How theLOVE OFMUSIChas changedourBUSINESSWORLDHow theLOVE OFMUSIChas changedourBUSINESSWORLD
Over the last decade, there was aMany destroyed Value ChainsVarious new Markets with new LeadersBusiness Innovation everyw...
This is the story about howthe love of music laid theFoundation for manyInnovations in the past 12years, turning the Busin...
Chapter 1First there was MP3Chapter 1First there was MP3
From 1982 on theFraunhofer Institutein Erlangen(Germany) wasresearching for amethod to storedigital audio data.From 1982 o...
Karlheinz Brandenburgdeveloped the MP3 fileformat for audio datacompression togetherwith Gerhard Stoll (IRT-Germany), Yves...
In 1999, music fans mainly listened toprerecorded CDs on disc players.Portable MP3 players were still largely unknown.In 1...
Only for some early adopters of tech-savvy musicfans, the new audio format had already takenhold -the digital MP3.
The small size of MP3 files enabled peer-to-peer filesharing of music ripped from CDs, which would havepreviously been nea...
Chapter 2The Foundation of InnovationChapter 2The Foundation of Innovation
Back in 1999 ShawnFanning at the age of 19was a student atNortheastern Universityin Boston when he hadthe idea for a compu...
He called it Napster. He called it Napster.
After months writing the program, Fanning releasedit to a group of about 150 friends and internet relaychat acquaintances.
Napsters fame spreadby word of mouth, andit soon had 10,000 to15,000 users.But once the program wasfeatured on Cnets Downl...
Reasons Why Napster was useful: Reasons Why Napster was useful:It helped people discover new musicAcoustic and various ver...
Napster gave everyone in the world africtionless, convenient way to get content.
"It probably was the single-most-important eventas far as media consumption on the internet isconcerned,""It probably was ...
Disrupting the status quoChapter 3Disrupting the status quoChapter 3
The Recording Industry Association of America (RIAA)denounced music "sharing" as equivalent to theft, andfiled a lawsuit a...
Heavy metal band Metallicaalso filed a lawsuit againstNapster in 2000."With each project, we gothrough a grueling creative...
“What record companies don“treally understand is thatNapster is just one illustrationof the growing frustration overhow mu...
From the music lover“s perspective was it really “free“QUESTIONFrom the music lover“s perspective was it really “free“QUES...
Apart from Prince one company understood that for Apart from Prince one companyunderstood that formany customers the main ...
The customers   instead wanted a seamless   solutionto search for   music, find, download and   listen to it.The customers...
And they were willing to pay for a successful solution. And they were willing topay for a successful solution.
The name of the Company was Apple. The name of the Company was Apple.
“...The choice we“ve made, wasmusic. Now, why music? Well,we love music! And it isallways good if you dosomething you love...
“With the best-selling iPod, which debuted in2001, and through the iTunes Music Store, whichlaunched in 2003, Apple Inc. a...
in July 2001 but couldn“t stop the revolution. in July 2001 but couldn“t stopthe revolution.Closed!The RIAA achieved the f...
Chapter 4Impact & DevelopmentsChapter 4Impact & Developments
Impact #1The Love of Music was EnforcingTechnological Developments
„Napster in its heydayalso was cited as onereason consumerswere getting high-speed internet access.Since then, continuedbr...
Impact #2The Love of Music was Laying theFoundation for Social Networks
Analysts say todays internetlandscape - with millions ofconsumers downloadingsongs from the iTunes MusicStore, watching vi...
Impact #3The Love of Music was StimulatingBusiness Model Innovation
Napster laid also thefoundation to Business ModelInnovation which arechallenging old paradigms:Napster „gave„ somethingawa...
Impact #4The Love of Music was InfluencingCopyright-licenses free of charge
Im not sure what influenced Lawrence Lessig, Hal Abelson, and EricEldred in 2001 to found the non-profit organization Crea...
Creative Commons was invented to create a more flexible copyrightmodel, replacing "all rights reserved" with "some rights ...
notable web-based projects notable web-based projectsusing one of its licenses.would not have been possibleAlso Wikipedia ...
Impact #5The Love of Music was Disrupting theTraditional Media Industry
„You can argue that everything that happenedsince has been a reaction toNapster.„"What did Napster give everyone in thewor...
Due to the Distribution Channel Internet, new forms ofto produce and distribute content such as Information,Music and alik...
Impact #6The Love of Music was InspiringNew Markets and new Market Leaders
Apple has understood best to grasp customerneeds and anticipate social and technologicaldevelopments.Apple performed a met...
Impact #7The Love of Music also had an Impact on theNew Marketing Reality
„Marketing„s control over branding, messaging andpositioning are in unprecedented decline as peer-„Marketing„s control ove...
