making money with music when the copy is 'free
DESCRIPTION
So these were some of the topics I talked about: 1) What is this new framework for the music industry - which facts and trends do we need to consider? 2) What are the key value shifts (pricing, and access versus copy), and what do they mean? 3) Why we need that 'new social contract' and thereby legalize digital music (and the discussion of the proposed digital music license) 4) The new logic of bundled access, embodiment and experience, and the need for a new 'pool of money' (to quote Jim Griffin) 5) The irreversible shift in the perception of 'copies' of content 6) Future revenues based on Attention 7) Why the future is not in selling what is abundant but what is scarce 8) Why content creators and rights-holders do not compete with free ... and much more fun stuff;) EnjoyTRANSCRIPT
Making Money with Music when the copy is ‘free’
by Gerd Leonhard
‣ Futurist‣ Strategist‣ Author & Blogger
www.mediafuturist.comtwitter.com/gleonhard
My job is to understand things and develop ideas
for my clients.
So what is the new framework (1)
So what is the new framework (2)
So what is the new framework (3)
Enormous Value Shifts
2.5
5
7.5
10
Sales, Distribution & Marketing CostsContent Ceration Costs
Traditional, Offline Content RevenuesRevenues of Offline Content Formats & Models simply moved OnlinePotential Revenues of Web-Native Content Formats & Models
We must urgently divorce ourselves from the old shapes of music delivery, and from looking at the distribution of music as the
most important money maker.
“A new Social Contract”
If distribution is indeed uncontrollable we will need
to legalize, bundle and integrate it - all else will fail
Embodiment
Experience
Access
Embodiment
Experience
Access
From Copy to Access + + +From Product
to Service
We don’t pay to eat all the food... we pay for access
The irreversible shift in Content Perception
Content
ContentContext
Curation
CommunityInterface
Timeliness
Convenience
The past: revenues based on Controlling Distribution
‘Free’ SocialMobile
OpenThe Future: Revenues based on
Converting Attention
Content Commerce 2.0: don’t try to sell what is Ubiquitous - sell what is
ScarceSource:
ReadWriteWeb.com
Content owners can’t, shouldn’t and don’t have to compete with Free Copies
Instead, content owners can compete with:Authenticity
Unique experiencesAdded Values
Packaging and Embodiment Timeliness (Real-Time)
CurationContext
Personalization & CustomizationWeb-Native Values
Content Futures: where is the value?
100%
Content / Copy
5%15%
15%
10% 20%
15%
20%
ContentContextCurationTimelinessEmbodiment / PackagingRelevanceOthers
The Success Formula: Content + Context + Connectivity - Community + Convenience + + +
Why I have spend $1000+ on iStockphoto
• Good quality images• Finding the right photo is quick and easy• The rights (licenses) are cleared• The price is right (well... mostly)
• I don’t pay just for the content - I pay for ease of use, peace of mind, the interface, service & curation...!
Direct, immediate, certified, personal content delivery
How much of a premium would you pay to receive the new song the very moment it
is finished, from the creator, himself, certified, personalized... guaranteed?
Relevant, customizable, time-saving Curation
How much of a premium would you pay to get the 50 best chapters from the 50 best business books, in a single new eBook?
Bundling music services within Social NetworksHow much of a premium would you pay to
have instant sharing of your peers’ playlists and favorites build-into your
mobile, your TV, your car-radio...?
Attractive, unique, premium PackagingHow much of a premium would you pay to
have your preferred content uniquely available on your favorite mobile device, at all times?
0
25
50
75
100
Was Will be
Price of legal copy’Number of legal, known, engaged UsersPremium Buyers (i.e. converted users)
Music Pricing Futures
Getting Paid for Creation *Hat tip to Shelly Palmer
I payYou pay
3rd party pays
I pay
3rd party pays
You pay
I pay
3rd party pays
We must get much better at these 2 things:
3rd Party Pays
A fact: flat rates and bundles often work best
Source: STLPartners / Telco20.net
DownstreamUpstream
Getting the vortex to spin...
Upstream Revenue Opportunities: Some Examples
•High-Definition Content (Classical, Jazz, Concerts...)•Concert downloads (after attendance, or without)•Virtual concerts, events, clubs•Virtual goods (e.g. wallpaper, icons, greetings etc)•Fan packages (direct connection to artists, pre-
releases, customized editions, special privileges etc)•Special products 2.0: compilations, audio-video
packages (see SoundWalk), mobile applications etc•Next-generation physical products (e.g. 2 TB
interactive & connected DVD+)•Custom-made, on-demand merchandising (see Nike+)•Many more that are yet to be invented...
New Packages and providing new Experiences will be the Key to Success
Rights holders and content owners now have the choice between:
A) The Illusion of Control - and declining Revenues
B) ‘Open’ - and new Revenues
Content Futures: Copy $ down, Attention $$ up
0
2.5
5.0
7.5
10.0
Was Is Soon Near Future Mid-term Future
Copy Based Revenues Attention Based Revenues
•Provide value for up-stream entities and related providers
•All kinds of Up-selling•Attention-Transfer (aka Advertising)
•Crowd-funding of new productions
Attention-based revenues...???
Attention Transfer is $$ Osmosis
The Mission: Converting Attraction into Real $
Please: forget most of what you know about Advertising
Yes, there is serious $$ in Advertising
•~ $ 900 Billion USD Global Advertising Spend in 2012
•30-50% shifting to digital media / interactive / mobile
•Opt-in, personalized, targeted Advertising = Content
Why Google is willing to ‘pay’ for music - in China
Why ISPs will be willing to ‘pay’ for music
The next music format is... Software
Such as
The Music 2.0 Model
Artist / Creator
Business ModelsBusiness Models
Business Models
The Mobile & Social ‘Consumption’ of Music is the
#1 Growth OpportunityDeep Collaboration with Telecoms & Operators is
the #1 Mission for the Music Industry
But: the content pricing & licensing issues cannot be solved without the solid
engagement of Telecoms, ISPs and Operators (as well as the Advertisers)
We urgently need either a voluntary, collective license
proposal by the rights-holders, or legislation that legalizes and monetizes the use of Music on
the Internet.
Image: TelecomTV
Just like...
Source: Techcrunch UK
Advertising (2.0)
Social Networks
Public, open and standardized Content Licenses
Telecom
The creation of a new Music EcosystemTV
Internet Mobile
Telecom
Media
Advertising
Step 1: Permission
Step 3: Collaboration
Step 4: Co-Creation of newBusiness Models
Step 2: Lubrication
email me at [email protected]/gleonhard
facebook: gleonhardmore presentations at
www.mediafuturist.com
Thanks for your time