 One of the leading futurists in this marketplace, so we're going to put the lights down low for Gert's presentation It's high-octane stuff. Could we give Gert a extremely warm welcome, please? All right. Thanks very much Lights go down. That's good Okay, great to be here. I'm delighted to speak to you about what's coming in telemedia as you can see one of my key thoughts is Disruption and lubrication. I'll explain to them what that means in a second turn. It's not dangerous. Don't worry My central thought really is that today if you're in the telecom business You are in fact in the media business Probably even worse if you're in the media business you may as well be the telecom business in the future Just briefly talking about what I do as a futurist people are really wondering sometimes what does a futurist do? We don't predict stuff. We listen There's a Chinese saying that says if you want to know the future ask your children That's sort of what we do So we do research and talk to people and basically try to create four sides over call four sides For the next three to five years mostly in telecom media and entertainment Here's some of the clients we work with content companies who work with record labels publishers Broadcasters and of course it companies and and the Googles and others of this world So we see all different things on different sides Ray Kurzweil who's a really interesting guy at the founder of the singularity movement, which is rather scary Said something very interesting said a kid in Africa with a smartphone today Has more information than the president of the United States 15 years ago And this is so true. I mean when you think about this right now on the mobile phone We can verify something immediately we can give you a rating we can criticize your movie online We can complain to customer service about delays with the airline if you use the flight tracker app at the gate You'll have more information about the fly leaving and the woman at the gate That's called consumer empowerment In many ways now that our world not just in political terms with the Arab Spring and others Looks a little bit like this where all of a sudden consumers have become this really powerful entity Very soon 5.5 billion people connected to the web on mobile devices Then it's what I call the people formerly known as consumers And we have to embrace this because what's happening is that because there there are people who are no longer just stupid Consumers who pay whatever it takes Now people are saying you know now we have a choice To bypass the offering and maybe do something that you haven't thought of you know Ever since the days of Napster that has become equal with Illegal or free downloading, but not just that I mean basically if you look at what people do today They're consumers or producers Participants the only reason I still watch CNN It's Twitter Because CNN uses Twitter now as a major source of revenues and I have just become a member of a CNN I report crew to where you can upload commons and stuff and and input into CNN right so CNN has already become a Conglomeration like many other TV channels have Of this phenomenon now Kevin Kelly who's the founder of wire magazine and now the chief guy chief Maverick He calls himself at wired. He said basically what's happening is that we have become people of the screen Check the taxi next time you go in London or Singapore or or any other any other big place in the world There's at least five screens in the front of the taxi the GPS the guy's Facebook page the taxi thing Right and a bunch and people actually doing Facebook while driving which is bizarre right the other day I had a guy with a computer like this doing Facebook while he was driving So we're now people of the screen in Asia many places Yeah, we travel around the world with seeing big ads projected onto buildings I mean basically you can now communicate with the bus stop and download a song from a bus stop, right? So we are people of the screen and now we're also people of the cloud Okay, people of the cloud means we have come gotten used to the fact that our media our Education MIT open courseware project right our health records Everything that's digital will be digital and we'll live in the cloud So we use music service like spot if high or more or or RDO or many others and and all the stuff We discussed in the late 90s and the internet years has to come true. We have the virtual jukebox in the sky This is great news to you in the Telecom business right because there is no cloud without the connection to the cloud and Somebody running the cloud, but of course the other thing is that people of the cloud will expect a lot more than just mere connectivity I mean, why does it matter if I can get a song for free or a movie for free? Doesn't matter it matters financially, but really what I want is I want relevance I want the right song. I'm looking to get a lot more than a free download I mean after I have gotten my free downloads and the next thought is okay. Is this a good movie is The quality good enough, right? I mean the the commerce model is based on anything else but Distribution I'll explain to you in a second going back to Kevin Kelly who said something very smart cut right out from his video At the TOC conference where Kevin talks about what has happened is the shift from the file from the page to the stream and The shift from the desktop to the cloud So this is a trend that we're seeing especially mobile devices. It's all about streams tags clouds and flows This is also very good news for the content owner Because guess what you can't pirate an experience You can't steal emotions. I mean you can try but It's very hard to copy something. That's uniquely connected to other things That leads to a phenomenon called social DRM social copy protection Which means that if