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

Social Media White Paper “Tracking the Influence” (Factiva of Dow Jones)

Good read
Link: Social Media White Paper “Tracking the Influence” (Factiva of Dow Jones).

Facebook and me

First, I think the way they describe themselves is great (nice and succinct)

Second, I have started using it more often, and can now be found here, and have been adding quite a few more contacts (but not all the 7800 from database - don't worry), and the liquidity on this network is absolutely amazing - connections and re-connections are made at blinding pace.  Not quite as 'serious' as LinkedIn (where I only add people I know really well, and in person i.e. face2face) but quite useful nevertheless.

Third, Sonific (my music widget / MusicAPI company) will shortly be launching a very cool music app for Facebook. We are very excited about this ... this will really make a splash. so... stay tuned.

Update: my Facebook badge. Yeah!

Olswang report on the Impact of Social Networks on Music Commerce (this is a must read if you want to know about The Future of Music"

I have had this pdf on my desktop, marked in red, for a long time, but I finally got to dig into it, today. This is an absolutely brilliant piece of research (albeit with a fairly small # of UK participants, about 1700 I think) that very clearly spells out where the Future of the Music Industry is taking us: licensing access, revenue sharing, ad-supported monetization, diversified revenue streams, complete music+video convergence, user-generated playlists and viral syndication, etc (you've heard all that from me before I reckon). This Olswang stuff is so good that I will show most of it on this blog, and comment on it (annotated by: Gerd comments).

This report is also a total argument for the fact that my own Music Widget / MusicAPI company Sonific is right in the sweet spot of things - and that's always a good thing, as well ;).

So here it goes:

Olswang: "Social networks are changing the accessibility of music, helping it to become more democratic and utilitarian and this, according to the 2007 Digital Music Survey released today by music and entertainment research specialists, Entertainment Media Research and law firm Olswang, is having a profound impact upon the discovery and purchase of music, with far-reaching implications for the music business"

Gerd comments: you can say that again. Streaming full-length music tracks (selectable by the USER without any restrictions whatsoever) is now becoming the default on social networks and blogs. Basically - and I said this 2 years ago - THIS IS THE NEW RADIO - and it should be licensed like radio (albeit for a  much higher share of revenues).

Olswang: "The Impact of Social Networks on Music Discovery & Purchase The Digital Music Survey is currently in its fourth year and is an independent survey of 1,700 UK consumers. The research indicates massive increases over the last 12 months in usage of sites containing music such as YouTube (up 310% to 53%) and MySpace (up 57% to 55%). Amongst teenagers the incidence is huge – 77% have used MySpace and 69%, YouTube. For users of these social networks, music is playing an increasingly important role. For example, 39% of social network users have embedded music in their personal profiles (65% of teenagers). Approximately 70% do so to show off their taste and half do so to reflect their personality. What’s more, it seems to work as almost 60% agreed that they could tell a lot about a person from the music in their profile."

Gerd comments: embedded music will indeed be the #1 driver of how music is being found and purchased, going forward - give it another 12 months and EVERYONE will know what a widget is.  Imagine an Amazon.com MP3-only downloading offer that is based on a flat-rate and / or bundling deal that 'feels like free' (remember Amazon Premium Shipping)...? that is on the receiving end of a click-thru from 500 Million social net users. It will no longer matter where and how the purchase happens, and whether there is any friction that can shore up the old scarcity paradigm, but WHO GETS THE CLICKS - getting and retaining Attention is the new mission; distribution is a default!

Olswang: "The survey findings strongly suggest that social networks are also impacting music discovery. 53% of people revealed they actively surf social network sites to discover new music and artists and two-thirds of all users regularly or occasionally discover music that they love on their preferred social network site. The incidence is higher still on MySpace (75%), Bebo (72%) and YouTube (66%)."

Gerd comments: this is indeed a huge marketing opp for the record labels, and one they need to embrace a lot more than they have until now. Forget the idea of fixed per-stream fees - being in the pipeline is what matters, and getting more people to pay attention is what will drive music commerce.  Don't abolish the toll-booth - just move it down a bit further. PULL don't Push.

Olswang: "Crucially, the discovery is translating into changing purchase behaviour. 17% of social network users claimed it has a “big/massive impact” on the way they purchase music and 30% state that they “regularly/occasionally” buy CDs or downloads of music that they discovered on a social network site. This rises to 36% of MySpace users. However, more needs to be done to make purchasing this music easier, with 46% of respondents agreeing with the statement “I wish it was easier to purchase music that I find on these sites.”

