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

Print and Digital Need Not Compete - eMarketer Reports

Interesting article on emarketer - whether this holds true for digital music I am not sure.

Link: Print and Digital Need Not Compete - eMarketer.

"There should be no distinction between online and offline," he said. "There is no conceptual reason these days why marketers wouldn't consider using multiple media with campaigns."

A real cherry for record labels is this graph, for sure (types of advertising that causes people to go to websites):  Search Engines and Recommendation lead the way.  Think about that for a minute. And then think widgets. Syndication. Social Networking.

Web Users Now Spend Half Their Time Visiting Content, Far Outpacing Time Spent with Search, Communications and Commerce

Good stuff from the OPA.
Link: Web Users Now Spend Half Their Time Visiting Content, Far Outpacing Time Spent with Search, Communications and Commerce.

"According to the OPA's IAI, conducted by Nielsen//NetRatings, communications accounted for 46% of consumers' time online in 2003. A dramatic shift has taken place since then, with consumers now spending 47% of their time with content, compared with 34% four years ago. The 37% gain in share for content is followed closely by a 35% gain in share for search. However the total time being spent with search remains relatively low, accounting for just 5% of Internet users online time in 2007*. "The IAI has identified a very significant and sustained trend in where consumers are spending their online time," Horan said. "The index indicates that, over the last four years, the primary role of the Internet has shifted from communications to content."

Clearly it's no longer about allowing online content use, or 'not', it is about licensing it and turning it into revenue. Exciting times.

Now, the Clicking Is to Watch the Ads, Not Skip Them - New York Times (Advertising2.0)

This is a good feature that talks about what I like to call Advertising2.0

Link: Now, the Clicking Is to Watch the Ads, Not Skip Them - New York Times.

Here are some high-lights:

"The difference between “watching a commercial on a Web site and in your living room,” said Michael Jacobs, executive vice president and executive creative director at MRM Worldwide in New York, is that online is “an opt-in audience; you’re choosing to be there."

“The only reason we have any chance of being successful is transparency,” Mr. Droga said — that is, “if people know they’re being sold to, you can celebrate the sell.”

“It’s all about relevance,” said Chris McCumber, senior vice president for marketing and brand strategy at USA Network. “Consumers want to be entertained on their own time, on their own terms.”

Silicon Alley Insider: The Great Ad Share Shift: Google Sucks Life Out Of Old Media

Link: Silicon Alley Insider: The Great Ad Share Shift: Google Sucks Life Out Of Old Media.

My favorite quote:

"Traditional media executives are doing a superb job of milking cash flow out of shrinking businesses, but you can't save your way to prosperity".

Sounds kinda familiar, right?

Music Syndication - embrace the inevitable: Project Playlist, Seeqpod and... Sonific

Just as Sonific, my own company plying the Music Widgets turf, is about to release its new, shiny, fantastic, network-rattling music2.0- inspiring Playlist feature (check this blog to be sure not to miss that... next week!), this whole turf seems to explode (which is good for us, I think;): witness Fairtilizer, SoundPedia, Jamendo, Project Playlist, and now... Seeqpod. 

Apart from the rather odd name (hello, branding guys... what are you thinking?) it is quite an interesting app, see the players below; essentially searching MP3 files from whatever MP3 blogs are out there, and sucking the MP3s off them, and creating playlists that can be widgetized to anywhere.

Not exactly a new idea (see project playlist) but nicely ajax-ed and well-done.

So, I can't resist... here are 2 thoughts on this stuff:

1) this is essentially meta-distribution of MP3 files that have been embedded in 10s of 1000s of MP3 blogs around the world, i.e. it's feeding of their blog posts, their servers, their gray-zone legal status (and I say this with great appreciation - I love what they are doing!).

Currently, however, most of these MP3 blogs are kinda ignored by the actual rightsholders or shall I say the major record labels (since most of the indies do seem to like the mp3 blogs a lot), but THIS kind of super-distribution of those 'tolerated' MP3s will rattle their cages fairly quickly. Because, let's face it, this is essentially on-demand, interactive play of single tracks which they have always maintained is subject to a license fee.

I mean, yes, of course that idea is an illusion, too, but still: look at the recent Imeem - WMG lawsuit etc etc - and this is also, of course, the very reason why Sonific does not yet have a lot of current hit artists on Sonific.com.  We just don't feel like giving up a big chunk of our company, and some nice chunk of VC-provided cash (which we don't have, anyway) for the merely theoretical grant of rights to include some of their catalog that is  licensed based on a commercial deal that looks just about as bad as selling weekend trips to the moon (*no implied meaning that Imeem did suffer that fate - just talking about ourselves, here...)

