Along with the free iPhone version of my 2007 Music 2.0 book, my new Lulu-powered eBook "Best of 2008 Blog Posts & Essays" is now available
to read on the iPhone, as well (yes, for free), using the very cool Instapaper iPhone reading app - and it works offline, too. Follow the instructions below, or add the Instapaper "Read Later" bookmark for this html page. I am still working on page breaks etc, so it's not very pretty yet - but if any of you can make a nicer-looking html file from the original PDF... please ping me!
This is what you need to do to read the free book on your iPhone
(perfect for those long, offline airplane trips!):
Download the Instapaper app to your iPhone (or iTunes), via the app store or via the Instapaper site.
Note that there is a free version and a paid version ($ 9.99 USD, which
is well worth it because of the cool tilt scrolling!), but both work
very well
Install the app, sign up / register, go to the Best of 2008 Book html page,
and mark it 'ADD' or 'Read Later" via the Instapaper.com page or the bookmarklet. It will now save the file and
sync it with your iPhone the next time you open the Instapaper app and
update it.
FICOD was an amazing event! Co-organized by Saatchi & Saatchi Spain (flawlessly done, btw) and sponsored by Red.es (a division of the Spanish Ministry of Industry i.e. the government) to discuss digital content issues, FICOD brought together 1000s of very keen, informed, open, and communicative people - this was Spain at it's best. An event like this is urgently need in all European countries!
And yes - the food was incredible, too, I highly recommend 'El Rabano' near the Palace Hotel where I had some amazing pescado [fish] dishes last night.
Anyway, El Pais wrote a nice comment after my presentation and a subsequent interview, here, English (Google) auto-translation is here. As promised, here is the PDF with most of my presentation (4.8MB low-res, high res-version to follow via Slideshare) future_of_content_free_shared_paid_gerd_leonhard_at_ficod_.pdf.
My key messages:
Less control will bring more success and more income for the content creators
Selling copies is a seriously declining business, selling access and attention is an exploding business
The traditional insistence on strictly enforcing pre-Internet copyright regulations is right and logical by the law (and good for lawyers), but really bad for future income - we must move beyond the 'sacrosanct copyright' idea to a new business model based on revenue sharing for all kinds of usages of content.
We don't need to compete with free - we sell many other valuable things apart from the copy!
A world of no permission is a world of no income
The copy economy becomes the share / access / usage economy
I was quite fired up for this topic since I had already spend the last 2 days at FICOD, with many good conversations happening, and watching the always-on Chris 'Longtail' Anderson and simply-brilliant 'kiwi' Kevin Roberts (CEO of Saatchi) give their keynotes, as well. All very good stuff!
The FICOD twitter channel is here (in Spanish), and their (video)blog is here. Hopefully they will have videos up soon, as well. A FICOD blog interview with me is here, more blog coverage of my talks (also did a lively panel there, yesterday;) at HoyTecnologica here.
Update: FICOD 2008 Video of my speech (dubbed in Spanish!)
I just ran across this truly brilliant essay on Wired.com - it's from 1995 but it reads like a perfect answer to today's issues facing content creators and providers. Esther Dyson is truly amazing - and this was 13 years ago! So, here are some of the best nuggets - if you are in the content business, the is a must-read. Quoting Esther (links and underlines etc are mine, and go to some blog posts that I think are related):
The problem for providers of intellectual property in the future is this: although under law they will be able to control the pricing of their own products, they will operate in an increasingly competitive marketplace where much of the intellectual property is distributed free and suppliers explode in number
On the Net, there is an equivalent change in "gravity" brought about by the ease of information transfer. We are entering a new economic environment - as different as the moon is from the earth - where a new set of physical rules will govern what intellectual property means, how opportunities are created from it, who prospers, and who loses.
Chief among the new rules is that "content is free." While not all content will be free, the new economic dynamic will operate as if it were. In the world of the Net, content (including software) will serve as advertising for services such as support, aggregation, filtering, assembly and integration of content modules, or training of customers in their use. Intellectual property that can be copied easily likely will be copied. It will be copied so easily and efficiently that much of it will be distributed free in order to attract attention or create desire for follow-up services that can be charged for.
