Gerd Leonhard's Blog on The Future of Music, Media & Entertainment

Good read: 'Off the record' (Robert Sandall | Prospect Magazine August 2007: In recent years, the economics of pop music have been upended

This is a great read if you want to know what's coming (and not only because I am quoted in it ;): 'Off the record' by Robert Sandall | Prospect Magazine August 2007

My favorite nuggets (quoted here cause I could not have said it better myself):

"Record sales as we know them are in long-term decline," says music business analyst Keith Jopling. "Whereas the wider music market—live, merchandising, streaming video and music social networking—is in rude health. After seven years of gradual change, we are about to see a major shift. Record companies are, at last, in a hurry to transform themselves into proper consumer marketing companies."

My comment: reminds me a lot of what Don Tapscott is saying in his book "Wikinomics": In 2006 the successful companies launched open access platforms while the losers were building walled gardens.  How true.

"...although Britons still buy more CDs per head than anyone else—2.7 in 2006—the market for recorded music is in rapid decline. In the first quarter of 2007, the market for the top-selling 200 CDs in Britain shrank by 20 per cent compared to the same period in 2006. In the US, CD sales in 2007 are down by 15 per cent, in France 25 per cent, in Canada 35 per cent. The German market, once the largest in Europe, is now no bigger than that of the Netherlands..."

My comment: Boy, is it URGENT to sell access not copies. Even a blind person can start to see this now. License ACCESS. Share revenues. Read Muserati!

"...Rather like the "Home Taping is Killing Music" campaign mounted by record companies in the 1980s, the arrival of illegal file-sharing coincided with an increase in legitimate sales of recorded music in the three largest markets: America, Japan and Britain. This supported the file-sharers' defence that their activities were no more harmful to music sales than the arrival of free radio airplay in the 1930s..."

"A rediscovery, or a renewed appreciation, of the communal source of music-making—and listening— must lie near the root of this upending of the music business. As personal stereos and MP3 players have grown in popularity, so has an appreciation that music isn't just something that goes on between your ears. The guitarist of the American hardcore band Anthrax expressed this rather neatly: "Our album is the menu," he explained. "The concert is the meal."

My comment: nice bottom line. I should start using that. Menus are free, meals are not.

blogs are not important individually but in aggregate are powerful on Flickr - Photo Sharing!

Great photo set from Lynetter (guy or girl... no idea ;) on Flickr.
and bulls-eye on the blog bottom line!

blogs are not important individually but in aggregate are powerful on Flickr - Photo Sharing!.

“Blogs are not necessarily important individually, but in aggregate they are massively powerful. The "blogosphere" pulls together what millions of talented people around the world are discovering and thinking. Collectively, blogs enable us to collaborate to filter and uncover the most worthwhile news.... the world of blogs allows makes visible our collective stream of consciousness”. Quote is from www.rossdawsonblog.com/weblog/archives/2007/01/techmeme_a... Image from Flickr CC www.flickr.com/photos/thomashawk/53084039/ thanks again to Thomas Hawk

Rags's Soapbox: The New, New Music Industry

Well done, Rags. Couldn't have said it better ;)

Rags's Soapbox: The New, New Music Industry.

"The music business has been transforming before our eyes. Many players in the industry are struggling to survive amidst the tectonic shifts as the industry transforms itself for the digital age. And yet there has never been more demand for consuming music, and the ability to satifsy that demand, as there is today. The events of the past few weeks point to an acceleration of change that promises to make 2007 a landmark year in the music industry....."

Music Sales2.0: It's not about getting people to BUY, first, but about Getting Interest -- Attention is Cash!

One of the things that seems really paradox and bizarrely 'retro' in the music industry (well, yes, there are a few others, too :) is its utter obsession with a unit-based, sales-centric, and productized value system and its related economics. Buy this record. Download this song. Get a copy...  This ancient yet persistent paradigm and mindset results in a constant repitition of the seemingly most urgent question: with all this digital stuff, how can I get people to actually BUY my music?  In other words, the thinking is that the buying is a different story than the discovery. Well - it is NOT.

The reality is - and some of you may find this refreshing, others may think it's Silicon Valley New Age geekdom personified - that it's NOT at all about selling something at every turn, and putting a BUY button everywhere.

In reality, I think it's all about this question: "How can I interest you in my music / band / artist?" - it's the process of getting interest from the right people, getting them to pay attention (literally, I believe, attention IS money), engaging an audience, creating value for and with and thru them (yes... those click-trails have huge value; some people argue that the users ARE the content, too).