Gerd comments: I think it is absolutely, positively and shockingly pathetic what most of the record industry has done so far to harvest the fruits of this enormous interest in music. People are TOTALLY interested, but -until now- the industry has done its utmost to  screw it up with impossible commercial terms, copy-protection obsession, format wars, territorial restrictions and licensing turf wars. Ouch! Talk about a dysfunctional ecosystem - this is winning the grand prize.

Olswang:" Russell Hart, Chief Executive of Entertainment Media Research commented: Social networks are fundamentally changing the way we discover, purchase and use music. The dynamics of democratisation, word of mouth recommendation and instant purchase challenge the established order and offer huge opportunities to forward-thinking businesses.” John Enser, partner and head of music at Olswang, says: 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."

Gerd comments: Amen. Are you listening? This is your future!!! 

I am going to stop here as you can read the rest on the Olswang site, but here are a few more morsels - couldn't have said it better myself: John Enser, partner and head of music at Olswang, says,  "As illegal downloading hits an all time high and consumers' fear of prosecution falls, the music industry must look for more ways to encourage the public to download music legally. Variable pricing models and DRM free music, which would allow consumers legally to transfer music to other devices, were popular among respondents and represent new ways of enticing people away from breaking the law."

Finally, a few more stats that support these arguments (most are from emarketer which always has good stats on these matters). And visit my new Kyte channel.

Data Junkie: The world map of social networks - Valleywag

Some very cool stats here. Media companies take note: this is your new audience.
Link: Data Junkie: The world map of social networks - Valleywag.

Social Networks Around The World: Survey Social Networks Worldwide: the Results

Some good stats here. Clearly, online communities and Social Networks are THE major growth engine for media, today. And music communities are the NEXT RADIO.

Link: Social Networks Around The World: Survey Social Networks Worldwide: the Results.

9 Ways to Build Your Own Social Network

As usual: Techcrunch Rocks!
Link: 9 Ways to Build Your Own Social Network.

eMarketer.com - The Crowded, Crowded World of Social Networks - The rise of social networking is driving advertising2.0

"The lead players, MySpace and Facebook, continue to perform strongly, and will account for 72% of all US revenues in the category this year," says Debra Aho Williamson, eMarketer Senior Analyst and author of the new report, Social Network Marketing: Where to Next? "Beyond that, hundreds of new social networking ventures are coming online and existing Web sites are also adding social networking capabilities."

eMarketer.com - The Crowded, Crowded World of Social Networks.

And what's even hotter? Music + Social Networking....

InterCasting Corp: What is mobile social networking?

Good stuff here! InterCasting Corp: What is mobile social networking?.

http://mt.intercastingcorp.com/cgi-bin/moveable/mt-tb.cgi/100

Highlight:  "This isn’t just a trend on the internet. This is an evolution in communication. What started with real-time point-to-point voice sessions via the telephone has turned into multipoint-to-multipoint asynchronous multimedia streams via devices with massive processing power...."

Social Networking and Music: a perfect couple

eMarketer.com - Is It Time for Marketers to Enter the Social Whirl?.  This emarketer feature is very interesting because it points towards a future where music can be PACKAGED INTO the social networks such as myspace or facebook - and I don't mean just the streaming stuff, but also Podcast and MP3 downloads -- and the ads could pay for it all, IF the labels can finally get around to license their music that way. How would it work: first, create demand by offering free streaming previews that the users present to each other (yes.... it has to be free to be viral); then, further wet their appetites by offering moderated podcasts in return for harvesting email addresses, then, offer DRM-free tracks for downloading as part of a 'myspace-gold' package....  now, take the whole thing to the world outside of myspace and friendster and classmates and bebo and hi5 and facebook, and -wham- you have a huge new revenue opportunity for selling music.

"eMarketer estimates that this year experimenting marketers will spend $280 million on social network marketing in the US, and an additional $70 million in international markets, mostly to create profile pages and sponsored promotions..."     sounds like a great opportunity for sponsored music downloads to me!

"People use social network sites to form connections with other people and bridge their online life with their offline life. And companies whose business is built on creating buzz need to tap into those connections in order to effectively market to tastemakers...."    This IS music marketing!!

How do social networks make money

As usual with the IHT writers, here's a good feature in the IHT talking about LinkedIn.com, Tribe, and Friendster. Personally, I like LinkedIn.com the best and think they will out-do Monster on many core functionalities. I have used LinkedIn about 50 times for making new connections and it worked out great about 70% of the time. I must say, though, that I have been very picky about WHO I connect with (only with People that I know in PERSON, really), so that seems like a key factor to me.