The Digital Music
License: why, what,
how and who
Gerd Leonhard
Media Futurist
www.mediafuturist.com
www.twitter.com/gleonhard

What I do:
‘I give ideas’
www.mediafuturist.com
twitter.com/gleonhard
www.payingwithattention.com

This is not against Copyright
This does not propose that Music
should be free, period
This is not a diatribe against the
large, global music companies
This is about creating a solution
that is fair, as well as socially
and economically realistic
This is a plea for collaboration

Just like Radio: no more no less
Picture by http://flickr.com/photos/matteo86photonature/

I will not comment much on the
proposed 3-strikes legislation

http://mahasiah.wordpress.com/

All of these ... without Permission

Copyright Gridlock

So far, Refusal was fruitless -
It’s time to switch to
Permission
Google’s Eric Schmidt (when talking about the book publishers & Google):
“We write large checks when we have a great strategy”

My gallery of “Yesterday’s People with Yesterday’s Assumptions”

Let’s not confuse things

The Music Economy is Broken
The System is certified dysfunctional
Source: Techdirt

A recent example

Why this can’t possibly work
200 Million users seems entirely realistic
20 songs per day =
4 Billion plays per day @ 1 Cent USD
$40 Million PER DAY in license fees for the masters
14.6 BILLION USD per year in licensing costs
Plus: costs for Public Performance in 50+ countries
Plus: payments to composers
Plus: technical costs

And this is not a unique problem

But it gets worse
Private deals for public services?
What choice did they have?
How much control does this leave them?
Is this ‘fair business practice’?

Connected people ‘consume’ differently
Access tr umps Copy
Sha ring is the K ey Driver

Listening, Reading & Watching = Copying

Controlling distribution - controlling the
flow of digital files - is the only way to
generate future music revenues
1. Wanting to control the flow of copies on
the Net is an understandable response
but entirely unrealistic - and not needed!
2. Copies of songs are no longer where the
real value of music is - we must sell the
scarce not the ubiquitous!
3. Legalizing what is already a de-facto
standard is the best way forward

We have been here before
D !
S E
EN
L I C

What would this look like?
First, legalize it - give permission
All use - all pay * or otherwise generate $ value
Many kinds of payments emerge
Rights are public, open and standardized
Licenses are available to every business
Data-Mining and Market Access is $ value, too

Public License
+ Build-in Revenues
+ Proportional Distribution

How would it work?
Advertisers
“Pool of
Social Nets
Money”
Rev Share & Device Makers
License Fee Search
Labels per User
Publishers ...
Rights Organizations
PROs / MROs
Provide
$$$
Collective ...want to align with
License Artists / Genres
Government ISPs, Programs / Platforms
Telecoms & & Services to reach
Networks Consumers i.e. Users
Percentage of Revenues (10%)
or Flat Fee per User ( 1 GBP/ week)

So who will pay if it’s not the
users fka consumers ...?

o t
n
m m
e e
t t
s s
y y
s s
O O
C G
E E

Brands
Music Agencies
Advertisers
Industry Media
Legislation
Government
Telecom Regulation
Google China President Kai Fu Lee:
“Mutual Interest, rather than Monopoly,
is the key to sustainable growth”

Calculation examples
50 Million applicable UK Users (estimated)
200 Million GBP / Month @ 1 GBP/week/user
2.4 Billion per Year earned via the DML
2008 recorded music revenues: 1.36 Billion GBP
Advertising & Marketing Spend in the UK (2010): 25 Billion
Estimated % to be digital / mobile: 25% i.e. 6.25 Billion GBP
Yearly artist’s earnings at 0.1% of total usage: 2.4 Million
UK ISP Revenues & Marketing Budgets?
UK Mobile Operators Revenues & Marketing Budgets?
UK CE / Handset Device Makers?

With a new Internet
license for Music we
don’t just sell
something - we also
buy something!

Many other New Generatives
Community Premium Services Permission
High Definition & Premium Media
Mobile Device Applications & Software
Live-Concerts, Web-Casts, Virtual Shows...
Flat Rates, Bundles, Revenue-Sharing
A new and very lucrative Ecosystem would emerge

We don’t pay to eat all the food... we pay for access

If we had a public music license, this
would already be money in the bank!

So why is there still so little revenue from
Youtube, Myspace, Facebook...?
• Advertisers are always 2-3 years behind
• Lack of permission for legal content has
resulted in much slower adoption
• Lack of public license has deterred new
investors
• Mobile broadband and smart mobile
devices are just now starting to take off

With a digital music license, the Longtail &
Success in the Niches becomes very real, too
Image: Flickr.com/WhiskersandWhispers

And this would become a huge business, too

Why this is good for the
Creators
Attention turns automatically into $$
Distribution is available to everyone, by default
Many up-selling options will emerge
Direct market access is included
Marketing costs will be greatly reduced

And it’s not just the $$$
Actual, real-time Usage Data
Direct Market Access

Summary: my proposal *since 1999
• Legalize it: a public, collective, open
License for the use of Music online
• Collaborative, cross-industry efforts to
develop new, web-native revenue streams
•A new social contract for Music

Music Like Water

The Digital Music License
Let’s do what’s right for
Compensation not for Control
Let’s generate future revenues for
the Creators not just the Lawyers
Let’s do what’s right for Social,
Cultural and Business Reasons

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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