But in the one-to-one world the Net promises, advertising will often be tailored and of higher quality. Those with more money to spend will get higher-quality advertising.
The likely best course for content providers is to exploit that situation, to distribute intellectual property free in order to sell services and relationships.
The way to become a leading content provider may be to start by giving your content away. This "generosity" isn't a moral decision: it's a business strategy.
There are 12 pages of one nugget after another - be sure to read it all.
Back in July 2007 I wrote a fairly long (but worthy;) essaycalled "Gerd Leonhard’s Open Letter to the Independent Music Industry: Music2.0 and the Future of Music is yours – if you can resist the temptation of becoming just another music cartel" which became quite a popular read for people in the music industry, around the world. Now, I have the great pleasure of sharing the French translation with you, below. This must have been a pretty tough job given that I am diving fairly deep into geek language territory in the English version, already - but it always amazes me what happens when you offer stuff in an open format - if it's good, other people will continue and expand the work, and together, maybe something much larger can be created.
Lettre ouverte auxIndépendants: "Music 2.0 et le future de la musique s’offrent à vous – à condition d’arrêter de copier les majors"was kindly translated by Christophe Soulard (owner of Mexican Stand-Off), in Paris / France, with some additional assistance by Sylvie Krstulovic, also in Paris. All is made available under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 License. Feel free to take it and spread it around!
"Le 29 juin 2007, de passage au London Calling, un groupe de labels indépendants m’a proposé d’intervenir lors de l’assemblée générale de l’AIM (NdT : Association Of Independent Music, syndicat des producteurs indépendants du Royaume Uni). J’ai saisi cette occasion pour développer mes idées sur les changements que les indépendants devraient prendre en compte, afin de profiter au mieux des mutations de l’industrie musicale. J’ai le plaisir de vous présenter ma vision de ce que j’ai baptisé « Music 2.0 » - cette nouvelle génération de l’industrie musicale qui se crée sous nos yeux. Le modèle « Music 2.0 » est à l’opposé du modèle traditionnel ; la plupart des anciens usages, des modes de relation et des traditions démodées ne pourront survivre à cette révolution. J’essaierai de vous convaincre, vous, leaders de l’industrie musicale indépendante, de m’accompagner sur ce chemin sans états d’âme, de sauter le pas, en abandonnant les idées préconçues et vos « dogmes », et en agissant avec conviction – car c’est le prix à payer pour changer de cap. Selon F. Scott Fitzgerald, « Le propre d’une intelligence supérieure
est sa capacité à penser simultanément deux choses opposées, et malgré
tout, de continuer à fonctionner ». Pour avancer, c’est certainement ce
que devra faire l’industrie de la musique !
Au cours de la dernière décennie, les innovations techniques et
économiques dans le domaine de la musique ont ébranlé bien des
traditions, des hiérarchies sociales et économiques et des situations
de monopole, et s’il y a bien une chose dont nous pouvons être sûrs,
c’est que la fête bat son plein…."
Further to my previous post on The Future Revenues of Content, Chris Anderson's Longtail blog has a timely post that is a perfect fit: Hal Varian: 14 Free business models. A lot of this fits very well with Kevin Kelly's writings on his Technium blog, too - all of them are a must-read if you are in the content business, imho. So, citing from Chris who quotes Hal's paper (edits for length and some high-lights are mine):
"Most information is born digital and that digital
information is typically very easy to copy and distribute, it is
conceivable that copyright laws may become almost impossible to
enforce. Are there ways for sellers to support themselves in such an
environment? It is worth considering some of the options. Here is a
brief list of business models that might work in a world without
effective copyright.
Make original cheaper than copy.