Only then, AFTER all of this happens, is where the 'buy' button comes in, where you can put some sort of tollbooth, where the wallet comes out. Let's not confuse the issues, therefore: before telling people that, hooray!, now they can buy my music, they must be interested, engaged, open, and ready - and that, in my mind, is where most of the music2.0 applications and services come in. Create demand, capture interest, collect attention, drive exposure - THAT is the mission. Selling is just a consequence.  Focus on getting interest, then enjoy the results. 

This requires, of course, that so-called record companies do not just make $ from the SALE of a copy (ouch): after all, if that was the case, it would not participate in 90% of the monetization that occurs after a band finds its audience and gathers interest, and builds TRUST with its audience. It's about providing access not selling copies (repeat after me). Dinosaurs of the record business.... take note. Switch to a full-service, 360 degree music company, NOW, be bold, or see your importance dwindle faster than you could possibly imagine. You have 12 months to get on this train - never mind driving it.

And do keep in mind that in the very near future, getting attention (i.e. views / listens/ impressions / clicks) literally and actually will translate into real $, since the presence of a flat rate for music (which is absolutely inevitable if we will still want anyone in the world to actually pay for music) will mean that anyone that has interest in my music can just click the 'add' or 'get' button, and, voila, I've made a sale.  Exposure and discovery leads to income. Simple. Right?

Users converging with creators: the rise of the Usators, the advent of distributed selection, and the attention economy’s impact on music & media commerce. Gerd’s Bottom Lines and Predictions May 2006

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Users converging with creators: the rise of the Usators, the advent of distributed selection, and the attention economy’s impact on music & media commerce – Gerd’s Bottom Lines and Predictions May 2006

May 15, 2006

Faced with the seemingly endless number of the subjects and issues when talking about the Future of Media, I recently wrote this short essay in an attempt to summarize the really important stuff, to focus on what really matters and to describe which trends and developments I think will have real impact.

1) The advent of usators: not just receivers but also senders. During the past 9-12 months, some of the people formerly known as users or consumers are now becoming creators, too. What’s more, they are themselves becoming content, too. As evidenced in Youtube, Flickr, Myspace, Delicious, Pandora, Last.fm, LinkedIn and many other so-called Web2.0 ventures, many consumers of digital media are no longer just receivers - they may also become (re)-senders of content. This phenomena, of course, has vast consequences for broadcast media, in particular – Radio and TV will never be the same (read how the BBC wants to deal with this!). Consequently, the very definition of ‘content’ – and yes, the underlying traditional copyright mantra - is changing, too; being creative seems to be no longer reserved for expert producers or ‘professionals’.

Some users now become usators (btw: a term I invented, solely for lack of better words), themselves producing content, remixing and mashing-up content - in fact, by doing this, they kind of become content, themselves, since they create their own values in this system, simply by the very fact of their participation (think EBay, Skype, myspace et al). If feels like the emergent ‘art’ of tagging, book-marking, collaborative filtering and online profiling is becoming just ‘another type of content’, one that would obviously not even exist without the users being in the system. Suddenly, media that engages and involves the users - i.e.  that broadcasts not just for, but with or even through them- has a lot more momentum than one-way, top-down, or centrally-served media ever had. Myspace compared to MTV, YouTube compared to CBS, Boing-Boing compared to Reuters, Wikipedia compared to the Encyclopedia Britannica.

Media is now also 2-way, interactive and non-linear, with many new gradients between being a ‘producer’ and being a consumer - and ‘also’ is crucial word here since these developments are not really replacing Media1.0 as we know it: rather, these are shaping up to be additional options for the user, making for a larger menu to feast on. However, they do severely cut into the advertising revenues of ‘old media’ which is certainly a major concern and source of headaches for many media companies– but more on that a later time.

The result: content is king, but since ‘content’ now also implies the User as Content – in other words, the Usators’s added value creations, we are facing a circular debate here, so this is really a moot argument. The bottom line: engage your users the best you can, and turn them into yet another tier of content, and you will do well.  Think professional media > pro-sumer media > amateur media, all next to each other, and interwoven in many new offerings such as DVDs, TV, and on-demand. 

Prediction
The BBC will swiftly emerge as global media powerhouse by integrating Usators into their programming, across the board – and not just in the UK. A uniquely credible, trusted and truly global brand, the BBC will continue to blur the line between public and commercial broadcasting, and will be the first broadcaster to also be a one-stop digital media reseller.