But anyway, what do you think will happen if these guys (projectPL and Seeqpod et al) gain a real audience (meaning... millions of users and embeds in most social networks)?. Well, it's simple: the MP3 blogs that feed them - willingly or not - will get take-down orders; or rather, the top 3 blog services (blogger/ google, typepad / livejournal / vox / six apart, wordpress) that host most of them, will get take down orders for ALL MP3s that are hosted on their millions of blogs, and that will be the end of us enjoying things like fluxblog or hypemachine. I am not so sure these MP3 blogs should be, or are, so happy about stuff like Project Playlist or SeeqPod. Tell me if you know more.... (comment, below)

2) Now, as to the MAJOR LABELS, talk about facing a new reality: Super-Distribution of Music is HERE. NOW. You will not be able to plug these holes, and insist on up-front license fees for on-demand streaming or interactive radio applications like these. You can only PARTICIPATE and share revenues.  You need to fuel the fire not look for a firehose.  I am willing to bet you 100 copies of my book that if you were to actually license all those web-music-social-2.0 companies that want to use on-demand, interactive, streaming-only widgets for their music-driven social networks, you could start to generate some serious money from advertising revenue shares and e-commerce click-thrus, PLUS you could use them to market your music extremely efficiently (well... for free, really!). And NO, this would not replace your CD-Sales (ehem... if you still have some, within the next 12 months) or your digital sales (provided you'll be smart enough to finally get out of DRM before your tanker hits the cliff).

So, to end the pontification part of this post, here are 2 playlists: one with Pat Metheny who I really like, and the second one with all major label content - just to make sure you -maybe- get the picture ;)

SeeqPod Music beta - Playable Search

SeeqPod Music beta - Playable Search

7 Digital Media UberTrends | AlwaysOn

This is a very good essay by David Beisel- check it out.

Link: 7 Digital Media UberTrends | AlwaysOn.

"The digitalization of transportation experience. Our cars are transforming from motorized transportation into digital immersion experiences. With in-dash devices ranging from GPS, to satellite radio, to integrated telephone controllers, the place where many Americans spend much of their day is going digital. Also, other transportation experiences, namely public transportation, is being affected by a digitalization trend – everything from digital signage in subways to infomation touchscreens in taxis is modifying what we do when going from here to there"

My comment: indeed - this will mean huge changes for Radio. Once we are all on wireless broadband we can connect to net radio just like we connect to satellite radio, today.

"Digital information becoming increasingly personalized with greater user control and choice. While search as proactive information-seeking reigns today, the notion of passive personalized discovery which is already taking hold will become ever more important with an abundance of information. User control and choice in that process is becoming integral in the content consumption process."

My comment: "I like the 'widgetization of media' concept: everyone will fill-in their web properties with feeds of media and information -- like a canvas, NOT just like a newspaper."

The Internet leads a rise in most media usage (says Emarketer)

Not surprising but still good to get some stats on this.... Link: .

"The Internet is the most essential medium for consumers and newspapers are the least, according to an Edison Media Research study conducted by Arbitron in January and February 2007. Respondents were all from the US and ages 12 and older..."

The plunge of the Major Music Labels (New York Times report)... the end of Music1.0 is near?

Good reporting from the NYT, as usual.

Some of my favorite morsels are below, plus my comments.
Link: Music Labels - EMI - New York Times.

NYT: "Despite costly efforts to build buzz around new talent and thwart piracy, CD sales have plunged more than 20 percent this year, far outweighing any gains made by digital sales at iTunes and similar services. Aram Sinnreich, a media industry consultant at Radar Research in Los Angeles, said the CD format, introduced in the United States 24 years ago, is in its death throes. “Everyone in the industry thinks of this Christmas as the last big holiday season for CD sales,” Mr. Sinnreich said, “and then everything goes kaput...”

Gerd says: guess there IS hope: once the pain is big enough, changing seems like a real option, all of a sudden - that is what we are seeing now. Maybe this ship really has to be steered into the cliffs first, after all?  Call me an optimist but I used to think there were other options ;). My 2 cents: if you have the guts CHANGE NOW, you can still own a good chunk of the market, and prosper.  But: band-aids are over - it's time for real, hard-core changes. Drop copy-protection (at least for now - until something can be used that is of super-value to the USER!), tell the users, fans & artists that you screwed up, go for flexible pricing and bundles, package music into other media, offer agency-type deals to artists, become completely transparent and drop the 'secret sauce' antics, and start using syndication as the prime vehicle of promotion, marketing and distribution. It's not the COPY - it's the ACCESS. It's not Prevention - it's Participation.

NYT: "For the companies that choose to plow ahead, the question is how to weather the worsening storm. One answer: diversify into businesses that do not rely directly on CD sales or downloads. The biggest one is music publishing, which represents songwriters (who may or may not also be performers) and earns money when their songs are used in TV commercials, video games or other media..."

Gerd says: ok, now, I have talked about this until the cows came home, but here is again: switch to music as a service. Again: never mind the copies - the next big thing is offering ACCESS. Brands. Experiences. Added Values. Stuff that only you can provide - together with the artists. Values and experiences can't just be downloaded.