This is basically the limit pricing model described earlier. If there
is a transaction cost for a copy-a direct cost of copying, an
inconvenience cost, or the copy is inferior to the original in some
way-then the seller can set the price low enough that it is not
attractive to copy. (Note by Gerd: this is working very well on Asia, already, particularly in Thailand. Once a ratio of 2:1 is reached, i.e. the legal version [of a physical product] is only 2x what the pirated version is, then people are ok with buying the legal version - also because they can be assured the quality is there, and it's not a fake. I do think that this approach will require a dual strategy of selling some copies in this way while getting a lot more 'Attention Revenues" going, as well, since it will be hard to make any reasonable margin on low priced products like these)
Sell physical complements. When you buy
a physical CD you get liner notes, photos, and so on. Perhaps you could
get a poster, a membership in a fan club, a lottery ticket, a free
T-shirt, as well. These items might not be available to someone who
simply downloaded an illicit copy of a song. (Note by Gerd: this is a very crucial point, and something that already seems to work well in markets such as India. Adding compelling booklets, photos and other material to a CD or DVD makes it more desirable to own something)
Sell information complements. One
can give away the product (e.g., Red Hat Linux) and sell support
contracts. One can give away a cheap, low-powered version of some
software and sell a high-powered version.
Subscriptions. In
this case, consumers purchases the information as a bundle over time,
with the motivation presumably being convenience and perhaps timeliness
of the information delivery. Even if all back issues are (eventually)
posted online, the value of timely availability of current issues is
sufficient to support production costs. (Note by Gerd: I would call this the Flat Rate...yes: Music / Media Like Water)
Sell personalized version. One
can sell a highly personalized version of a product so that copies made
available to others would not be valuable. Imagine, for example, a
personalized newspaper with only the items that you would wish to read.
Those with different tastes may not find such a newspaper attractive.
Advertise yourself. A
downloaded song can be an advertisement for a personal appearance.
Similarly, an online textbook (particularly if it is inconvenient to
use online) can be an advertisement for a physical copy.
Advertise other things. Broadcast
TV and radio give away content in order to sell advertisements.
Similarly, most magazines and newspapers use the per copy price to
cover printing and distribution, while editorial costs are covered by
advertising. Advertising is particularly valuable when it is closely
tied to information about prospective buyers, so personalization can be
quite important. In an extreme form, the advertisement can be
completely integrated into the content via product placement.
Monitoring. ASCAP
monitors the playing of music in public places, collects a flat fee,
which it then divvies up among its members. The shares are determined
by a statistical algorithm. The Copyright Clearance Center uses a
similar system for photocopying-a flat fee based on an initial period
of statistical monitoring.(Note by Gerd: "New pools of money and a fair way to split them up"!)
Media tax. This
a tax on some physical good that is complementary to the information
product (i.e., audio tape, video tape, CDs, TVs, hard drives, etc.) The
proceeds from this tax are used to compensate producers of content. For
example, the Audio Home Recording Act of 1992 imposes a media tax of 3
percent of the tape price. (Note by Gerd: I don't favor taxes but in some countries it may work well. A commercial VOLUNTARY COLLECTIVE LICENSE would have the same effect, though).
Ransom. Allow
potential readers to bid for content. If the sum of the bids is
sufficiently high, the information content is provided. Various
mechanisms for provision of public goods could be used, such as the
celebrated Vickrey-Clarke-Groves mechanism. This could be used in
conjunction with the subscription model. For example, Stephen King
offered installments of his book The Plant on his web site. At
one point he indicated he would continue positing installments if the
number of payments received divided by the number of downloads from his
site exceeded 75.6 percent. His experiment did not succeed, perhaps due
to the poorly chosen incentive scheme. (Note by Gerd: I would rather call this patronage)
Pure public provision. Artists
and other creators of intellectual property are paid by the state,
financed out of general revenues. This is not so different from public
universities where research and publication is considered integral to
the job.
Prizes, awards and commissions. Wealthy
individuals, businesses or countries could commission works. The
patronage system achieved some notable results in Europe for several
centuries. The National Science Foundation or the National Endowment
for the Humanities are examples of modern day state agencies that fund
creative works using prizelike systems."
