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

On-demand Streaming of Music on Social Networks and Blogs: this is the Next Radio!

Partly because of my general work as a Futurist, and partly because of my role as Co-Founder and CEO of MusicAPI provider Sonific I have been very busy analyzing social networks, blogs, and other self-publishing platforms, and their importance to the music (and media) business. I will be publishing the results as part of my new book (The End of Control), soon, but my summarized conclusion is that this is the birth of the next Iteration of Radio that we are witnessing here.  If you recall, Radio was first based on 'pirated' un-licensed content, too, unwanted and hated by the record labels and music publishers, since they considered it to replacing solid revenue streams (performances and sheet music, mostly) that they were counting on and did not want threatened (much like CD and download sales, today!). 

But then, 100s of stations were launched, Radio became something that everyone loved and used (yes... because it 'feels like free' ) and they all used whatever music that wanted without a definitive license (if any), and guess what: after ten years of just standing by and not giving their blessings the music companies  finally had to agree that Radio was, indeed, driving sales of music and that it should therefore be allowed to exist. The irony, of course, was that the labels did not even manage to get ANY revenue share from the radio operators; only the publishers did (in the US that is).  Would they have gotten substantially more if they had agreed on a revenue share right from the start; before those radio networks became the driving force behind music sales?  You bet!

So here is my urgent appeal to the record labels: license the social networks with a blanket,  full-length-track (streaming) revenue-share-based license NOW, and get your foot in the door before it jams up, and before they can successfully argue that you need them more than they need you. Mark my words: streaming music on-demand, fully interactive, fully-shared-enabled, full-length-tracks, will become a default setting on the social networks, regardless of the record industry's 'permission-denied' tendencies. And we are already talking over 220 Million people, 700+ sites and services, growing something like 250% every year. Billions of $$ in revenue shares from ads, upselling, bundles...  And we certainly wouldn't mind if you tried this with Sonific, first, either :)

Gerd on Fred Wilson who comments on: Rhapsody Hooks Up With MTV

An interesting view by the ubiquitous Fred Wilson.  Good stuff but see my comments below
Link: A VC: Rhapsody Hooks Up With MTV.

Fred Wilson:  I" think Rhapsody (or a service like it) is the future of music. It won't be long until we can connect to the Internet from anywhere and when we can, there will no longer be a need to have files stored locally on any device (ipod, computer, laptop, music server, etc). We'll just log into whatever music service we use, decide what we want to listen to, and the music will start playing. That's how it works in my home already"

My comment: agreed but this is precisely why we won't be able to distinguish between streaming and downloading any more.  All-pervasive wireless broadband will kill the idea of 'listening only' versus getting a copy / paying for a digital download. Access will trump ownership. Therefore, the labels must monetize ACCESS first and foremost, and only THEN the copies. Remember the roots of Rhapsody are in online radio, and imho that is what needs to be offered first: 'feels like free' on-demand streaming, based on community and advertising support, and only then move into ownership propositions.

Fred Wilson:  "...Offer a subscription plan that incorporates an eMusic style DRM free music download service. For those people who do want to continue to own music, Rhapsody should offer "sample and own' plan. For say, $20/month, you get unlimited listening plus 30 downloads a month. And Rhapsody will know what you are listening to and can recommend what those 30 downloads should be..."

My comment: yes, that would be nice, but people are just not going to pay $20 a month for digital music access - at least not at the entry level. $1 / week is more like it, and 'feels like free' is what we need to shoot for, imho. That means ad-support etc, or something like cableTV where we just accept that we are paying (and it kind of becomes automatic). I think Amazon will do this very soon and that will be a real problem for Real.  I love Rhapsody too but the labels have really screwed this up for a looooooong time.

On Fred's other points, I totally agree - I just think that, again, music needs to be more like a utility, like water, something that everyone pays for and everyone uses, but that does not create individual payment points everywhere. Based on this ubiquitous access to music, imagine all the stuff you could add value with, and upsell. Read this and watch these.

 

Cory Doctorow’s craphound.com - on DRM’s Potemkin (the BBCi player)

Cory hits it on the nail again - hope the BBC gets another go at it after this debacle, though.

Link: Cory Doctorow’s craphound.com >> Blog Archive � My column on DRM’s Potemkin Village for The Guardian.

RIAA's Newest Enemy: The Social Network | WebProNews

Good article - will comment on this subject later today!

Link: RIAA's Newest Enemy: The Social Network | WebProNews.

