17,000-strong database by email and his business has continued to thrive. It was a pleasure to chat with Gerd on the subject of social media marketing and we are excited to share some of his top tips with you.

Pull, don’t push: Get people’s attention by providing value and earn their love by engaging with them. This will naturally lead to increased website traffic and increased sales.

Getting started

• Choose a plausible position and objectives you want to achieve
• Find out where your target audience is, i.e. Twitter, LinkedIn, Facebook, YouTube…
• Listen to others and decide carefully who you want to follow and get feedback from
• Track replies and keywords to help you actively participate in the conversation
• Set up multiple accounts if necessary (by topic, employee, etc)

Building momentum

• Jump in: don’t be afraid to start, there is no right or wrong way to use social media for marketing
• Provide value: link to content on your website or blog like videos, slideshows, tips, interviews; provide useful resources from other sites; don’t be afraid to re-package existing content by putting a new spin on the story.
• Avoid sales pitches: but do offer special offers or rewards to members of your network
• Participate: develop conversations with members of your network; ask for feedback or advice
• Be transparent: people will feel more connected with your brand when they know what is going on behind the scenes
• Establish yourself as a thought leader or authority: dialogue with the right people

Measuring success

• Social media marketing is not a replacement for other marketing tactics. Success with social media tools requires time and effort, not money. Success has to be defined by the individual or company.
• The number of followers or members is important, but not the only measurement of success. You can also track traffic to your website generated by social media sites, number of RSS subscribers, and increase in comments or leads.

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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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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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My speech on The Future of Music & Media (Plugg 2009), now on Video

Plugg 2009 has made all the videos, official pictures and presentations from Plugg 2009 available. More on their blog.    Videos: http://plugg.eu/media/videos  Pictures: http://plugg.eu/media/pictures
Presentations: http://plugg.eu/media/presentations

Here is the video with my presentation, below (scroll the icons under the player to get to my image, then click... or listen to all of it). Vimeo file for my speech only.

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Cool video: Microsoft's 2019 Future Vision Montage (and more via Officelabs)

This video provides a nice summary of some of the key computing and communication developments that we can expect in the near future. Whether MSFT will be a big part of that... who knows, but they did a great job with these videos; be sure to check MSFT Officelab's other cool stuff, here, as well - quite impressive, I think.

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 Printing Press brought us Copyright, the Internet brings... Usage Right!

I think creators now need to get paid for the USE of their work, not (just) for a copy. On the web, everything is a copy, every listen / watch / read / use is in fact a copy; computers are simply copy machines by default. If creators and rights-holders stick to the old definition of 'copy' and the corresponding, unit-based mode of how they used to get paid (e.g. the mechanical license for each download of a song), then we will continue to have a total mismatch between what 1.4 Billion Internet and the converging ~ 4 Billion mobile phone users are willing and / or able to pay, resulting in a drastic loss of revenues that could be harvested via revenue sharing, bundling and other collaborative, usage-based models. Check out the slideshow below. More on what I call "21st Century Content Economics" later today - I will publish a PDF with my Authors@Google presentation I am doing in San Francisco, today.

Copyright 2.0 and the Future of Music Gerd Leonhard Norway Think Tank June 2008

View more presentations from Gerd Leonhard. (tags: copyright immf)

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Itay Talgam at PICNIC08: Conducting Creativity (great video)

Itay talks about his Maestro Program and explains how business has changed, using the example of how conductors interact with their orchestras. From Itay's site:  The “Maestro programs” were founded on the belief that, in the orchestra as in the work place, music has the power to create community and reinforce shared values. Music embodies knowledge and innovation, individual effort and collective achievement, and offers a work-environment that is full of opportunities for excellence and self-actualization – same as any successful business. These programs offer a unique learning experience that explores the magical relationship between conductor, musician and audience to achieve inspiring new insights into leadership, management, and teamwork".  Great stuff.

I saw his presentation at PICNIC 08, and it was the high-light of this entire event, imho. Well worth watching.

Itay Talgam at PICNIC08: Conducting Creativity from PICNICCrossmediaweek on Vimeo.

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Thoughts on 21st Century Content Economics (flash movie)

Just a quick brain-dump, this time in swf / flash format (just open in any browser, hit space bar for next animation).
Enjoy. Share. And so on. And on.  Download Gerd Leonhard Thoughts on 21st Century Content Economy

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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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Video from LeWeb'08: Sharing Love - Joichi Ito ***

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2009: The year of Re-Designing the Content Business

I am planning to dedicate a good chunk of my 2009 time and energy to this crucial topic: what are those new, web-native, social & inter-connected business models that will power the future of content creators and their industries?

In 2008, the disruptive force of the Internet has finally hit home, and - as is usually the case - it all came much later than we had estimated but the disruption is also much bigger than expected. A quick look at some trends in this context:

• Newspaper revenues are seriously down (25% in some cases); and magazines and other print media are severely challenged, as well
• Digital music revenues are still going up, overall, but very very very far from enough to stop the free-fall of the recorded music industry, in general (approx 20%, globally, would be my estimate for 2008) *pennies for $$, see below
• DVD sales are declining, worldwide, prices are falling, too - and this will only accelerate next year
• Online video views and audiences are up a lot - but so far pretty much everybody has trouble making any real money with online video

My hunch is that the Internet may well - and soon - bring us an utterly scary reduction of traditional content models that is somewhere in the neighborhood of 1:5, i.e. if you keep relying on the old 'disconnected' content revenues models you may eventually see only 1/5th of the financial returns that you had before. This could vary by industry, location and context, of course, but I would dare say that if you stick to your old models the future will be bleak, either way - and this goes for the actual creators but even much more so for the businesses that are build around them.

To me, the bottom line is that most of what used to work just fine in a disconnected world of 'totally segregated consumers and producers' will simply not work in the future.

This is why I think 2009 will be year of:

• Totally exploding consumer / user / fan / listener / viewer empowerment (yes, you ain't seen nothing yet - wait until 2 Billion + people are wirelessly connected via increasingly smart and easy-to-use mobile devices)
• Re-inventing content commerce (such as: charge for access... not just units, bundle content into access, freemium etc)
• Re-evaluating copyright as that sacrosanct, sole, principal, or even main driver of revenue - the solution for what I like to call 'digital payment-refusal' aka piracy is not a technological issue but a business problem
• Re-inventing advertising (since new kinds of advertising will no doubt be one of the future drivers of content commerce, as well)
• Getting the telecoms and network operators aboard - for they can't make it work without content, either!

I do have a hunch that this old Chinese proverb holds a part of the solution: “Tell me and I'll forget; show me and I may remember; involve me and I'll understand.”  Stay tuned for 2009 - this will be fun.

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