And finally, here's a video I made on this a few months ago:
A lot of people have asked me to compile what I think are my best posts from this blog... so here they are, starting from April 2008 to today (and yes, I will try to keep this updated). Enjoy & Share. 1.5MB PDF
Fascinating conversation with technology expert, consultant, teacher and author Mark Pesce. Pesce recently spoke at the Personal Democracy Forum in New York, and in this discussion he provides his thoughts and opinions on where we are with web and mobile technology, and most importantly, on its critical social and political impact on us all today. (PS: Blip.TV really rocks I think! - check out my channel on Blip)
Basel, Switzerland, July 1, 2007 Update: French version now online.
Gerd Leonhard’s Open Letter to the Independent Music Industry - Music2.0 and the Future of Music is yours – if you can resist the temptation of becoming just another music cartel.
On June 29, 2007, while at London Calling, I was invited to speak to a small group of indie record label leaders at the annual AIM / WIN gathering in London. I took this opportunity to take a good look at what needs to happen in order for the independent music companies to actually take advantage of the new music economy that is unfolding right now. So... some of my thoughts are shared below.
Today I want to present my views on what I like to call “Music2.0” – the next generation of the music industry that is being created as we speak. This new model is dramatically different: many old ways of doing things, many old relationships, and many outmoded traditions cannot and will not survive.
I want to seduce you, the leaders of the independent music industry, to go down this new road with me, to take a leap, to leave some of your assumptions and your ‘religions’ aside, and to make bold moves – because this is required to turn this ship around.
Scott Fitzgerald, the famous novelist, said: “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function”. This will clearly be the music industry’s challenge going forward!
Technical and economic innovations have, for the past 10 years, stripped away many traditio
ns, social and economic hierarchies and monopolies in the music industry, and if there is one thing we can say for sure I guess that would be that it’s now show-time: the music industry is finally reaching a major inflection point; 10 years after the first .com ventures shook the ground. It took a lot longer than we all thought but it’s hitting much harder now: CD sales are down between 20 – 40% YTD, and digital sales are not making up the difference, any time soon – and the one-horse race with iTunes clearly is a dead-end.
We are very quickly nearing a point to where we are forced to dive into what I like to call “Music2.0” – a new ecosystem that is not based on music as a product, but music as a service: first selling access, and only then selling copies. An ecosystem based on ubiquity of music, not scarcity. An ecosystem based on mutual trust, not fear.
As Don Tapscott says, in his great book “Wikinomics” , we can think of Web1.0 – the ‘old’ web - as some sort of digital newspaper, while Web2.0 is a canvas that allows information to be put up, shared, changed, and remixed. It’s about the interaction, the send-and-receive options that make it useful and ‘special’. And in music, it’s always been about interaction, about sharing, about engaging – not Sell-Sell-Sell right from the start.
Stop the sharing and you kill the music business – it’s that simple. When the fan / user / listener stops engaging with the music it’s all over. Today, you urgently need a canvas for music not a one-way product (such as the CD).
Let’s face it: most ‘leaders’ of the major record companies as well as some independents are, by and large, still in denial about the fact that their unit-sales-based model is utterly broken and crashing quicker than they can fathom, and many still hope for some magical technology solution to solve a business problem.
Billions of $$ have already been lost due to misguided strategies, outdated policies, and lack of true leadership. Forgive me, but it's time to get your act together and do whatever it takes, not just what fits comfortably into your current landscape – this is a make-it or break-it moment.
How come many societies and PROs / MROs are still at a total loss when it’s about ‘licensing the un-licensable’ (as my dear friend and colleague Jim Griffin puts it)? 1000s of companies with innovative business models are left unlicensed, by default (or shall I say by design?), and most of them have given up on even trying. Major money is left on the table due to tardiness and internal squabbling. Many of the traditional music licensing organizations have utterly failed in their mission of making music available – in fact, they have, by non-action, succeeded to make it unavailable. What you need now is action not continued excuses.