2)  Distributed Selection is around the corner.
User empowerment, beyond Darwin’s wildest dreams. Now, in parallel to the professionals, the users and usators can also be the ones that decide on what’s hot or not: fast and innovative user rating options, digital reputation schemes, tagging, bookmark sharing, and blogging in general all drive this new trend higher and higher. And again, it’s not like the role or importance of professional programmers or editors is diminished, at all - it is just being supplemented (and therefore admittedly pressured) by another type of editor – the mass of people that may spend 5 seconds leaving a quick comment or tag. While I may not entirely subscribe to the ‘wisdom of masses’ theory, here, btw, but in music, in particular, I see solid value in averaging user ratings and tags – after all, this is how companies such as Gracenote have created a lot of powerful data.

Many of the what I call ‘next-generation music companies’ will be based on the belief that giving the users any and all power means that they will give it right back to you, in form of loyalty and support. In the very near future, these newcos will use public rating and tagging tools, and ‘conversation-metering’ to find out what’s out there, where, and why, rather than trying to tell the listeners what they think they should pay attention to. A&R people will once again truly listen to the network buzz, and the art of ‘metering the buzz’ will be just as important as ‘having an ear’ for the music. We will see a whole new generation of music companies sourcing their acts from and in the Net, period – and this will, of course, be in close interaction to what happens in real-life, because the Net will very soon simply become all-pervasive reality, like water or electricity.

Prediction: new artists and bands will be ‘born and raised’ on digital networks and on the respective streets and stages around the world. Many fans and eager online talent scouts will do the work of 1000s part-time A&R (*artist & repertoire) managers.

Google will charge new bands to be found and heard by the ‘right’ people.

3) Not getting distribution but getting attention is what matters.
Having Distribution (or, in Radio, a frequency slot, or owning a cable or wireless network), is no longer a big deal, but being good at getting, retaining, and converting attention is. If you still think that simply having a network of retailers and outlets, or a popular radio frequency, or a high-powered cable network, or a highly-priced wireless license is going to make you king of the hill, by default, then… think again, because today, everyone has distribution – and many of them are using your expensive networks for free.  Now, it’s neither only owning the network nor only owning the content that would make you king, now it’s what actually happens within, on, through and via your network, or with your content. Read: the conversations, the interactions, the relationships - in other words, getting and retaining attention.

We are catapulted into a world that is no longer based on content or on distribution, but around content that is already distributed by default. In a way, we may have come full circle, back to what it used to be before there was any way to record and mass-distribute media: the experience is what matters, the meaning, the context, the relevance, not just the pure offering, in and of itself. What music is remembered without it’s context, it’s time and place?

Attentioneering
Marketing is therefore evolving into ‘attentioneering’. New companies will pop up that will have their ears to the ground, and that will help ‘the creatives’, the media producers and owners to reach their users / usators by snagging their attention, at the right time and in the right place. I predict that media companies and creators will actually pay people to pay attention to them, i.e. users will get paid to download a track, watch a movie, play a game. This will be a rather bizarre but inevitable reversal of the ludicrous RIAA witch-hunting we are still witnessing today: download our music, talk to us, and we will give you a lot of good stuff for free.

4) In a much faster, more eclectic, and infinitely more diverse world where previously separated forms of media increasingly converge, a much shorter term of copyright is inevitable.

Look around you: our world is becoming a very mad place of seemingly contradictory trends that are happening at the same time. For example, nation-states or purely national concerns are starting to matter less and less, but at the same time, quasi-national ‘tribal’ or shall we say communal concerns such as energy, health and the environment are becoming equally important to people no matter where they live. Life keeps speeding up at a dizzying rate, and the media companies of the future simply won’t need copyright terms of 75 years beyond the life of the author - we will have 8-15 generations of media users behind us by then, and plenty of money can be made from 25-30 years of exclusive ownership protection, I reckon. As content creators, writers, composers, and artists, we just need to get used to very fast moving media phenomena that will only exist in a ‘moment’ (in overall terms), and ride those waves while we can; then move on to be part of, or create, the next one.

In this context, clearly, improved opportunity recognition is a vastly desirable skill; much like Clive Davis and Ahmed Ertegun had (have?) a good ear for great songs and artists, the new trend-spotters and ‘producer moguls’ will have a nose for creating instant media explosions that are not just music, or just film / tv, or just games, but will constantly cross-over from one sector to the other. Trend spotters and opportunity recognizers will be (behind) the new Trumps, Gates’s, Murdochs, Turners and Mottolas – look for new leaders to emerge that ‘simply get it’ and can smell a fit 18 months before it’s actually here. 

Prediction: Officially designated Futurists will become part of the strategy team within every major media company, within 12-18 months (I  certainly like the idea!).