NYT: "But very few albums have gained traction. And that is compounded by the industry’s core structural problem: Its main product is widely available free. More than half of all music acquired by fans last year came from unpaid sources including Internet file sharing and CD burning, according to the market research company NPD Group. The “social” ripping and burning of CDs among friends — which takes place offline and almost entirely out of reach of industry policing efforts — accounted for 37 percent of all music consumption, more than file-sharing, NPD said...."

Gerd says: sounds like an obvious problem - it's all out there for free so they stopped buying. But the thing is that this is not the real problem. 'Free distribution' is a blessing not a curse, and P2P / Super-Dustribution will emerge as the main mechanism for digital distribution in the next 3 years (and not just for music). Rather, it is - still seriously counter-assumptive, and beyond grasp of most of the incumbents of 'music1.0' - the unfailing desire to, at any cost (including self-destruction), want to control the ecosystem that the large music companies must keep in check - and then we can understand and monetize what people actually do with technology. They are doing this because they like the music and the artists, not because they want to  do as much damage as they can - YOU simply have not given them good enough options to act differently.

If the model of ueber-control over music distribution isn't working any longer, wouldn't it make sense to try to come up with a new model? Lesser control does not mean zero revenues. There is life after selling expensive copies of plastic, or indeed of 0s and 1s. Trust me.

The rise of the legal mashup - engage the user and sell your content! - Lucasfilm offers Starwars snippets for legal mashups via Eyespot.

To my readers from the Music Industry: READ THIS and LEARN!

The WSJ has a good article about Lucasfilm making 250+ short clips available on Starwars.com, tomorrow, for remixing by anyone, using Eyespot. Here are some morsels from the WSJ:

" Working with an easy-to-use editing program from Eyespot Corp. of San Diego, fans can cut, add to and retool the clips. Then they can post their creations to blogs or social-networking sites like MySpace. More clips will come out from time to time over coming months.

...In essence, Lucasfilm is going to legitimize and streamline a pastime that has become increasingly popular on the Web..."

Gerd says:  very very very much spot-on. Instead of going after people that want to do this because they love Startrek but don't have permission, they make the footage available themselves, and in return harvest people's attention, and PULL them into the fold, make them happy, and sooner or later... you guessed it, sell stuff to them. Kind of a logical move, isn't it.  Now, music moguls, if George Lucas can do this... maybe you can, too?

"While Lucasfilm could fight what amounts to the theft of its property, it has now decided to take the opposite tack. In doing so, it is tackling an issue that faces all media companies today: how to keep some semblance of control over intellectual property in the digital age..."

Gerd says: that IS precisely the point: you give up some control, hand it over to your users, and get their attention and engagement back, in return. THEN you collect the cash. Just move that toll-booth down a bit.

"We see what's going on at YouTube," says Jeffrey Ulin, senior director for distribution and business affairs at Lucasfilm, who says the company began to think about allowing mash-ups last summer. "We see what's going on out there on the Web generally. And we wanted fans to come to Starwars.com as the center of fan activity."

Gerd says: yes indeed. People do what they do - the key is to invite them to do it WITH YOU and at some location where you can benefit from it. Engage not enrage!

And lastly:

"The mash-up project will come with rules, however. While it won't stop anybody from assailing characters or casting them in unexpected lights, Eyespot has set up a program to make sure none of the doctored clips contain nudity, pornography, and the like..."

Gerd says: the very definition of what I call 'Control2.0': give some, take some, but be a lot less upfront, take-it-or-leave it about it.

A tip: read Mashable every day, and you'll know what's coming. Mashing of media will be a major way to engage and pull the users into your offering. Cut back on the control obsession and you will receive attention. sales. revenues. Got it?

VentureBlog on The Widget Economy (monetizing widgets... or not)

This is a very good post on how, why, if and when to make money with widgets - thanks to David Hornik at August Cpital (one of the few VCs I know that actually bother to understand the space they are in - and even share their real thoughts... wow!). David is talking about how widgets can be symbiotic or parasitic which is a very crucial distinction and what it all comes down to. This is exactly where we are at with my new company www.sonific.com (we provide music widgets for blogs, social nets, and photo sites): on the one hand, having our SongSpots music widget available on your platform (such as Wordpress, Friendster, Typepad, Slideroll etc) really adds a lot of value (translating into a stickier site, higher retention, more users and higher overall traffic for the platform), on the hand, Sonific and our content providers also must eventually monetize the traffic (and streaming costs etc) in some way. Which leads to.... you guessed it, ADVERTISING, or rather, what I call Advertising2.0. Sonific currently does not run ads on / in / around the widgets but we will roll out some ad-loaded widgets with some select partners very soon - so this discussion is very relevant for us.  If you have any input on this... fire away!  Link: VentureBlog.
PS: Sonific will make a major announcement in about 10 days - make sure you are on my mailing list to get it before everyone else does (use the sign-up box on this blog or go to www.gerdsnews.com)