I log into an account with my name I would be very unlikely to share this account with 50 people because they pollute my profile They change what I look like there For example, I use Spotify a lot, which is a great music service And when I use Spotify people on my Facebook page can see what I'm listening to Now if my wife is also listening to Spotify with the same username People will think what in the world is he listening to and it's not me is her right, but they don't know So basically what we're seeing here is a shift towards the stream the tag and the cloud and especially in Southeast Asia This is going to be a huge business Not just in terms of transporting it, which is a big business But in terms of filling it with meaning and social connectivity and value In most countries people care a lot more about their time and the care about money And this is a trend that we're seeing in general. I think ultimately this idea of scarcity You know locking something up to make it more valuable and the idea of distribution as a value factor in my view Is rotating is changing. I think it's more about ubiquity about selection and about relevance What Kevin Kelly calls the new generative's the new way to make money This is why we shouldn't care let people download for free What we have to care about is how we can monetize ubiquity and selection relevance service timeliness and so on As Nicholas Nico Ponty says from MIT says we don't want a thousand channel. We want the one to watch If Disney is going to be that one channel up. We want to watch. Let me have this channel in a way that I'm willing to pay for it That is the future of distribution over the top I mean if you're looking at these trends clearly Asia Pacific trends what's happening in terms of time spent on the internet I mean that time is huge here 25 hours a week in Singapore Five hundred sixty four percent mobile traffic growth. I mean you've seen all these numbers, right? I mean clearly that's what people want. You see total mobile internet dealers for example in China, of course, it's huge But Indonesia only roughly 19 million with a country of 240 million. We have a long way to grow All right, there's a lot of new things happening there If you're looking at these number all the money is being made on the top mobile apps advertising So if you're in the telecom business, you have to wonder about this. How do you participate? You discussed this yesterday. My view is clearly you will not participate unless you collaborate With what's happening over the top and if you look at these numbers, I think diversity underrated in fact But clearly in television these are the great lesson Every single television in the next few years will be connected to the internet and this is great news Of course for the people making those programs because now you know who they are they can give you a feedback They can collaborate you can charge them for other things you can sell data. You can sell ads, right? I mean all good news Of course, the main news is that people are connecting through the television like they used to at the water cooler in the 50s When you watch I love Lucy 1960 70% of Americans watch the same movie That's down to 4% now So now with social media people are sitting down using for example ITV live app in the UK Watching the ITV show and chatting on Twitter and Facebook 50% of the viewers are talking about the show on their mobile devices while they're watching it This is a huge development that has a lot of benefits. I think for everybody in the food chain So what's happening here for example the example of YouTube is that over the top content is exploding first? Of course content aggregation as you can see with YouTube the new movie channel on YouTube featured Live streaming on YouTube and of course YouTube lean back which is designed for your television Just runs automated programs while you're watching. It's I think youtube.com slash lean back And now YouTube adding new content providers I mean clearly content aggregation and curation is big on YouTube But the second step is that all these guys and there's about 50 of them right from QQ and Tencent To many other companies around the world getting into content production YouTube has just a dedicated a hundred million dollars for the production of TV shows And of course Amazon is now becoming the biggest distributor of electronic books and therefore also a publisher Netflix has just exclusively licensed the TV show Madman that will only be available over the top on Netflix Facebook will go public probably tomorrow. I'm not just kidding sometime in the next few weeks And they're also going to get into production So clearly our Disney has already done this. I think the deal is about 10 days Oh, that's so where Disney and YouTube will create a TV show based on where's my water? So you're going to see a lot of old meets new in the next few years and as a telecom and ISP or mobile operator If you're not part of this you're in deep trouble Because all that stuff will happen on top of the network and all the money will be made on top of the network And you're just going to finance and run the network and that's it And you can charge people for the network Ever less of course over time Facebook is a great example almost 1 billion users Yeah, Facebook clearly has achieved ubiquity in most places now Facebook is becoming essentially cable TV without the cable Facebook will raise a hundred billion dollars on the stock market Let's be conservative and say 50 Okay, how much content can the license with 50 billion dollars? They have already licensed One of others movies mirror max Disney. I'm not sure Nikolas would tell you But clearly Facebook is it a platform. It's a infrastructure platform and social is the new broadcast That doesn't mean all broadcasters will go away. They will not but clearly