Good Copy Bad Copy - Stealing Culture
Watch a fascinating social commentary on the state of affairs in copyright and the internet.
woensdag 10 oktober 2007
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 traditions, 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.
Gerd Leonhard, Basel, Switzerland, July 1, 2007
http://www.futureofmusicbook.com/
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 traditions, 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.
Gerd Leonhard, Basel, Switzerland, July 1, 2007
http://www.futureofmusicbook.com/
What The Kids Are Stealing These Days -- And What They'll Be Buying Soon
Peter Kafka | October 5, 2007 4:49 PM
The same record labels that complain about the epidemic of file-sharing/song-stealing also pay close attention to what songs file-sharers are swapping. Why? Because song-stealers tend to have the same tastes as song-buyers, but they tend to move faster. So if you track the what songs are moving quickly on P2P file-sharing systems, you can get a good sense of what's will be selling in a few weeks' time.
Online measurement firm BigChampagne has generated a "biggest movers" chart for us, which tracks which songs have had the biggest week-to-week increases on file-sharing networks. We've published it after the jump. Note that it doesn't correlate at all to CD sales, because people who buy CDs aren't buying them because there's one good song on them. But if there's more than one good song on them, they tend to do very well. That's why we're confident that Gorilla Zoe, who we'd never heard of prior to today, will be selling a lot of copies of his album Welcome To The Zoo in the coming weeks. The album, released by Warner Music Group (WMG), has two fast-moving songs on the BigChampagne chart.
The same record labels that complain about the epidemic of file-sharing/song-stealing also pay close attention to what songs file-sharers are swapping. Why? Because song-stealers tend to have the same tastes as song-buyers, but they tend to move faster. So if you track the what songs are moving quickly on P2P file-sharing systems, you can get a good sense of what's will be selling in a few weeks' time.
Online measurement firm BigChampagne has generated a "biggest movers" chart for us, which tracks which songs have had the biggest week-to-week increases on file-sharing networks. We've published it after the jump. Note that it doesn't correlate at all to CD sales, because people who buy CDs aren't buying them because there's one good song on them. But if there's more than one good song on them, they tend to do very well. That's why we're confident that Gorilla Zoe, who we'd never heard of prior to today, will be selling a lot of copies of his album Welcome To The Zoo in the coming weeks. The album, released by Warner Music Group (WMG), has two fast-moving songs on the BigChampagne chart.
Why Hannah Montana Should Sell $200 Tickets
Peter Kafka | October 5, 2007 3:42 PM
The WSJ reports on the fascinating court battle between IAC's Ticketmaster and RMG Technologies, a Pittsburgh company that runs TicketBrokerTools.com, a scalping/reselling service. IAC says RMG has created bots that can outsmart Ticketmaster's "captcha" boxes and allow it to buy up huge blocks of tickets. It then resells them at a steep markup. RMG says it's not using bots, but says what it is doing is perfectly legal.
The Internet has transformed the aftermarket ticket business, and everyone wants in. In January eBay bought Stubhub for $310 million, and Ticketmaster has its own entry, dubbed TicketExchange. Last month Live Nation CEO Mike Rapino said his concert promotion business would like to have one, too.
The Journal focuses its story on Miley Cyrus/Hannah Montana tour, where the price and scarcity of tickets purportedly has parents in a rage; a Kansas City councilman is making vague threats to do something about the problem. (Richard Blumenthal, are you on top of this?) But ticket buyers shouldn't blame concert promoters or resellers - they should blame themselves (or their kids) for driving up demand.
