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;) Enjoy

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

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

4. So what is the new framework (1)

5. So what is the new framework (2)

6. So what is the new framework (3)

7. 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

8. 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”

9. If distribution is indeed
uncontrollable we will need
to legalize, bundle and
integrate it - all else will fail

10. Experience
Embodiment
Access

11. Experience
Embodiment
Access

12. From Copy to
Access + + +
From Product
to Service

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

14. The irreversible shift in Content Perception
Co
m munity Con
nv
en
Co ien
Interface text ce
Content Timeliness
Curation
Content

15. The past: revenues based on Controlling Distribution

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

17. Content Commerce 2.0:
don’t try to sell what is
Ubiquitous - sell what is
Scarce
Source:
ReadWriteWeb.com

19. 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

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

21. The Success Formula:
Content + Context + Connectivity -
Community + Convenience + + +

22. 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...!

23. 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?

24. 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?

25. 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...?

26. 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?

27. 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

28. 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

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

30. A fact: flat rates and bundles often work best

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

32. 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...

33. New Packages and
providing new Experiences
will be the Key to Success

34. Rights holders and content owners now
have the choice between:
A) The Illusion of Control - and
declining Revenues
B) ‘Open’ - and new Revenues

35. 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

36. 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

37. Attention Transfer is $$ Osmosis

38. The Mission: Converting Attraction into Real $

39. Please: forget most of what you know about Advertising

40. Yes, there is serious $$ in Advertising

41. • ~ $ 900 Billion USD Global
Advertising Spend in 2012
• 30-50% shifting to digital
media / interactive / mobile
• Opt-in, personalized, targeted
Advertising = Content

44. Why Google is willing to ‘pay’ for music
- in China
Why ISPs will be willing to ‘pay’ for music

46. The next music format is... Software

47. Such as

48. The Music 2.0 Model Business Models
Business Models
Business Models
Artist /
Creator

49. The Mobile & Social
‘Consumption’ of Music is the
#1 Growth Opportunity
Deep Collaboration with
Telecoms & Operators is
the #1 Mission for the
Music Industry

50. But: the content pricing & licensing
issues cannot be solved without the solid
engagement of Telecoms, ISPs and
Operators (as well as the Advertisers)

51. 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

52. Just like...

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

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

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

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