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Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
Gerd Leonhard Presentation in  Helsinki: The  Future Of  Music  End Of  Control Sept 8 2006
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Gerd Leonhard Presentation in Helsinki: The Future Of Music End Of Control Sept 8 2006

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Gerd Leonhard's 2006 Presentation on the Future of the Music Industry

Gerd Leonhard's 2006 Presentation on the Future of the Music Industry

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  • I think you guys will like this video of a recent presentation I gave at Google Tech Talks in London - Cheers! Gerd Leonhard www.mediafuturist.com

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  • 1. Gerd Leonhard, Music Entrepreneur & ‘Music & Media Futurist’ www.mediafuturist.com www.gerdpresents.com CEO, www.sonific.com The “End of Control” and the Future of Music gerd@mediafuturist.com 2006 -some rights reserved - Gerd Leonhard Music Futurist gerd@musicfuturist.com 1
  • 2. About me www.mediafuturist.com • Music & Media-Futurist & Author, Speaker and Presenter, ThinkTank Leader, Strategic Advisor • 20 years in music & technology, EU and U.S., Entrepreneur, Musician & Producer • Berklee College of Music graduate, Quincy Jones Award Winner • Digital Music Entrepreneur, latest venture: SONIFIC - Soundtracks for your Digital Life, previously: LicenseMusic • Speaking activities around the globe: “The Future of Music & Media”, with a focus on business design for media companies, and helping industry organizations plan for the future • Co-Author of the book “The future of music”, next book “The end of Control” coming in late 2006 • Blog at gerdleonhard.net Gerd Leonhard Music & Media Futurist www.mediafuturist.com 2
  • 3. 3
  • 4. Our future: selling Music to Digital Natives 90 80 70 60 50 40 30 20 Now 10 Soon 0 Tomorrow Analogues Digital Immigrants Digital Natives Gerd Leonhard Music & Media Futurist www.mediafuturist.com 4
  • 5. About those Digital Natives (and why it matters) Marc Prensky: • They are surrounded by digital media to such an extent that their very brain structures may be different from those of previous generations • Digital Natives are used to receiving information really fast • They like to parallel process and multi-task • They prefer their graphics before their text rather than the opposite • They prefer random access (like hypertext). • They function best when networked. • They prefer games to quot;seriousquot; work Selling music as a SERVICE is the consequence Gerd Leonhard Music & Media Futurist www.mediafuturist.com 5
  • 6. Mass Media > Niche Media > Lifestyle Media Source: IBM report Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 6
  • 7. Mass Media to Personal / Lifestyle Media (inspired by Paul Saffo) No significant Substitution! Music = a Product you buy Music = a Service you subscribe to TV as dominant force Web as dominant force Anglo-American ‘hits’ dominate Diverse / niche content works thrives Radio: on schedule Anytime One-way ‘broadcasts’ Receiver also SENDS Consume Participate / Usate THEY pick YOU pick Gerd Leonhard Music & Media Futurist www.mediafuturist.com 7
  • 8. 2 crucial paradigm shifts USAGE RIGHT Monitored CopyRIGHT Controlled 2006 © Gerd Leonhard Music & Media Futurist www.mediafuturist.com 8
  • 9. Copyright becomes usage right • Just asserting control, and restricting use, will not generate revenues • Allowing and encouraging ubiquitous use, and tracking it, will (watermarking and fingerprinting versus DRM) • We must license digital music like we license radio - but with a better share of overall revenues, and with build-in up-sells Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 9
  • 10. And it’s a new game for music companies Produce, select, Finding and being deliver Found Unknown Known consumers participants Seller controls Buyer controls License Syndicate Gerd Leonhard, Music & Media Futurist 10
  • 11. Mega-hits may no longer be the main objective Point of more choices! Seth Godin: “If your marketing strategy requires you to hit #1 in order to succeed, you probably need a new marketing strategy.” Gerd Leonhard Music & Media Futurist www.mediafuturist.com 11
  • 12. More choice = less hits 12 Gerd Leonhard Music & Media Futurist www.mediafuturist.com 12
  • 13. My next book... and a good headline The End of Control 13 13
  • 14. So...what does that mean? ★ In a digital content world: • Un-Control means success (see myspace) • Engaging Users and enabling Usators means success (see YouTube) • Being trusted means success (see ebay) • Getting attention means success (see Apple) • Just enforcing control means certain demise (see SwissAir) Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 14
  • 15. To be more practical: ★ For us, this means • We must offer / sell unprotected and universally compatible music content, in order to really engage most of the users. On other words: there is no Safety Net • We must stop using legislations based on outmoded copyright laws to shore up the beloved distribution and valuation models • We must pursue a ubiquity model not try to maintain artificial scarcity • We should let the users do the rating, tagging, and viral marketing • We must respect and expand user’s rights, and re-earn their trust • We must carefully consider where to put the toll-booth, and be much smarter with handling pricing, bundling and re-bundling • We may sometimes need to forego immediate revenues for large scale exposure Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 15