The top face value of a Hannah Montana ticket was $63; the average price of a Hannah Montana ticket on StubHub is $237 -- more than the Police, Genesis, or anyone currently on tour. Obvious solution: Increase the face value at the start. Rock bands and some Broadway shows have already started doing this by offering at least a portion of their seats at nosebleed prices; the moves tend to generate plenty of headlines, but not that much sticker shock. People who really, really want to see Neil Young in L.A. will pay $257 a pop (and that money goes to Neil Young and the concert promoter, not a scalper), and those that don't pay less, or stay home. No need to call the authorities here.
http://www.alleyinsider.com
The WSJ reports on the fascinating court battle between IAC's Ticketmaster and RMG Technologies, a Pittsburgh company that runs TicketBrokerTools.com, a scalping/reselling service. IAC says RMG has created bots that can outsmart Ticketmaster's "captcha" boxes and allow it to buy up huge blocks of tickets. It then resells them at a steep markup. RMG says it's not using bots, but says what it is doing is perfectly legal.
The Internet has transformed the aftermarket ticket business, and everyone wants in. In January eBay bought Stubhub for $310 million, and Ticketmaster has its own entry, dubbed TicketExchange. Last month Live Nation CEO Mike Rapino said his concert promotion business would like to have one, too.
The Journal focuses its story on Miley Cyrus/Hannah Montana tour, where the price and scarcity of tickets purportedly has parents in a rage; a Kansas City councilman is making vague threats to do something about the problem. (Richard Blumenthal, are you on top of this?) But ticket buyers shouldn't blame concert promoters or resellers - they should blame themselves (or their kids) for driving up demand.
The top face value of a Hannah Montana ticket was $63; the average price of a Hannah Montana ticket on StubHub is $237 -- more than the Police, Genesis, or anyone currently on tour. Obvious solution: Increase the face value at the start. Rock bands and some Broadway shows have already started doing this by offering at least a portion of their seats at nosebleed prices; the moves tend to generate plenty of headlines, but not that much sticker shock. People who really, really want to see Neil Young in L.A. will pay $257 a pop (and that money goes to Neil Young and the concert promoter, not a scalper), and those that don't pay less, or stay home. No need to call the authorities here.
http://www.alleyinsider.com
AGs: Parents Have Inalienable Rights To Hannah Montana Tickets
Peter Kafka | October 8, 2007 10:00 PM
Last week we suggested that expensive Hannah Montana tickets were a result of market forces, not criminal behavior.* We appear to be in the minority on this one. From Billboard.com:
Missouri Attorney General Jay Nixon last week sued three ticket resellers on charges they violated state consumer protection laws. Also last week, Arkansas AG Dustin McDaniel said he was investigating resellers in that state, as is Pennsylvania AG Tom Corbett. The attention from state legal eagles speaks to the huge demand for tickets to the 54-date Hannah Montana tour, which begins Oct. 18 in St. Louis.
Adding fuel to the fire are the core demographics being impacted -- children and their parents. "You're dealing with a mother/child dynamic here that can lead to a very upset child and a very angry mother, and that certainly exacerbates things," says Ticketmaster VP/assistant general counsel Joe Freeman.
We didn't know that certain "core demographics" had the right to demand lower prices on entertainments. We also don't know if we fall into any of the "core demographics" that qualify for government intervention on our behalf. But if we do, here's a brief list of things we'd like to pay less for. Andrew Cuomo, please take note:
• Starbucks grande skim latte
• Santa Fe salad from Chopt
• Time Warner Cable's Cable/Broadband/Phone "triple play"
• Two-bedroom apartments in Boerum Hill, Brooklyn.
Related: Why Hannah Montana Should Sell $200 Tickets
* We also wondered if Connecticut AG was aware of the situation. Of course he is! From MTV.com:
The situation was no better in Connecticut, where there were also plenty of upset fans. That state's attorney general, Richard Blumenthal, blames the fact that the state did away with its scalping laws. "Consumers are now at the mercy of ticket scalpers who can corner the market on tickets and then exercise monopolistic stranglehold power on the prices that tickets are sold," Blumenthal told local station WTNH.
Last week we suggested that expensive Hannah Montana tickets were a result of market forces, not criminal behavior.* We appear to be in the minority on this one. From Billboard.com:
Missouri Attorney General Jay Nixon last week sued three ticket resellers on charges they violated state consumer protection laws. Also last week, Arkansas AG Dustin McDaniel said he was investigating resellers in that state, as is Pennsylvania AG Tom Corbett. The attention from state legal eagles speaks to the huge demand for tickets to the 54-date Hannah Montana tour, which begins Oct. 18 in St. Louis.