Today, we have the paradox situation that any startup that wants to use music will not even try to go legal right from the beginning, since there is no reasonable way of doing so. Look at the biggest exits in this turf, during the past 2 years: myspace, youtube, last.fm – either they did not bother with proper music licenses, or it was unclear if and where and when they would even need one. Non-compliance succeeded and was handsomely rewarded.
The music industry must admit that it has failed to act. Their leaders’ clueless-ness, incomprehension and general lack of willingness to embrace true change allowed the paying for music to become voluntary. Congrats.
Don Tapscott points at the year 2006: the losers built digital music stores, and the winners built vibrant communities based on music. The losers built walled gardens while the winners built public squares. The losers were busy guarding their intellectual property while the winners were busy getting everyone’s attention. Warner Music Group’s stock nose-dived from $30 to $14 in less than one year; Google rose from $323 to $526, Apple went from $50 to $127.
For the independent music industry, the question is: which side do you want to be on? Do you want to become another ‘major player’, and stay stuck in music1.0, or do you want to lead the way into music2.0?
In this context please allow me give you a glimpse of the future, so that you can make some decisions based on what is coming.
1. Within 18 months, in many key music territories around the globe, wireless broadband networks and device-to-device ad-hoc networks will connect every conceivable device with each other, as well as with gigantic online content depositories – or shall I say switch-boards - that will contain every imaginable song, film, or TV show.
If you think ‘sharing’ is a big deal now, wait another 2 years – it will be 100x as fast and enabled on every single device (not just computers). 3 Billion+ cell phones and 1 Billion+ music players will connect seamlessly to each other.
Wireless broadband access and devices will become so cheap, super-fast and ubiquitous that sharing content will become the default setting, at very high speeds and with anyone that is close by. Search – Find – Select – Exchange. Click and get.
How can you monetize this? By licensing participation – and the networks and the devices that enable it. You must license the use of any and all music on these networks, and make irresistible, irrefutable and compelling blanket offers to those that run it. These license deals must be conversations not monologs. Not a stick to the ISPs but a huge, shining and attractive carrot.
2. 10s of 1000s of new TV, online video, and gaming channels will be born in the next 2-3 years – and all of them will need music to go with the visuals. Millions of songs will be synched to video – this market will positively explode. It may well be that those B2B licensing revenues end up being more than 50% of your future income.
However, exploiting these opportunities will only be possible if an efficient and frictionless system for transactions is available – this is, imho, where the huge opportunity for the Merlin initiative (where AIM is a member) lies. Think ebay+ chemdex +ricall + pumpaudio+. Every $ invested in better B2B processes will make 10s of 1000s for music rights holders… while they sleep, or better yet, make more music.
3. Streaming music, on demand, will be everywhere. On every website, every widget, every mobile, every device – supported by ads, sponsorships and commissions on transactions. Performance-based income will surge beyond your wildest imaginations, But again, only if you finally chose to play ball, to participate, to make irresistible license and rate offerings, create reliable standards and go flat-out for liquidity not try to maintain artificial scarcity. BMI’s revenues have grown from $630 Million in 2003 to $779 Million in 2006 – not bad considering the overall demise of the recorded music market, at the same time! So read my mouse: It’s not the copy of the recording that makes all the $$$, it’s the use. In fact, the use of your music is the next big format you have been looking for.
4. Rich media (i.e. ads with music, video, animations, audio etc) will become the default advertising format for online advertising, representing yet another huge growth opportunity for music. Soon, 10%+ of all ad-spending will be on the Internet; and 16% of all Internet ads in 2009 will be rich media. With an estimated $ 700 Billion of global ad spending by 2009, that means $70 Billion for online ads, and over $10 Billion spend for rich media ads. 100s of millions of $$$ for music licenses!