5) Mass markets morph into a mass of niche markets. 
If you’re American and over 50 years old, you may remember when 63% of your fellow- Americans faithfully watched “Gun Smoke” on the tube – the peak of the united-by-TV feeling and the tube-driven national identity. In music, when looking at Neil Young, Santana, Elvis, The Rolling Stones, The Beatles and other major music brands with global mass market appeal, I deduct that in addition to their obvious genius their vast success was also due to a severe distribution bottleneck that simply did not allow ubiquitous and economic access to other artists, as well. In other words, not all music by all artists was equally available (as it is today !!!), and while these artist were (are) truly fantastic artists, the lack of strong, niche-market driven competition - or using a Chris Anderson inspired term, ‘viable longtail alternatives’ - that people could also listen to, is part of what really created the mass markets that the record labels loved so much and grew fat on.

Today, everyone’s taste is becoming more eclectic: many different kinds of food, new music from all over the world in an ever increasing melting-pot of styles, and the increasing global cross-pollenization of cultures is evident everywhere. The range of interest in media content now is as diverse as the crowd in a New York City subway car!   In the future, while we will likely still have mega-stars of some sort, the days of ubiquitous, global and long-lasting media dominators such as The Beatles, Elton John or The Rolling Stones are long gone – the world has simply become more complex than that. In my opinion, this is not due to a lack of good artists, as is often alleged; it’s simply a cultural development driven by technology - having more choices has unchained diversity, and therefore the $$$ are spend more evenly. Not a bad thing for the 98% that never made it to the top!

My predictions:
2006: the next hot music style is not anglo-made (i.e. from the US or the UK) – in fact, this may already be here… in the shape of Reggaeton?
2007: the first Chinese music star breaks globally
2008: so-called ‘world’ music makes up more than 7% of the total industry turnover

6) Media is Conversation, 2-way.
The Media of the future is not the monolog passed down by the ueber-wardens of (B)(H)ollywood, it’s not a sermon delivered from above, rather, it’s a conversation. It’s no longer all top-down, centrally-served, dispensed on a schedule, wrapped in remote-access-control-as-we-see-fit-software (even though.. some of it will be!).  It may not even be A&R’ed, either - it’s simply grown. It’s not just from ‘me the producer’ to ‘you the consumer’. It’s also an interactive process, an on-going, 2-way conversation, not a stale and linear product. And: who can pirate (as in ‘steal’) a process? Who could steal conversations?  Going forward, media companies are not just creators of content but also conversation curators, offering platforms for exchanges. This may mean that soon, the term ’broadcasting’ becomes as meaning as the term “record company”.

7) Marketing2.0
The burden is now on the media itself, i.e. what we create must be found worthy. It’s no longer the consumer that is subjected to artificial scarcity mechanisms such as record distribution, or some default advertising programs that he/she has to suffer through. Users and usators are no longer targeted with weapons of mass advertising, rather, they now decide and tell us what they want to receive, who they may ‘allow to find’ them. In fact, as evident in much of the old-style, quasi-military advertising lingo (‘targeting, penetration rate, launching a campaign…’) we must now no longer assume that we need to conquer the customer, to nail him while we can, to get his attention and squash him into submission i.e. get him to buy something they probably don’t need. This old view of media has all too often been the idea of the customer as some kind of elusive enemy that needs to be pounced on the very moment we can see him.

In the future of media, effective advertising simply consists of boosting the enablement factor that the user enjoys, i.e. maybe even giving him the tools to switch you off – handing control over, fair and square. Mass advertising will diminish greatly as mass media shrinks and shrivels and as media is both becoming unbundled (i.e. songs rather than CDs, and clips rather than shows) and re-bundled (i.e. included in access subscriptions and other services).

To finish this off, here are various predictions (more to come…)

Google will launch an application that allows you to program your digital radios, TVs and mobile services via epg.google.com: search, find, program, get – all in one go.

Skype will launch a service that will see band and artists paying consumers to download and ‘taste’ their music and provide ratings and feedback to them - many music fans will make a living as professional music raters.

CNN will offer ad-hoc, live video and image feeds from camera-phone equipped ‘stringers’ from all over the world.

A consortium of Asian telcos and wireless operators led by SK Telecom will offer $10 Billion+ per year to get a flat fee, all-you-can-eat license for music on digital networks.

Within 24 months, a compulsory digital music license will be tested in some European countries, followed by a pan-European scheme.