Adding fuel to the fire are the core demographics being impacted -- children and their parents. "You're dealing with a mother/child dynamic here that can lead to a very upset child and a very angry mother, and that certainly exacerbates things," says Ticketmaster VP/assistant general counsel Joe Freeman.
We didn't know that certain "core demographics" had the right to demand lower prices on entertainments. We also don't know if we fall into any of the "core demographics" that qualify for government intervention on our behalf. But if we do, here's a brief list of things we'd like to pay less for. Andrew Cuomo, please take note:
• Starbucks grande skim latte
• Santa Fe salad from Chopt
• Time Warner Cable's Cable/Broadband/Phone "triple play"
• Two-bedroom apartments in Boerum Hill, Brooklyn.
Related: Why Hannah Montana Should Sell $200 Tickets
* We also wondered if Connecticut AG was aware of the situation. Of course he is! From MTV.com:
The situation was no better in Connecticut, where there were also plenty of upset fans. That state's attorney general, Richard Blumenthal, blames the fact that the state did away with its scalping laws. "Consumers are now at the mercy of ticket scalpers who can corner the market on tickets and then exercise monopolistic stranglehold power on the prices that tickets are sold," Blumenthal told local station WTNH.
Why Nokia Won't Beat Apple's iPhone
Peter Kafka | October 9, 2007 4:41 PM
We've been knocked in the past for being too hard on Apple's iPhone. We think that criticism is misguided -- we simply think that Steve Jobs' one-third price cut, two months after the phone's launch, indicates that demand was underwhelming. Regardless, perhaps this prediction will cheer up Apple fans: We're confident that Nokia's attempt to take on the iPhone will fall flat on its face.
Why? Because last week Nokia launched an ad campaign that knocks Apple for selling a "locked" phone -- see photo of a set of New York sidewalk posters below. We don't have strong feelings about whether Apple made a mistake here or not. But we do know trying to tackle Apple products by pointing out their supposed flaws is a non-starter. Case studies after the jump.
picture at >> http://www.alleyinsider.com/images/2007/10/09/nokia.jpg
http://www.alleyinsider.com/2007/10/why-nokia-cant-.html
We've been knocked in the past for being too hard on Apple's iPhone. We think that criticism is misguided -- we simply think that Steve Jobs' one-third price cut, two months after the phone's launch, indicates that demand was underwhelming. Regardless, perhaps this prediction will cheer up Apple fans: We're confident that Nokia's attempt to take on the iPhone will fall flat on its face.
Why? Because last week Nokia launched an ad campaign that knocks Apple for selling a "locked" phone -- see photo of a set of New York sidewalk posters below. We don't have strong feelings about whether Apple made a mistake here or not. But we do know trying to tackle Apple products by pointing out their supposed flaws is a non-starter. Case studies after the jump.
picture at >> http://www.alleyinsider.com/images/2007/10/09/nokia.jpg
http://www.alleyinsider.com/2007/10/why-nokia-cant-.html
dinsdag 9 oktober 2007
Note To Music Industry: It’s Time To Clean Your Own House
It is amusing to me that the recording industry has celebrated its first “victory” when it comes to prosecuting piracy. Last week, Jammie Thomas was ordered to pay $222,000 for illegal downloading of music. This amount is approximately ten times the median income for her community. I’m guessing the industry won’t see a dime — and I’m guessing the verdict won’t change the facts on the ground.
It’s a pretty safe bet that one of the biggest contributors to piracy is the industry itself. If you live in certain cities, you know that promo copies of CDs show up in used record stores long before the release date. All those freebies are pretty much turned over for better product or cash. And disks get passed hand to hand in hopes that “buzz” will be built for an upcoming release.
Mostly this doesn’t happen because most music that gets released on major record labels isn’t buzz-worthy. That’s another problem for another day.