Illegal music downloads hit record high - Telegraph

A good read from the UK Telegraph.
Link: Illegal music downloads hit record high - Telegraph.

Some of my favorites:   "Four out of every ten social network users have music embedded in their personal profiles, rising to 65pc among teenagers. Russell Hart, chief executive of Entertainment Media Research, described this phenomenon as "the democratisation of the music industry... "Social networks are fundamentally changing the way we discover, purchase and use music," he said. "The dynamics of democratisation, word of mouth recommendation and instant purchase challenge the established order and offer huge opportunities to forward-thinking businesses."

My comment: You can say that again! Yet, I don't see a concerted move from the labels to just offer a default license for the use of streamed tracks on these networks, in exchange for a share of revenues. This sounds like a great job for the PPL, or Soundexchange - but once again, the only thing you hear from them is that they don't have the mandate for this, and on and on and on.  My prediction: on-demand streaming of each and every song will be offered, licensed or not (more likely, NOT, since there are already 50+ apps that do this without a license!), on all of these networks (and there are already approx. 750 of them, estimated to grow to over 5000 within 12 months), and if the labels think they can just deny this license by their usual 'permission not granted' approach, in order to extract larger sums of $ out of the market, they will just put another nail in their coffin. Because today, non-participation means that everyone just routes around you!

"There has been a significant increase in the preparedness to download illegal music by teenagers and people in their 20s," he added..With margins on CDs declining while the growth of legal downloads slows and piracy rises again, the music industry is under pressure to find better ways to distribute its content. John Enser, head of music at Olswang, said: "The music industry needs to embrace new opportunities being generated by the increasing popularity of music on social networking sites. Surfing these sites and discovering new music is widespread with the latest generation of online consumers but the process of actually purchasing the music needs to be made easier to encourage sales and develop this new market."

My comment: The biggest trend here is ACCESS REPLACING OWNERSHIP. People go to those networks and LISTEN before they will consider buying anything (IF the buying of digital music was even attractive which it is clearly not, right now).  And THAT needs to be monetized. Incidentally, that's what I am shooting for with Sonific..!

The summer of Facebook - some good reads on the Facebook phenomena

Link: The summer of Facebook | Between the Lines | ZDNet.com.
Jason Calacanis comments here     Scoble comments here

Fred Wilson says: "And I share Jason's frustration with Facebook. It's just not my world. The web is my world. Blogs are my world. Flickr is my world. Twitter is my world. Facebook aggregates all of those features, wraps a social network around it, and provides a turnkey solution. It's better in many ways. But when you make it easy, you get overload. And that's what Jason is facing. And that's what I am facing..."

There may be such a thing as TOO MUCH ATTENTION - I have not made up my mind yet and have just started to get into Facebook, so... let me know what you are thinking.

 

Will the iPhone blend?

Definitely not something I would do with MY iPhone (or my blender, either)

BBC iPlayer: A Flawed Gem : Digital-Lifestyles (alpha remix)

Link: BBC iPlayer: A Flawed Gem : Digital-Lifestyles (alpha remix).

Juicy review of the BBCi player... Death by DRM once again?

- 50 Best Websites 2007 - TIME

Link: - 50 Best Websites 2007 - TIME.

Good browse~   also, the 25 sites we can't live without

Technology News: File Sharing: Bringing P2P File-Sharing Out of the Shadows, Part 1

I made a humble contribution to this report at technewsworld (which is, btw, usually worth reading).... Link: Technology News: File Sharing: Bringing P2P File-Sharing Out of the Shadows, Part 1.

"In two years, file-sharing has the potential to be 100 times as fast and enabled on every single device, not just computers, according to Gerd Leonhard, CEO of Sonific.

"To some degree, P2P is a bit overrated -- USB (universal serial bus) and IM (instant messaging) are much more widely spread than P2P, mostly because industry players are sitting on top of ISPs," Leonhard told TechNewsWorld.

People are sharing wireless networks and kids are flocking to IM -- and possibly abandoning e-mail, he said.

"They're using Skype and IM; this whole sharing thing is going to be completely crazy with mobile wireless broadband," Leonhard said. "You have to license the network." Limitations should not be placed on computers and networks, he added.

"It has to feel like a free embrace, like water or electricity. ... There are much smarter ways of charging for service and content," Leonhard pointed out. "Initially, cable fees were $10; now they're $72, so the potential for up-selling is there." If the sharing stops, it may kill the music business, he said. "When the fan/user/listener stops engaging with the music, it's all over," said Leonhard. "Today, you urgently need a canvas for music not a one-way product (such as the CD)."