Chapter 5The Result:A NEW BUSINESS WORLDChapter 5The Result:A NEW BUSINESS WORLD
Business Innovation is everywhere
Customers are empowered
Marketing became conversation Marketing became conversation
Apple is melting the competition Apple is melting the competition
More Music is being produced than ever before! More Music is being produced thanever before!
And traditional media companies are still caughtin their old Business Models andValue Chains.And traditional media compani...
Recap #1 MP3 enabled peer-to-peer file sharingof music#2 Napster gave everyone in the world africtionless, convenient way ...
Thorsten FaltingsYouve made it this far.Thanks for your attention and sharing!Thorsten FaltingsYouve made it this far.Than...
Credits:Photos WebsitesCredits:Photos Websites1. tfaltings.de - Pipi „P!nk„ Langstrumpf Flickr.com2. tfaltings.de - Bowie ...
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  1. 1. How theLOVE OFMUSIChas changedourBUSINESSWORLDHow theLOVE OFMUSIChas changedourBUSINESSWORLD
  2. 2. Over the last decade, there was aMany destroyed Value ChainsVarious new Markets with new LeadersBusiness Innovation everywhereEmpowered & emancipated ConsumersGiant Refresh in the Business World:
  3. 3. This is the story about howthe love of music laid theFoundation for manyInnovations in the past 12years, turning the BusinessWorld upside down.Told by Thorsten Faltings@faltings
  4. 4. Chapter 1First there was MP3Chapter 1First there was MP3
  5. 5. From 1982 on theFraunhofer Institutein Erlangen(Germany) wasresearching for amethod to storedigital audio data.From 1982 on theFraunhofer Institutein Erlangen(Germany) wasresearching for amethod to storedigital audio data.
  6. 6. Karlheinz Brandenburgdeveloped the MP3 fileformat for audio datacompression togetherwith Gerhard Stoll (IRT-Germany), Yves-François Dehery (CCETT-France), Leon Van deKerkhof (PhilipsNederland) and JamesJohnston (AT & T-USA).
  7. 7. In 1999, music fans mainly listened toprerecorded CDs on disc players.Portable MP3 players were still largely unknown.In 1999, music fans mainly listened toprerecorded CDs on disc players.Portable MP3 players were still largely unknown.
  8. 8. Only for some early adopters of tech-savvy musicfans, the new audio format had already takenhold -the digital MP3.
  9. 9. The small size of MP3 files enabled peer-to-peer filesharing of music ripped from CDs, which would havepreviously been nearly impossible.The small size of MP3 files enabled peer-to-peer filesharing of music ripped from CDs, which would havepreviously been nearly impossible.
  10. 10. Chapter 2The Foundation of InnovationChapter 2The Foundation of Innovation
  11. 11. Back in 1999 ShawnFanning at the age of 19was a student atNortheastern Universityin Boston when he hadthe idea for a computerprogram that wouldmake sharing MP3seasier by allowing usersto see a directory ofsongs stored on othermembers computers.
  12. 12. He called it Napster. He called it Napster.
  13. 13. After months writing the program, Fanning releasedit to a group of about 150 friends and internet relaychat acquaintances.
  14. 14. Napsters fame spreadby word of mouth, andit soon had 10,000 to15,000 users.But once the program wasfeatured on Cnets Download.comsite, the number of users soaredinto the millions.
  15. 15. Reasons Why Napster was useful: Reasons Why Napster was useful:It helped people discover new musicAcoustic and various versions of the same song were availableArtists who were once unheard of gained recognitionThe more peers online, the broader the spectrum of musicand more.
  16. 16. Napster gave everyone in the world africtionless, convenient way to get content.
  17. 17. "It probably was the single-most-important eventas far as media consumption on the internet isconcerned,""It probably was the single-most-important eventas far as media consumption on the internet isconcerned,"(Phil Leigh, Internet Media Analyst)
  18. 18. Disrupting the status quoChapter 3Disrupting the status quoChapter 3
  19. 19. The Recording Industry Association of America (RIAA)denounced music "sharing" as equivalent to theft, andfiled a lawsuit against Napster in November 1999 (andagainst thousands of customers over the coming years)for stealing music.
  20. 20. Heavy metal band Metallicaalso filed a lawsuit againstNapster in 2000."With each project, we gothrough a grueling creativeprocess to achieve music thatwe feel is representative ofMetallica at that very momentin our lives, ..."said Metallica drummer LarsUlrich in the accompanyingpress release.