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Download gerd_leonhard_bottom_lines_predictions_on_the_future_of_media_may_2006.pdf

Why the major record companies will offer MP3s in less than 18 months

I  will go on the record and predict that finally, the pain will be big enough and at least one of the major record companies will cave in, during the next 9-18 months, and offer downloads in the MP3 format, i.e. the holy cow of copy protection will end up in the public's meatgrinder. Why?  Here are some of the reasons:

1) Because DRM is a fig-leaf and everyone knows it. Do you know any company that has made any money with selling DRM 'solutions', do you know any consumer that sees a benefit in DRM, and are there any half-way smart kids out there that do not know how to sidestep it? Is there other reason for Napster, Rhapsody and YahooMusic to use DRM apart from needing to placate the (major) record companies? Look around you: all DRM companies that have any sense of reality are either exiting the business or are becoming CRM2.0 (Customer Rights Management) companies, or they will cease to exist. DRM in its current form is a product of 'fear of change', plain and simple - what we need is smart software that empowers the customer, and paves the digital highway for superdistribution.

2) Because EMusic will kick their butts. EMusic is becoming the major force in the market place for some very simple reasons: the music plays everywhere, the price is right, and the site is very easy to use - in other words: it JUST WORKS!  Imagine that.

3) Pretty soon, it's either MP3 or APPLE / ITunes will own the market place, simply because right now, nothing gets off the ground that does not work with IPods (i.e. Napster et al). The windows-DRM'ed files don't work with many players - so which option is the one that is the lesser troublesome for the labels - going MP3 or playing second fiddle to Steve Jobs?

4) Digital radio (satellite, HD, and online) will supply such a huge amount of music, for a very low cost, that many people that have still bought CDs will start accepting the lack of on-demand options on these services, again, because they are so convenient and they simply work.

More reasons coming shortly!

Update: Phil Leigh has a good report "Digital Music goes mainstream" that fits right into this. Get it here

hypebot: Younger Listeners May Never Return To Broadcast Radio

Link: hypebot: Younger Listeners May Never Return To Broadcast Radio.

How true!

Copyright has become copywrong

Link: Star-Telegram | 12/11/2005 | Copyright has become copywrong.

Mark Cuban nails it once again!

Music Industry: once the PAIN gets big enough we will have... real CHANGE

I often get this question from people: how come - if things are so obvious and the opportunities are so clear - that the incumbents in the music industry don't JUST DO IT, and adopt all the new ways of using technology to grow the marketplace, and just get on with it.  Why continue selling 'music by the unit',  sue your own customers, and chill the market place in just about every possible way? 

Well, in my opinion, the answer is: The Pain is Not Big Enough Yet. When do people REALLY make big changes - usually (unfortunately) only when they are left with very few options, and the old way of doing things is TOAST, 4sure, and there's nothing to loose, and 'anything else would be better than what we have now'.  In my view, another 18 months and we're there; at the pivot point of 'Pain Versus Change" - see below.  In the meantime... prep the runway.

The rise of the ‘Culture of Participation’ …and why the music industry should pay very close attention to blogs, photo-sharing, ringtone-mixers, and social networking

By Gerd Leonhard Music Futurist, Co-Author of "The Future of Music"

Download this essay as pdf

Sept 8, 2005

Witness: blogs, mash-ups, online collaboration sites and services, social networking, online photo-and video-sharing, Google-Map-Archives, the tremendous growth of Wikipedia, Ourmedia.org and the Internet Archives, P2P webcasting, collaborative playlist sharing, and the countless new ringtone-creation tools …the list of participation-fuelled sites and booming 'personal media' services gets longer and longer, while 10s of millions of people are signing up just to be a part of something.
"Fan-built playlists and mixes are taking over the way people get their music" says Wired's Katie Dean in a recent feature. "Mix tapes and playlists are really the new container for music," adds Lucas Gonze, creator of Webjay, in the same feature. Is this the next big thing?

In a drastic departure from the good old one-way, top-down TV-‘culture’ of the past, we are now witnessing a seemingly ubiquitous trend to media forms that allow, or better yet, promote PARTICIPATION and SELF-EXPRESSION - and the music & media aka “content” industries are the first to feel it.

For the average yet somewhat web-savvy consumer, though, it seems that now that we do have access to pretty much any content anytime (whether legal or not) many of us are no longer satisfied with simply taking advantage of that fact and blissfully consume the content. Rather, now we actually want to BE PART OF IT, influence it, change it, and somehow play a more active part in it… or – ouch! – maybe even create some ‘content’ ourselves. Does this take us to some sort of California Tech-Geek Digital Hippie-ism: is every consumer also a potential creator or (worse) publisher? Is that were it’s going?   