Advertising money will shift towards these platforms We're talking about a global advertising budget of roughly six hundred billion dollars plus four hundred billion in data mining and marketing Various marketing costs and so on so roughly you can expect one third of that money to shift towards mobile video interactive three hundred billion dollars and That's what's going to hurt of course the old guys, right? So social connectivity social programming guide SMS replacing Being replaced by social media in telecom. We're moving from communications to content And that doesn't mean communications won't happen, of course They will but now we're moving towards content as Kevin Kelly again points out the internet is a giant copy machine Isn't the whole lot we can do about this what we can do about this is of course to try to monetize what people do there with mobile devices with the cloud Embracing what goes on essentially in the content industry We have to help these guys understand that we're shifting from a copy economy to the access economy and of course I all know that right but what does it mean? How do we create a model based on the access economy? That's a bit of a reset as we can see in digital music for example Now we're clearly living in this world now where you guys over here you guys are the cat The telecoms and ISP is looking at the mouse as the content business because you know basically the Telcos are roughly I think about six point five trillion dollar business and Entertainment is one point five says a bit of a difference there, but clearly we're moving into an era that are called telemedia And this is very scary to both parties because clearly It's unknown right we used to live in this world the world of silos content telcos You know distribution device makers now If you want to live in this world it's game over And we'll take about five years to really be felt in all territories But clearly we're moving into a world where these kind of devices are useless without content But they equally useless without connectivity So that is the marriage that I see in the future. I call this telemedia I think we're going to see all the pieces of this ecosystem build a new pie that we have I think you discussed yesterday All different people and of course the new players being social networks and surgeon tech companies So the challenges for you to find a new role Much like most other companies have to find new roles now for example Audi the car maker is spending 20% of their R&D budget I think about 12% actually on define making a new car. It's a self-driving car You don't drive it yourself Another 10% is spent on building wind turbines for energy in the future little to do with cars But a lot to do with technology if you're looking at this graph here clearly from smartphone Adoption the next few years now future revenue is in what they do there not the fact that they can do it In other words, it's not so interesting that they can download and do stuff on the web But how they do it what they do what they want when they do it who they do it with and so on That is the value that I see in the future if you're looking at this chart of market caps from Gaff and September 11 clearly you have to ask the question Who will be the new telemedia leaders to put the fear into you for this day? Look at these guys Apple Google Amazon and Facebook They do have the money So it's time. I think to move in this direction with Facebook preparing a hundred billion dollar IPO That clearly is a challenge for you in the future. These guys may very well eat some of your lunch in the future Especially in Asia right this guy over there. They're 10 cent CEO In many ways has a lot more Jews coming up than the guys in America because they understand the market So if you're looking at the business model for example in the past of Apple And sell content to sell hardware I mean look at a pie chart of revenues of Apple They have hardly made any money selling content and they don't intend to really they charge for it Yes, but really what they sell is hardware inaugural us in In for ISPs Bundle content to sell core services. We already have this in TTC in Denmark IRCOM in Ireland the same logic So in other words you could even argue for saying make content free and prevent assist and Raise money from selling your services That's a trend that we're seeing a disrupt and lubricate as I said before Amazon Kindle be in the best example here Nobody asked Jeff Bezos to make the Kindle now he sells more Kindle books and he sells printed books Let this be a lesson to us. I think we have to become market makers If you sit in this room and you're saying I'm a market waiter You'll be toast in three years because now it's about making new markets creating models That are not totally obvious if they were obvious then you wouldn't be sitting here asking the question what to do Looking at what's happening in music right streaming over the top right market making requires disruption Which means that the content owns have to accept that the model is different But also the telcos have to accept that they have to engage They have to actually solve a problem. Otherwise. What's the point? You know all the good innovation the last five years were about disruption Skype eBay Amazon Twitter Constant disruption look at Indonesia another good example where I do a lot of work With talcom Indonesia Clearly, you know the question you have to ask why would you leave it to others to monetize content? These guys from four shared here make 40 million dollars a year with appetizer given content away for free How much more of that are we going to sit by and say well, you know what we can actually do this better and make money But Facebook is number one will they do this clearly they will not much to compete with so I Would encourage you for the rest of