  21. 21. “What record companies don“treally understand is thatNapster is just one illustrationof the growing frustration overhow much the recordcompanies control what musicpeople get to hear, ...““Why should the recordcompany have such control overhow he, the music lover, wantsto experience the music? Fromthe point of view of the realmusic lover, what“s currentlygoing on can only be viewed asan exciting new development inthe history of music.“(Prince 2000)
  22. 22. From the music lover“s perspective was it really “free“QUESTIONFrom the music lover“s perspective was it really “free“QUESTIONback in 1999/2000 to download music from Napsterwith a 28K Modem blocking the phone line, with somemusic files being corrupt, and no flat-fee andBroadband in sight?
  23. 23. Apart from Prince one company understood that for Apart from Prince one companyunderstood that formany customers the main purpose of using Napsterwasn“t stealing music.
  24. 24. The customers instead wanted a seamless solutionto search for music, find, download and listen to it.The customers instead wanted a seamless solutionto search for music, find, download and listen to it.
  25. 25. And they were willing to pay for a successful solution. And they were willing topay for a successful solution.
  26. 26. The name of the Company was Apple. The name of the Company was Apple.
  27. 27. “...The choice we“ve made, wasmusic. Now, why music? Well,we love music! And it isallways good if you dosomething you love.““More importantly, music is apart of everyone“s life. Musichas been around for ever. Itwill always be around. This isnot a speculative market. (...)It“s a very large target marketall around the world. It knowsno boundaries.“(Steve Jobs during the Introductionof the first iPod 2001)
  28. 28. “With the best-selling iPod, which debuted in2001, and through the iTunes Music Store, whichlaunched in 2003, Apple Inc. and CEO Steve Jobscapitalised on consumers newfound freedom tocontrol their media.“(Mike McGuire, Gartner)
  29. 29. in July 2001 but couldn“t stop the revolution. in July 2001 but couldn“t stopthe revolution.Closed!The RIAA achieved the final victory against Napster
  30. 30. Chapter 4Impact & DevelopmentsChapter 4Impact & Developments
  31. 31. Impact #1The Love of Music was EnforcingTechnological Developments
  32. 32. „Napster in its heydayalso was cited as onereason consumerswere getting high-speed internet access.Since then, continuedbroadband adoptionrates have paved theway for the success ofpopular online videosites such as YouTubeand Hulu.„(Phil Leigh,Internet Media Analyst)„Napster in its heydayalso was cited as onereason consumerswere getting high-speed internet access.Since then, continuedbroadband adoptionrates have paved theway for the success ofpopular online videosites such as YouTubeand Hulu.„(Phil Leigh,Internet Media Analyst)
  33. 33. Impact #2The Love of Music was Laying theFoundation for Social Networks
  34. 34. Analysts say todays internetlandscape - with millions ofconsumers downloadingsongs from the iTunes MusicStore, watching videos onYouTube or Hulu andnetworking on social mediasites like Facebook -can betraced back to the day inearly June of 1999 whenFanning made Napsteravailable for widerdistribution.
  35. 35. Impact #3The Love of Music was StimulatingBusiness Model Innovation
  36. 36. Napster laid also thefoundation to Business ModelInnovation which arechallenging old paradigms:Napster „gave„ somethingaway for „Free„ which pavedthe road for varioussuccessful Business Modelslike „Freemium„and the logic of a peer-topeernetwork illustrated thepossibility to deliver „Less ofMore„. The Idea laterdescribed as „The Long Tail„
  37. 37. Impact #4The Love of Music was InfluencingCopyright-licenses free of charge
  38. 38. Im not sure what influenced Lawrence Lessig, Hal Abelson, and EricEldred in 2001 to found the non-profit organization Creative Commons(CC), but if Napster hasn„t played a role, I would wonder.
  39. 39. Creative Commons was invented to create a more flexible copyrightmodel, replacing "all rights reserved" with "some rights reserved".In 2008 Nine Inch Nails successfully released their latest Album„The Slip„ under a CC-Licence over the Internet.
  40. 40. notable web-based projects notable web-based projectsusing one of its licenses.would not have been possibleAlso Wikipedia is one of theAnd even this Presentationin this form without CC.
  41. 41. Impact #5The Love of Music was Disrupting theTraditional Media Industry
  42. 42. „You can argue that everything that happenedsince has been a reaction toNapster.„"What did Napster give everyone in theworld? It gave them a frictionless,convenientway to get content.„„Napster helped change the mindset of ageneration that now sees digital forms ofall media,from music to newspapers, as more convenient.„„You can argue that everything that happenedsince has been a reaction toNapster.„"What did Napster give everyone in theworld? It gave them a frictionless,convenientway to get content.„„Napster helped change the mindset of ageneration that now sees digital forms ofall media,from music to newspapers, as more convenient.„(Mike McGuire, Gartner Industries Media Team)
  43. 43. Due to the Distribution Channel Internet, new forms ofto produce and distribute content such as Information,Music and alike was taken from the traditional mediaCopyright, continuously shrinking costs for Bandwidth,Computing Power and Memory Space the exclusive „right„irrevocably.
