 Hello, I'm Gerd Leonhardt, media futurist from Switzerland. I'm here in beautiful Sydney, albeit of course it's winter and it's not sunny, but in any case I'm here with Ross Dawson, also futurist, and we're having conversations today about some important topics that we deal with on the daily level. And so what we want to talk about now is the music industry and the future of music, which some of you may know, I've been writing books about for quite some time. But let me ask Ross, you know, Ross, what's your take on where's music business going? Do you have a future? Are you listening to music? And if so, where are you stealing it? Not just kidding. Go ahead. Well, there's obviously less money in music than there was and there probably will be less money again in the future, but it's driven by human desires. Humans like music and humans also want to make music. So there will be markets for music in various ways. I guess what I've been really interested in is a couple of things. One is that's collaborative filtering in music, this idea of how do we collaborate to find the music that we love. And you know, one of the early forays in that space is Last FM, which is still a solid offering and I suppose is one of the better ones. I prefer Last FM to Pandora in terms of, because it is truly about looking at the matchmaking as in what are music profiles and how they match up with music. Now I've been very excited about turntable.fm, which is bringing us into the social music realm and this is something that we haven't truly had before and this ability to basically to collectively create playlists. Playlists have all been done by individuals now. Now playlists have been done by groups and I think these are two of the spaces in which certainly shaping the way in which we're going to be listening to music. Yeah I think in many ways I think we're going back to what used to be maybe 70 years ago or so before the invention of vinyl and the CD of course is that music is about an experience and it's about what happens between people and it's about sharing because what the record industry had done for a long time on the CD is to productize music, right? So that you would buy a CD and that's all they wanted and then you would buy another one and that would be it and now you're buying an iTunes, right? But music isn't about products, right? Music is about experience, it's about sharing, it's about discovering new stuff, it's about the whole ecosystem and artists are not that concerned I think necessarily with unit sales but about audiences, right? They want to have large audiences that want to be recognized so we're going back to what the good part about music is which is the creation of sort of like-minded people but also being able to share and to figure out the commercial process of this because music as a product I think is dead because that means CDs, it means pay per unit, it means a sort of commercial process, right? If you make music and experience again using services like Spotify, SimFi, Mog, Lassif and Pandora and then it's not all about buying units, you know? Then I think we're getting back into a good stream of thought to where the record that music industry of course has shrunk 70% in a decade, right? That's not surprising because of the refusal of the industry to essentially allow it to go further than the product, you know? In my view, that's the biggest problem. Well, I mean, I just say music is an experience and there's many artists clearly where their major revenue sources are not in music sales but in associated products, not at least concerts. Though not all musicians have that model. Not all musicians even want to or in a situation to perform live. So that's, I suppose you get this divide between musicians who are able to and want to engage in the ancillary revenue streams of entertainment and products and endorsements and all sorts of things. And those were focused on the music. But I still think there is a model for unit sales. I still think iTunes and pluriphration of other ones will be able to get it. I still buy songs that I hear on the radio, capture on Shazam and I buy them because I do want them my collection. I do them on part of my own personal playlist. Then I think, you know, we're of course by age. And so we're not a typical consumer in the sense today, you know, for kids, music is just a click. So when you like something, you click on it, it plays, plays on YouTube, plays anywhere else. And your willingness to pay is going to be subject to other added values around the music, for example, you may decide that you want a service to where you can stream high definition or webcasts, you pay extra for that. It's a bit like cable TV, except that the first step would be included somewhere, right? So we're going to see offerings of flat rate services, bundled into ISPs, free and paid both, right? And it's not going to be about buying news, it's going to be about buying access and a shift from copy to access. And I think if the music industry keeps on refusing what people actually want, it will just die because, you know, this sort of idea of controlling what people do and then milking them as in many which way, or sort of the idea of saying that this can be handled like it was 20 years ago, the only way to make money is to sell a CD, you know, that's just completely broken. And we're seeing the shift now, we're going to see all of the major music companies either die or adopt the access-based model, which, of course, they're working on. I hope you guys are working on that, so pay attention. So back in 2002, when I wrote Living Networks, I just did that very simple analysis of what would happen if you shifted CD sales to basically streamed subscription models and basically meaning that not only would you get four times the revenue, but everybody would have access to far more music than ever before. So it's like value creation on both sides. Why wouldn't you do it? That's because they can't control that part, right? If you can control distribution, but they can't control attention. Yes. And so therefore, this is the important part. I think that's something we have to let go of. And then it will just come to enterprise. I mean, the music industry is a fraction of the advertising or the mobile industry or the ISPs. I mean, that's like $3 trillion. The music industry is $17 billion. That's like, you can't even see it in comparison. So there's lots and lots of potential there. I think if we get used to the idea that we're not controlling what people do with distribution, we're basically making money off the attention, whether it's ad support or subscribed or paid for units, all in different proportions. But I think that's what it comes down to. So there's a snapshot of the future of music. For more from me, look at rossdorsen.com or rossdorsen.com Twitter and for Goode. It's mediafuturist.com, and I've written a bunch of books. Most of them are free on the internet, except for the future of music, which you have to buy on Amazon. But my book, Music 2.0, is available. Just put Music 2.0 and Goode GRD. You'll find lots of free PDFs around the web. And of course, at mediafuturist.com. And on Amazon, if you do want a dead tree, you can buy it there as well. Thanks very much for listening.