the day to look at interconnected business models I had business models based on advertising devices content Telecom to think about the theme of disruption and lubrication lubrication meaning that you make it work because you have scale This is the biggest thing here and of course ultimately it's going to be mostly about Finding a way to use data. This cartoon shows it very nicely says a very important trend, right? It's free But they sell your information This is Google Facebook Twitter Google makes 2.8 billion dollars a month selling our information and Facebook will make the same if not more selling our information and giving us free content Can you sell and use people's information? You can you have to ask for permission? There's a few minor things you have to keep in mind for this So clearly what's happening our future is that we're looking at content Advertising data and users converging and of course the verse is also true users content data and advertising Very important to remember for our future Data is the new oil has been said many times, but it's definitely becoming true data is the major driver of this economy The internet economy and we have to get engaged to use this data also of course to deliver advertising I'm a little bit out of time So I'm just going to give a quick glimpse at the issue of free a trend that we see around the web Which is clearly a winning trend is to make something free only to then sell something larger and called freemium ever note drop box Skype LinkedIn All those models are based on freemium models in fact cable TV of course is a freemium model because it's essentially free Which means below cost when people sign up initially, right? You subsidize it just like the Kindle is essentially a freemium model So I think this is a model that we're going to see a lot in the future It's based on this logic of saying okay It sort of feels like free, but it's not actually free in economic sense I had money is being generated people are getting paid, but it's very attractive Fine the principle being is that free or feels like free attracts people and What goes beyond the free is what monetizes it? This is a very important point I think in the key economy of scale that you have the network effect and the telecom business so I need to get to the end so we can get to our discussion so I'm going to skip ahead of here really quickly and We'll dive into this just one more important slide is that Kevin Kelly talks about the new generative's here They are if you want to know about this just put in new generative's Kevin Kelly You'll find lots of stuff in the web. He's talking about how now today We have so many more things that are happening that are monetizing for example immediacy Personalization immediacy is for example being able to watch the new TV show on demand At the first time it actually runs life somewhere else and not Safe for later or watching or downloading a show that you went to All right on a concert. That's immediacy a few example Metallica sells their music from all live shows on the web Major League Baseball is about immediacy is about being connected very successful model Virtual business farmville on Facebook. I Mean these models all make a boatload of money HD opera in America You can go to 30 now I think 200 theaters and and watch the Met in the theater for 10 bucks while it goes on in New York Making lots of money with this through this kind of model So the future of content is going to be based on various things not just paying money for content Which worked fine for a while, but will not work Exclusively in the future is by creating new ways of getting paid One through virtual currencies Facebook money Facebook credits The use of personal data Time attention which is called advertising Influence reputation and many other models So this is our job for the future is to create those business models that don't exist yet There's not a job to recreate what used to be so we can put a band-aid on the current business And this is quite a tough mission I think basically for you guys if you're in the telecom business This is the game right in the past. It was a simple chess game, and then I'm a chess player. I love chess It's controllable, right? If you know enough about the chances are you'll win the game Because you just have to play it a lot, right? But now we have this game We have a three-dimensional chess game Try to plan this game. It's going to be pretty tough Which means that you have to do your current business You have to do a new business and they have to think about beyond the new business You have to think in three different levels You have a current business, but the future business is not going to be about providing infrastructure and making a faster cheaper network I mean that's the business now, and it's still growing nicely congratulations, but in three to five years There is a new game You have to think of that game today Summary and then we'll go to the panel disruption Anything you do in content has to disrupt something that's not currently working That's why most telecoms in the past and operators have tried to sell music didn't work because it wasn't disruptive It was just a mirror of reproduction of past models lubrication If you've got 400 million users you can lubricate you can make things work like very few others can And free you have the power to make things feel like free Bundling in into the subscriptions networks Operating devices and so on which is a very unique situation. Thanks very much Here's my various stuff you can download all my books from the internet just put in GERD and free PDF And you can find them. I have also apps where you can you can download them I have a book a new book on Kindle called the future of content. That's also available there. Thanks very much and That's it. Great. Thank you. Good