  44. 44. Impact #6The Love of Music was InspiringNew Markets and new Market Leaders
  45. 45. Apple has understood best to grasp customerneeds and anticipate social and technologicaldevelopments.Apple performed a metamorphosis from aApple has understood best to grasp customerneeds and anticipate social and technologicaldevelopments.Apple performed a metamorphosis from acomputer company into a media companynow offering an attractive platform for digitalcontent of all kind.
  46. 46. Impact #7The Love of Music also had an Impact on theNew Marketing Reality
  47. 47. „Marketing„s control over branding, messaging andpositioning are in unprecedented decline as peer-„Marketing„s control over branding, messaging andpositioning are in unprecedented decline as peer-to-peer, crowd sourced, and affinity-basedcommunity interactions gain increasing influence.„(Accenture Interactive,Point Of View Series2010)
  48. 48. Chapter 5The Result:A NEW BUSINESS WORLDChapter 5The Result:A NEW BUSINESS WORLD
  49. 49. Business Innovation is everywhere
  50. 50. Customers are empowered
  51. 51. Marketing became conversation Marketing became conversation
  52. 52. Apple is melting the competition Apple is melting the competition
  53. 53. More Music is being produced than ever before! More Music is being produced thanever before!
  54. 54. And traditional media companies are still caughtin their old Business Models andValue Chains.And traditional media companies are still caughtin their old Business Models andValue Chains.
  55. 55. Recap #1 MP3 enabled peer-to-peer file sharingof music#2 Napster gave everyone in the world africtionless, convenient way to get content#3 This was disrupting the Music Industryand influencing:Technological DevelopmentsSocial NetworksBusiness Model Innovations#5 The exclusive „right„ to produce anddistribute content was taken fromtraditional media irrevocably#4 The new Giant Apple was inspiredEmpowered CustomersNew Marketing RealityRecap #1 MP3 enabled peer-to-peer file sharingof music#2 Napster gave everyone in the world africtionless, convenient way to get content#3 This was disrupting the Music Industryand influencing:Technological DevelopmentsSocial NetworksBusiness Model Innovations#5 The exclusive „right„ to produce anddistribute content was taken fromtraditional media irrevocably#4 The new Giant Apple was inspiredEmpowered CustomersNew Marketing Reality
  56. 56. Thorsten FaltingsYouve made it this far.Thanks for your attention and sharing!Thorsten FaltingsYouve made it this far.Thanks for your attention and sharing!Business Development ConsultantHappy to help you through todays Marketing & Business RevolutionLet„s network!@faltingsfacebook.com/faltingsslideshare.net/faltingslinkedin.com/in/faltingsfa.ltings.defaltings@ymail.comSlideShare.net
  57. 57. Credits:Photos WebsitesCredits:Photos Websites1. tfaltings.de - Pipi „P!nk„ Langstrumpf Flickr.com2. tfaltings.de - Bowie in a Boombox Wikipedia.com3. www.se2009.eu - Karlheinz Brandenburg - Photo: MargaretaStridh/Regeringskansliet Wired.com4. Flickr/Shawn Fanning aka Napster/Joi Ito accenture.com5. Flickr/Tower of Terror, aka CDs/William Hook6. Flickr/Diamond Rio PMP300/nrkbeta rateyourmusic.com - A Timeline on7. Flickr/IRC on my TRS-80/Blake Patterson Technology, Social, and Legal Battles8. Wikipedia/Screenshot Napster in 2001 that have changed in how we9. Wikipedia/Diagram Napster Unique Users receive and use music.10. Flickr/Green Hell/Mark Wainwright11. Flickr/Prince!/Scott Penner www.tech-faq.com - What Happened12. Flickr/Even If/Fey Ilyas to Napster13. Flickr/Money/Andrew Magill14. www.wide-wallpaper.de/Apple Logo15. Youtube/Steve Jobs presenting first iPod 2001/Screenshot16. Flickr/Ciber Cafe/Lars Kristian lFem17. Flickr/The new concept of friendship/Sylvain Latouche18. Flickr/Lessig_CC/Simon Bierwald19. Flickr/Creating Ghosts I-IV/Nine Inch Nails20. Flickr/A smile a day keeps the pain and the doctor away/Zitona21. Flickr/an old design 02/Hector22. Flickr/Apple Retail Store Fifths Avenue/Víctor Martín23. tfaltings.de - Lena Meyer-Landrut24. Flickr/The rough strength & the law sense . ./Joël Evelyñ & François25. Flickr/Retro Texture/Sarai

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