Well, personally, I have some doubts that just giving people good, cheap and plenty production tools plus access to almost-zero-cost publishing and distribution mechanisms actually produces GOOD CONTENT (however you want define that), rather, I think it first and foremost creates A LOT OF content. Still, even if this empowerment trend does not (yet) truly boost the creation of mind-boggling new art, the mere POSSIBILITY of playing a more active role in content (re)-creation is certainly an exciting idea to many people, and probably will unlock some potential that may otherwise have gone unnoticed.

But, music may prove to be a different animal here: while the grassroots journalism that takes shape in blogging has already made a real tangible impact, and is very much on its way of changing the way the journalism business operates, I am not sure that the same thing will happen with music, anytime soon. While, conceptually, I like and support the ‘everybody can be a publisher, composer or writer’ – idea, deep down I have a hunch that so few people are actually gifted in these fields, and, personally, those are the ones I would want to hear and see, not the countless others that just maybe of interest. Who has the time? Often, the desired result is best achieved with some sort of smart, benign, and intelligent filter in place, i.e. a trusted third party that selects the best new music for me, or –maybe- some sort of human + machine +database intelligent engine that can emulate it, see Pandora, Soundflavor, Transpose / Goompah, Last.FM etc. MAYBE.

As to participation, let’s remember that back in the early days of the NSF, pre-Netscape Internet almost every user was most likely also a contributor to its exploding vastness and ever-increasing depth. Early ‘epicentres of participation’ like TheWell (now for sale) thrived on people participating rather than just being ‘information freeloaders’ which pretty much became the default scenario in the 90s. However, we are now at the point where many things that were invented in the late nineties, and that didn't quite 'make' it then, are becoming actual reality (witness the long and winding road of  EMusic – imho, a vastly under-rated success story in digital music), and this phenomena also brings us to the second  wave of the ‘the culture of participation’ – a phenomena that is changing entire industries practically over night, with the media / music / entertainment industries right on top of the s(hit)-list.

And the importance of the participation factor is even further amplified by that other crucial new paradigm of media consumption: empower your customers or watch them move on. Add that to “enable user participation or become irrelevant” and you have a nice stew of opportunities and challenges.

So, take a short tour with me. Even if you don’t subscribe to the possibly naive notion that everyone can be a writer, actor, musician, artist, entrepreneur or inventor, you still can't avoid noticing how the thresholds for at least trying to be a content creator are being drastically lowered everywhere around us. Everyone can now ‘make music’ using computers and various software programs (like it or not), and publish the results on a website, or set up his / her own online radio stations, right from the bedroom PC. Everyone can now be a writer and publish endless pontifications on their blogs (I should know ;) or even make you listen to them via podcasting (scary thought, as in my own case :).

No longer are we just contend in shooting cool photos or bleeding–edge videos, and showing it to our family or friends, we now actually want to show them to the world, and post them on Flikr, Webshots, Ofoto or Shutterfly for everyone to see!  And it’s not just because it’s so easy (it’s not, really ;), it’s also because we want to be heard and seen, make a contribution, and show ourselves, even without anyone’s approval or official authorization.

No longer do we take the ‘official’ and sanctified sources of traditional news for granted, instead, we find and subscribe to ‘our own’ news-channels by connecting to other people that focus on the exact same subjects or verticals that we’re interested in, and that seem credible or are otherwise recommended (witness the booming popularity of Boing Boing, InstaPundit etc). Out goes CNN, and in comes RSS. Never mind MTV, ClearChannel and American Idols – now people tune into podcasting!

No longer do we just listen to TUGOR (“the uniform, good old radio”), and take their remote-controlled programming choices for granted, instead we build our own radio stations on the Internet, and swap playlists, like-it links, URLs and profiles. Enter Mercora, Myspace, Grouper, last.fm, Launchcast...

No longer do we just accept one opinion or one point of view as ‘real’ just because that’s all we can get right now, instead, we now ‘google’ everyone and everything, and find others that may have something to add that sparks our interest.

No longer do we only read the classified ads to meet new people, make business connections or personal contacts, or find out what’s happening - instead we become an active piece of the puzzle, and contribute to the formation of virtual meta-conventions where people meet each other for kinds of purposes. Witness Myspace, Friendster, ASmallWorld, Match.com, HotOrNot, Ryze, LinkedIn…

No longer do we just listen to music, we now are starting to remix it the minute we have downloaded it; we morph, change, tweak and edit with great enthusiasm the very minute it has turned up in its original version.  We use samples and snippets of anything to make a personal and / or a Fashion or Style Statement, e.g. by mass-customizing our cellular ringtones – already ringtones are an estimated $4 Billion global boon for music publishers and record labels. Look at Garageband, Minimixa, DigImpro, Hyperscore, and many others – watch for those kinds of tools and services to go through the roof in the next 5-10 years. Tune-In, Participate, contribute, share, publish!!

