The Digital Music License: why, what,

how and whoGerd LeonhardMedia Futurist

www.mediafuturist.com www.twitter.com/gleonhard

www.mediafuturist.comtwitter.com/gleonhard www.payingwithattention.com

What I do:

‘I give ideas’

This is not against CopyrightThis does not propose that Music

should be free, periodThis 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

PermissionGoogle’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

200 Million users seems entirely realistic20 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 costsPlus: costs for Public Performance in 50+ countries

Plus: payments to composersPlus: technical costs

Why this can’t possibly work

And this is not a unique problem

Private deals for public services?What choice did they have?

How much control does this leave them?Is this ‘fair business practice’?

But it gets worse

Connected people ‘consume’ differently

Sharing is the Key DriverAccess trumps Copy

Listening, Reading & Watching = Copying

Controlling distribution - controlling the flow of digital files - is the only way to

generate future music revenues1. 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

LICENSED!

What would this look like?

First, legalize it - give permissionAll use - all pay * or otherwise generate $ value

Many kinds of payments emergeRights are public, open and standardizedLicenses are available to every business

Data-Mining and Market Access is $ value, too

Public License + Build-in Revenues

+ Proportional Distribution

ISPs, Telecoms &Networks

LabelsPublishers

Rights Organizations PROs / MROs

Government

AdvertisersSocial Nets

Device MakersSearch

...

How would it work?

ProvideCollective License

Rev Share &License Fee

per User

“Pool of Money”

...want to align withArtists / Genres

Programs / Platforms & Services to reach

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 ...?

ECOsystem not

EGOsystem

Music Industry

LegislationGovernmentRegulation

BrandsAgencies

AdvertisersMedia

Google China President Kai Fu Lee: “Mutual Interest, rather than Monopoly,

is the key to sustainable growth”

Telecom

Calculation examples50 Million applicable UK Users (estimated)

200 Million GBP / Month @ 1 GBP/week/user2.4 Billion per Year earned via the DML

2008 recorded music revenues: 1.36 Billion GBPAdvertising & Marketing Spend in the UK (2010): 25 Billion

Estimated % to be digital / mobile: 25% i.e. 6.25 Billion GBPYearly 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!

A new and very lucrative Ecosystem would emerge

Flat Rates, Bundles, Revenue-Sharing

Live-Concerts, Web-Casts, Virtual Shows...

Mobile Device Applications & Software

High Definition & Premium Media

Community Premium Services

Many other New Generatives

Permission

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

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

The Digital Music License

• email me at gerd@mediafuturist.com• twitter.com/gleonhard• facebook: gleonhard• more presentations at

www.mediafuturist.com

Thanks for your time

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