BitTorrent (in the generic sense of peer-to-peer services, not specifically) watchers know that songs can be found in advance of official release. I think it’s safe to assume that much of this free stuff comes from the collections of music industry professionals. Maybe it’s just a modern version of the stealth (stealthy like an elephant, I mean) marketing I noted in the paragraph above. More likely it’s part of the culture.
Basically, I’m thinking that before the RIAA goes after consumers who won’t make enough money in the next decade to pay fines for really crappy music, it should clean its own house. You know what they say: piracy begins at home.
And Congress needs to stop pandering and start thinking. According to the Los Angeles Times, Thomas claims to own the songs she downloaded on CD. While this could and should be verified, it also raises a question we ponder frequently around here. Should it really be illegal to download an MP3 version of a song (or album) you’ve already legally purchased? Doesn’t legal precedent offer consumers a right to make a copy for personal use? Why is that we have turned the rights of consumers upside-down just because the music industry played its collective fiddles while the labels were burning?
And let us not forget that the industry has been downright multiple personality about how to get music to consumers. They pay lip service to the value of the content, but every day sees a new initiative. Pay for it, give it away free, ad-supported, non-ad-supported, use BitTorrent as a delivery mechanism, BitTorrent is evil. Consumers are understandably confused. The industry has sent more than a few mixed messages. Why should consumers be held responsible for knowing the rules when the music industry can’t maintain a consistent approach (”piracy is bad” is not a consistent approach)?
I have long believed that (most) people will pay for music that is easily accessible, in a usable format, and available at a reasonable price. I think the success of paid models like iTunes supports my theory. The hassle of going the piracy route is far outweighed by ease-of-use. At every possible turn, the music industry has made consuming music legally the most difficult of all choices — and that says something very sad about the state of music today
It’s a pretty safe bet that one of the biggest contributors to piracy is the industry itself. If you live in certain cities, you know that promo copies of CDs show up in used record stores long before the release date. All those freebies are pretty much turned over for better product or cash. And disks get passed hand to hand in hopes that “buzz” will be built for an upcoming release.
Mostly this doesn’t happen because most music that gets released on major record labels isn’t buzz-worthy. That’s another problem for another day.
BitTorrent (in the generic sense of peer-to-peer services, not specifically) watchers know that songs can be found in advance of official release. I think it’s safe to assume that much of this free stuff comes from the collections of music industry professionals. Maybe it’s just a modern version of the stealth (stealthy like an elephant, I mean) marketing I noted in the paragraph above. More likely it’s part of the culture.
Basically, I’m thinking that before the RIAA goes after consumers who won’t make enough money in the next decade to pay fines for really crappy music, it should clean its own house. You know what they say: piracy begins at home.
And Congress needs to stop pandering and start thinking. According to the Los Angeles Times, Thomas claims to own the songs she downloaded on CD. While this could and should be verified, it also raises a question we ponder frequently around here. Should it really be illegal to download an MP3 version of a song (or album) you’ve already legally purchased? Doesn’t legal precedent offer consumers a right to make a copy for personal use? Why is that we have turned the rights of consumers upside-down just because the music industry played its collective fiddles while the labels were burning?
And let us not forget that the industry has been downright multiple personality about how to get music to consumers. They pay lip service to the value of the content, but every day sees a new initiative. Pay for it, give it away free, ad-supported, non-ad-supported, use BitTorrent as a delivery mechanism, BitTorrent is evil. Consumers are understandably confused. The industry has sent more than a few mixed messages. Why should consumers be held responsible for knowing the rules when the music industry can’t maintain a consistent approach (”piracy is bad” is not a consistent approach)?
I have long believed that (most) people will pay for music that is easily accessible, in a usable format, and available at a reasonable price. I think the success of paid models like iTunes supports my theory. The hassle of going the piracy route is far outweighed by ease-of-use. At every possible turn, the music industry has made consuming music legally the most difficult of all choices — and that says something very sad about the state of music today
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