Good-bye, one-way-content funnel and good old ‘linear’ copyright, and welcome to the chaos of participation  that will make the music  business 3x as big.

Digital trust, reputation and credibility are now starting to be real factors; something that was once reserved to MIT-geeks, hackers, and assorted ‘get-a-life’-ers. Now, one’s reputation on EBay may be just as valuable to people than their ‘real-life’ reputation at their favourite bar. This, to me, is a sure sign that the distinction between ‘online’ and ‘offline’ realities is starting to blur.  In fact, I would venture to say that within 5-7 years most ‘digital natives’ in most rich countries won’t even comprehend what ‘offline’ even means (except for, hopefully, for describing a frame of mind).

In music –as a direct side-effect of the exploding Culture of Participation and the drive to self-determination that fuels it – WE THE USERS now determine WHAT, WHEN, HOW and WHERE we listen to music – and we egg others on to do the same.

There goes Radio (at least in its old form) and in comes time-, space-, and device-shifting.It is becoming clear that the more people are ‘connected’ to digital networks more often and at ever decreasing costs, the more people want to PARTICIPATE and be involved – it’s that simple. We are therefore leaving something behind that basically was the foundation of media for the past 50+ years: the one-way communication-mode that made THEM (the media companies) the producers, creators and rightsholders, and US into the consumers, buyers, ‘users’ and ….couch potatoes.

Entertainment devices used to be receiving devices, now they are transceiving and transmitting devices – we no longer just ‘get’ stuff, we also change it, forward it, share it, and THAT is where the growth of those industries lies. This empowerment is a huge shift the music industry is just starting to embrace – and as we can see in other businesses (amazon, ebay, SouthWest Airlines, EasyJet, ETrade…), giving the power to the USER is what makes real money, today (on that note, check out the BBC’s creative archives initiative in this context).

My humble success-recipe for music & media companies: empower the user and promote participation, and you’ll do well. 

Feel free to comment, below! 
Cheers, Gerd

Please note: I draw from other as others may draw from me (hopefully)! This particular essay is inspired by a feature I recently received via email from Business2.0; I believe it was Erick Schonfeld using the term ‘culture of participation’ that egged me on to look at this a bit closer. Thanks Erick, keep up the good work! Also, while working on this article I ran across another great feature on Wired.com, “We are the Web”.

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Non-commercial re-use / re-print permitted if attribution to source is given (“Gerd Leonhard, Music Futurist www.musicfuturist.com)

Even in MUSIC, the power is moving to the edges of the network!

While reading an interesting feature on Motley Fool.com (Stocks that will rock your world), I realized a few things that I wanted to share with my blog readers.

In music, it seems like the 'power' is just now starting to move to the EDGES of the network, rather than coming from the middle, or the central point. To explain, network centers are huge content channels such as MTV/ VH1, ClearChannel, Infinity, the BBC etc etc, and of course the Major Record labels and large retailers, as well as ITunes and maybe even Rhapsody and MSN. Network "edge-dwellers" are companies like Garageband.com, MySpace Music, XM, Sirius (soon to move into the center?), KPFA, Hearts of Space Radio, Last.fm and many others. Podcasting, blogging and online networking are activities that happen on the edges of the network; they are largely unregulated and mostly a 'bottom-up' phenonema.  Supernova's Kevin Werbach has some good thoughts on 'Edges of the Network", btw - the graph on the left is also inspired by Kevin (be sure to check out his blog for more details).

Now, IMHO, the bottom line is that digital technologies are going to be doing away with the "It Must Be Huge" to-be-successful -requirement that was a given until just 5 years ago. Now you can publish your music and -PROVIDED YOU CAN GET PEOPLE'S ATTENTION- you can actually sell direct from your bedroom, or should I say basement studio. Granted, the numbers are not large, yet, and it barely merits a big-company CFO's attention, but more and more bands are starting to 'get it' and are flocking to places 'on the edge of the network' rather than trying to be in the center. Remember - that's what I used to ALL be about: get onto MTV, play at Glastonbury, get on the cover of Rolling Stone - in other words: be in the CENTER, be FAMOUS. Rolls Royce or Bicycles. Now, a whole new possibility opens up for artists and small labels: ife on the Edge of the Network IS, indeed, economically FEASIBLE. Niche Markets CAN work. The much-lauded Long Tail in digital media makes it possible - just today, the Guardian UK picked up on this.. Myspace.com has opened a huge can of worms here [now here is one company to watch for - hope they don't go the way of Friendster :]; years after MP3.com some of the very same thoughts are coming back, albeit with a much more cut & dry feel but maybe with real staying power. Is the VC money indeed coming back, or is it just the we all have to come around a 2nd time to prove that it can be done and that all those whacko dotcom ideas were not entirely foolish? 