5. Digital radio will deliver 100% time- and place shifted music experiences, stopping only a tiny bit short of becoming another iTunes. The reality is that net radio is just another Tivo for music. Radio will indeed become the feels-like-free, on-demand music box, once again: the only remaining ‘Radio1.0’ factor will be that it will continue to be curated and expert-produced, as well as taking in social recommendation and smart technology agents. The best radio stations will become very strong brands (Radio 1, KCRW etc), out-doing what used to be record labels. How will you license Radio2.0 if you insist on staying with a per-copy model?
6. All music companies will become video companies, too – music will be multimedia, by default (music + video + audio + text + games). If you aren’t already diversifying into video and TV you really should.
7. China, India, South America and Africa will explode with new models of usage rights – bundles and flat rates based on access. And guess what: they will indeed have those $100 computers that Negroponte is trying to bring to them!
But again, you will not have truly liquid (i.e. efficient, low-friction, vastly scalable) markets until you allow, support, and enable them. You must swing this ship around, because right now, the music industry is failing miserably: failing on technical and on licensing standards, on flexible pricing offerings, on competitiveness, on compatibility, on being trusted, on transparency.
The music industry’s past was based on: • Control • Exclusivity • Monopoly • Closed-ness • Guarding / Protection • Secrecy / Non-Transparency • Territoriality
Your future – if you chose to go there – is based on: • Openness • Total transparency • Peering • Sharing • A truly global outlook • Liquidity
I predict that as much as 60% of this new music business - and with that I mean a $100 Billion music business - will be independent within 3-5 years – but only if their leaders don’t follow the major labels into LIKING CONTROL MORE THAN INCOME. Update: watch this movie clip for more details ;)
Here are a few of my favorite bottom lines:
1) The media ecosystem of the future is frictionless. That means music anytime, anyhow and anywhere, ranging from free and ‘feels like free’ to bundled, up-sold and premium’ed. Your job as a music company is to do away with the friction, not to add to it, or even to re-insert it: on the Internet, every hurdle is treated as damage, and the traffic is simply routed around it. Create friction and be side-stepped.
2) It’s all about participation not prevention. Because of the utter impossibility of maintaining any real hurdles, it is absolutely crucial that you find ways to participate in any and all forms of commerce that use music. Charge smartly for access but make music available the same way that cell phone operators make cell phones available: a very low-cost, irresistible way of engaging people… and sell-up from there. Whether it’s streaming on demand, remixes and mashups, play-listing and social network music applications, to add-music-to-video, to digital radio – being part of it is what it’s all about.
3) Let’s face it: the web is like a giant Tivo, a huge recorder or DVR - all performances are or can be recorded, all broadcasts really are deliveries. You need to stop distinguishing between music ‘to keep / own’ and music ‘to listen to’ – our users have done this a long time ago! License the USE. Share revenues. THEN upsell to ownership.
4) Copyright is the principle, usage right is where you monetize. Usage is where you need to focus your energies, not the ‘protection of Intellectual Property’. This is a tough spot but again… do you want total control, or do you want revenues?
5) Very few things end completely when new inventions are taking hold – usually, the market just grows larger. And it will be no different here. Yes, the fax machine and the Internet killed the Telex and telegraph, but we still have books even though we have Xerox machines. CDs will decline, and may fade out completely, eventually, but nothing you do in digital music will completely wipe out physical media. This is just another format, and it’s called ACCESS. And even better: after you provide access, you can sell ownership again, too (think HD!)
6) Remember that the only real limit to growth, in music and in media, is TIME. Media consumption will rise and rise and rise, as the offerings become cheaper and more ubiquitous, and as more of the “Digital Natives” consume multiple media at the same time. You are now engaged in a battle for the wallet and the clock – but the clock comes first. Mind share means time-spend means money spend! Again, this is where attention translates into money, and this is why the first objective is to get attention, and only then to get money. The biggest problem for most artists (and their labels) is obscurity not piracy!
7) Engage not enrage: stop anything that enrages the users. And do it now.
