Making money with music when the copy is 'free'

Making Money with Music when the copy is ‘free’ by Gerd Leonhard ‣ Futurist www.mediafuturist.com ‣ Strategist twitter.com/gleonhard ‣ Author & Blogger

My job is to understand things and develop ideas for my clients.

So what is the new framework (1)

Enormous Value Shifts Sales, Distribution & Marketing Costs Content Ceration Costs Traditional, Offline Content Revenues Revenues of Offline Content Formats & Models simply moved Online Potential Revenues of Web-Native Content Formats & Models 10 7.5 5 2.5

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

Experience Embodiment 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 Co m munity Con nv en Co ien Interface text ce Content Timeliness Curation Content

The past: revenues based on Controlling Distribution

The Future: Revenues based on Converting Attention Open Mobile Social ‘Free’

Content Commerce 2.0: don’t try to sell what is Ubiquitous - sell what is Scarce Source: 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 experiences Added Values Packaging and Embodiment Timeliness (Real-Time) Curation Context Personalization & Customization Web-Native Values

Content Futures: where is the value? Content Context Curation 5% Timeliness 20% Embodiment / Packaging 15% Relevance Others 15% 15% 10% 20% 100% Content / Copy

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 Networks How 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 Packaging How much of a premium would you pay to have your preferred content uniquely available on your favorite mobile device, at all times?

Music Pricing Futures Price of legal copy’ Number of legal, known, engaged Users Premium Buyers (i.e. converted users) 100 75 50 25 0 Was Will be

Getting Paid for Creation *Hat tip to Shelly Palmer 3rd party pays You pay You I pay pay 3rd party I pay I pay pays 3rd party pays

We must get much better at these 2 things: 3rd Party Pays

A fact: flat rates and bundles often work best

Getting the vortex to spin... Upstream Downstream Source: STLPartners / Telco20.net

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 Copy Based Revenues Attention Based Revenues 10.0 7.5 5.0 2.5 0 Was Is Soon Near Future Mid-term Future

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 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 Business Models Business Models Business Models Artist / Creator

The Mobile & Social ‘Consumption’ of Music is the #1 Growth Opportunity Deep 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...

Telecom Advertising (2.0) Public, open and standardized Content Licenses Social Networks Source: Techcrunch UK

The creation of a new Music Ecosystem TV Telecom Advertising Internet Mobile Media

Step 1: Permission Step 2: Lubrication Step 3: Collaboration Step 4: Co-Creation of new Business Models

Thanks for your time email me at gerd@mediafuturist.com twitter.com/gleonhard facebook: gleonhard more presentations at www.mediafuturist.com

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Making money with music when the copy is 'free'

by Futurist Gerd Leonhard

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Making money with music when the copy is ’free’ Presentation Transcript