  • 16. So where is music commerce going? • Open, flexible, interoperable, intuitive, ‘heavy lifting in the background’ - technologies • Very competitively priced subscriptions that can accommodate just about every user, everywhere, and that may be advertising supported • Flat fee deals that will just be the tip of the iceberg of consumption (and payment!) • Ad supported and P2P models, bundles and ‘content fee included’ products will create ‘feels like free’ environments Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 16
  • 17. Selling Protected Music Won’t Work • Users are staying away from protected music - the value proposition is lousy • Devices and services don’t connect • CDs are still unprotected! • DRM is an attempt at using technical solution to solve a business problem • One could argue that DRM is a major DRIVER of online ‘piracy’ Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 17
  • 18. And for the artist - label relationship: ★ The future is Change • Artists will go a long way by DIYing before even starting to look at label or publisher deals • Labels will offer completely new services that will create new reasons to consider them • Record labels become music companies • Agents become labels • Labels become publishers Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 18
  • 19. Artists & Labels, and the Record Company of the Future (RcoF) • Rights ‘leasing’ will become the standard • Composition and master rights will converge • Labels will prove their value by offering access to a vast NETWORK (rather than Distribution) • Labels that are brands, in itself, will thrive • A few online players will start RcoFs • Model is based on revenue splits (25-50% for RcoF) Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 19
  • 20. Today: A perfectly broken system  The current market is not working  Apple sells 45Million+ iPods - using music as a loss-leader  Windows DRM-based services have serious problems if used to-go, for now, and good services are destined for failure because of out-moded policy decisions  MP3 services work great but are effectively black-listed by the majors  80% of the market is STILL trying to control distribution  The USER (aka consumer) is STILL severely under-served  Digital music revenues could be 10x of what they are right now 20
  • 21. The fact is, we don’t control distribution any more - like it or not. And why would we want to when the USERs can do our marketing for us? 21
  • 22. The REALITY of the digital natives  Listening to music = getting music  Performance = reproduction  Access is outmoding ownership So, why are we still trying to sell MORE COPIES if we could also sell ACCESS? Why do we need the traditional copyright mechanism? 22
  • 23. The Flat Fee for Music  Everybody uses everybody pays: one flat fee gets every user a LOT of content on any and all networks  And: it will ‘feel like free’ (i.e. payments are bundled)  Labels: you can’t refuse to be distributed on digital networks - just like you can’t refuse to be on radio  The flat fee is only the beginning for music commerce  Selling only a la carte / by the ‘unit’ does not make sense for CONTENT in the digital ecosystem 2006 -some rights reserved - Gerd Leonhard Music Futurist gerd@musicfuturist.com 23
  • 24. The basics  A ‘Music Fee’ of approx 3-4 Euro /month (EU), sign-up via ‘music registry’  But: Cellcos / Telcos, ISPs, Media Companies etc would soon want to bundle the fee into their offerings  Music Fee ID and password would give the users access to any and all digital music services (TV, Wireless / Mobile, Internet…) - and builds a hugely valuable database! 24
  • 25. The MUSIC FEE is only the beginning: the real $$$ will come in from: Music Fees (Pool) 25
  • 26. And: Cross-Selling Music Fees (Pool) 26
  • 27. And… (!!!!) Sharing Advertising Revenues Music Fees (Pool) 27
  • 28. The new ecosystem: make $$$$$ with music, beyond the COPY of a track Advertising (2.0) Up- & Cross Flat Fee Selling Music Services 2006 © Gerd Leonhard Music & Media Futurist www.mediafuturist.com 28
  • 29. Changes reviewed Content 1.0> Content 2.0 Distribution Attention Shelf Space Mind-share Niche Marketing Mass Marketing Monolog Dialog Influence & Control Reputation Control Attention & Trust Gerd Leonhard, Music & Media Futurist 29
  • 30. Benefits for the creators and rights holders  Levels playing field of distribution  Monetizes what people already do  Exploits ‘long tail’ effect, and gets the user to EXPLORE  Exposure translates DIRECTLY to revenues  Provides equal market access 30
  • 31. Why all of this is good for musicians • Direct market access, and a leveled playing field • The tools of production, promotion, communication, distribution, and marketing have become increasingly available to anyone • A lot more can be accomplished ‘DIY’ which increases a potential deal value • Music is everywhere, literally • Attention can translate into immediate revenues Gerd Leonhard, Music & Media Futurist www.mediafuturist.com 31

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