8) Guess what: you can compete with free because what you can offer is not free. Yes, a copy of a file is free. A CD burned from another CD is free, a USB stick’s content copied to my computer is free. But the real-life connection to the artist, the experience that is happening around the music, the added values such as videos, films, games, chats, books, concerts and merchandising, the context (!!!) - all of that must not be free. You must stop the obsession with trying to make money merely from selling copies, and instead provide access, because only the legitimate and authorized source (i.e. agent-label-manager) can provide the whole bundle of values that the users, fans, the people formerly known as consumers, will buy.
Music2.0 is an unprecedented opportunity, very much like when music when from acoustic to electric. Everyone wants music. More music is used on more platforms, all the time. An unprecedented hunger for music that you need to fulfill!
Finally, here are some challenges that I believe a music industry led by Independents must embrace.
1) Once released, a recording becomes, in reality, available by default and must be made ‘usable’ under a default license – all else equals tacitly conceding that it’s free to use without permission. As a result of such a new ‘default license’, some rights principles that we have gotten used to probably won’t translate in this environment – such as the moral right of deciding where you music is being performed or maybe even otherwise used. However, I don’t think this will apply to commercial use in films or ads - unlike the private or semi-private use in UGC and web-generated content, and of course, to public performance.
2) The traditional definition of ‘copyright’ and ‘intellectual property’ can, for the time being, not be the sole key to monetizing your creations. Because it is no longer about copies, it’s no longer about the right to copy, it’s no longer about reproduction – it’s about how music is being used and how to participate in those much larger revenues.
Call it ephemeral copies, tethered downloads, rented media, streaming, buffering, caching, storing, time-shifting, downloading, ripping or whatever – the fact is that digital technology has done away with the distinction of a so-called performance being different than a so-called DPD (digital phonographic delivery). All computers - and that means all cell phones, too ! – are by definition copying machines. As overwhelming as this may sound, you must therefore discard the idea of charging more to ‘keep’ music, as opposed to just ‘listening’ to it as in radio. Instead, you must focus on charging for added values (such as a better way to keep the music ;), and on collecting revenue at every point of access, and then go from there. I don’t want to get into my good old ‘music like water’ rant again, but charge for music like utility companies charge for basic water & electricity service, and then charge more for all the other options. The bottled water business is a $100 Billion industry!
3) Your revenues from selling ‘copies of songs’ will soon dwindle down to maybe 30% of your total income – the rest will be revenues from licensing, sync, performance, bundling, flat rates… revenue sharing and the many other streams that are yet in their embryonic stages. Get busy creating and supporting those new revenue streams!
4) You can’t afford exclusive rights representation at high rates any longer, unless these institutions give you 100% coverage and a flawless solution.
5) Forget territories except for when serving local repertoire (which is on the rise, too). Most talent is global, and your audience is global, or at least virtually local. Internationalize right from the start and build systems that will support that. Build a worldwide licensing and B2B-transactions system that makes all repertoire available for all types of use, and build it quickly.
6) Resist the temptation to do as the major labels have done (e.g. extract huge one-off payments, extort equity shares, license at unreasonable rates, refuse access for no reason but for market control concerns, sue their own customers etc) – that is a certain death wish. In fact, now you can force them to follow you!
7) Resist all attempts at locked / protected formats, and go for open systems.
) Bundle and package music in new ways: with other services, with other products. And prepare for the Flat Rate because this is certainly coming.
9) Remove any and all hurdles to complete market liquidity: pricing inflexibility, lack of standards (technology), lack of licensing transparency, territorial differences, monopolies.
10) Embrace outsiders to jumpstart the music business. Niklas Zennstrom disrupted the telecom business, Hotmail changed email, Stanford dropouts started Google – the innovation often comes from the outside.
Call me a Utopian, call me a Dreamer, call me a ruthless Optimist, but I think this is the Future of Music.
Keynote Speaker, Think-Tank Leader, Futurist, Author & Strategist, Idea Curator, some say Iconoclast | Heretic, CEO TheFuturesAgency, Visiting Prof FDC Brazil, Green Futurist
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