A bigger pizza makes more slices – and why the music industry is heading towards lower prices and higher values

U.S.Here's another bottom line: The real problem in the music industry is not file-sharing, piracy or lack of consumer interest in paying for music. Rather, it’s that the industry is WAY too slow in baking a bigger pizza. Rather, many incumbents are still obsessed with snapping up the same slices from under each other’s noses as quickly as possible. The bottom line is that we need to create a larger market, all-together – a market that has 9 out of 10 consumers buying music, not 2 out of 10 as is the case in the U.S.today.

And how would we do that? The answer is simple yet, of course, its realization is not: lower prices and higher value. Look at the airline and travel business, or at banking: the customer is truly becoming the uber-king, and demands constant value-upgrades for less cash. As I said before (even though I did not invent this catch-phrase;): content is king, customer is Godzilla, and service is King-Kong! If the music industry ‘leaders’ would finally get on with this we would see a significant lowering of CD and download prices (i.e. license fees!), and a flood of additional content that the users would get ‘for free’ – SonyBMG has started doing that with the dual CD / DVD idea, lately (but hey – where it goes wrong is that they want a higher price!!!). Imagine this scenario: if a CD costs $9 / Euro 7.50, and downloads cost between 10 cents and $1 (yes, sorry – liquid pricing is a MUST), who would bother with limewire, grokster and Kazaa? Better yet, if we could get 98% of all consumers to buy into a ‘basic music’ subscription on any and all digital channels (TV / cable, satellite, radio, net, mobile, wifi…) for only $3 / month we would all of a sudden have a HUGE pizza that would have more than enough slices for even the hungriest record label, music publisher, producer, agent or artist. Music Like Water, once again. Do I hear you mumbling ‘pie in the sky’… dream on?  Well, I don’t agree: consumer electronics companies, internet service providers, telcos, advertisers, and wireless companies will make this happen sooner than you may think – their combined market power is 150:1 if compared to the music industries. And all of this will be great news to the artists, writers, producers and composers since exposure always leads to discovery which always leads to revenues, dime after dime. And then, we can finally and for good shed the idea that making-money-making music simply means selling copies of songs (whether physical or digital) – there is a lot more to this business than that. Think branding, sponsorship, licensing, advertising, merchandising and of course performance royalties.  And finally: “I can't understand why people are frightened of new ideas. I'm frightened of the old ones” — John Cage

a different view on making videos

wow (tx to Bill Evans (pho)

Closed system = closed opportunities

Cory Doctorow hits the nail on the head in this feature. " A word of warning to DRM-crazed companies, says the outspoken Cory Doctorow: somewhere out there is a competitor who will steal your customers with more open products".

I particularly like this part: "Now put yourself in your customer's shoes: are you going to buy the alarm clock where you have to pay your alarm tone tax every time you wake up in the morning? Or are you going to buy the alarm clock that lets you load your own CDs into it? Somewhere out there, there is a competitor of yours who will sell your customer a phone that lets him listen to his own music. And that company will attract more business at the expense of companies that treat their customers as wallets to be held open for the music industry".

You could argue that, for example, TIVO was once that kind of 'just do it' company, and now that it's less 'cutting-edge' and daring, its business is quickly evaporating... or maybe it's just a 'window closing'?

The more you give the more you get

Just read an interesting study that showed that books whose publishers allow AMAZON users to browse the books online before buying them (the 'Search Inside' functionality), sell an average of 9% more than the others that do not have that feature. I have followed this debate in the past, with publishers argueing that browsing allows the user to search for one particular thing (such as a recipe), find it, print it, and then... never buy the book. That eternal fear!!  Thos logic is plainly defeated by the fact that these books sell more copies, I would think. imho, yet another data point for my BOTTOM LINE that OPEN content systems will always sell more content. Well, in that spirit, my new book, The Future of Music, can be browsed on Amazon, as well as on our own site (more pdfs to come, too). On the debate of 'search inside the book' - or not... go here for more fuel.