 Hi, this is Gerd Leonhardt, media futurist in Basel, Switzerland, today with another edition of Gertube. A very special and dear topic to me is the future of music, as some of you may know. I was a musician and producer for a long time. I went to Berkley College in the 80s to play guitar. I co-wrote a book with Dave Kusek called The Future of Music, which you can still buy on Amazon. It's five years old, but it's still quite cool, also has a Kindle book. I also wrote a second book called Music 2.0, which is available for free on the Internet and on the mobile at MusicFutures.com. But let's talk about the future of music. This is a very, very important topic because many people around the world are sort of looking at the music industry and saying, you know, these guys are dead because music isn't selling anymore. But of course, the fact really is that music is more important now than ever before. We have everywhere music on the Internet. We have it in shops. We have it on trains. We have it on all of the TV and television productions, on digital media, on games. Music is everywhere and people really love music and they're very interested in music. What they're not interested in clearly is an industry that forces them to behave different than they want to behave. And this is a main problem, as you can see in this slide, the mantra of the music industry, which I've worked in for a long time, working with labels all over the world and trying to help them to understand the digital paradigm. But the mantra of the music industry has been the opposite of Google when Eric Schmidt talks about that he wants to understand the future and prepare for it. That's the Google mantra, right? The mantra of the music industry is what does the future look like and how do we prevent it? That has been quite clear for a long time because clearly back in 1999 it was clear that what we wanted is a big box in the sky that has all of the music and we push a button and it starts playing. The jukebox in the sky as it was called back then. Today we have this, right? We have Spotify, we have SimFi, we have various services but still around the world Spotify is only in six territories. I'm using it with the UK-based version which works great because of licensing issues, because of all the legal issues, because nobody can agree on anything. The music industry is the worst case of non-collaboration you can ever find around the world, not to dwell on it too much, but going forward what needs to be done is to agree on the new rules of commerce to unlock music that people can pay for it. What we're seeing basically as a trend is sort of bundling as you can see in this slide, if we're going forward trying to sell copies of one song at a time, like iTunes has been doing very successfully, 15 billion songs, that is a success even though in overall terms it's not for five years. But if you're looking at this slide it shows you that the average person in the US spent $71 on music 10 years ago, today they spent $26 on music. And that is clearly because buying music is not easy. I mean you buy as one song at a time but are you going to fill up your iPod with $20,000 worth of music because that's how much it would cost. Nobody in their right mind would do this. So the commerce model of iTunes is flawed in this regard even though it's quite good in other regards, but at a certain point I stopped giving music to my kids because spending a thousand euros for music seems out of proportion. So now we have to say what is the future of music? And I think basically music is moving into the cloud. We're going to use devices to play it, when we're at home we're going to get high definition and streaming and all kinds of maybe quite reforming sound or 3D things. We'll pay extra for that. But as this slide shows making it fluid is inevitable. And that probably also means that the beginning of music consumption has to be somewhat free or feel like free. Like imagine radio the next step, you're able to play a song on demand or Pandora that you have in the US which is a great service, 65 million users, that becomes inevitable because essentially it's very powerful to get stuck and you really want to get into it and learn more about the music. So now you have TDC play in Denmark, you have Play Louder in Ireland, you have SimFi, you have Google Music in China, you have lots of interesting things in India as well. And as this slide shows music is moving into the cloud. People will be pushing a button and playing the music pretty much anywhere they are from different devices. And there's lots and lots of money in this. We just have to get away from this idea of saying now when you make a copy you have to pay another euro. That is old world thinking won't work. We have to cover access. And as I said earlier 5.1 billion people connected on mobile devices. Imagine if they all create some sort of monetary value by clicking a button and playing music, streaming music, advertising supported and otherwise. As this slide shows we're moving from a world that used to be sort of about monopolies which the record labels and of course the societies definitely qualify for. Now we're moving to a world of networks. So Spotify is a network with many different ISPs and mobile operators, the network of record labels and the network of publishers. It's about being a network that creates value for everyone and now it's also possible to go direct just like you can publish a small book on Amazon using Kindle, you can write a 40 page book and publish it on Amazon in a week. Now you can do the same on Spotify and other services. You can build your audience and people can listen to it with a bundle and a flat rate. So what we're going to see in music is that what I call music 2.0 we have to move to an open ecosystem which means public licenses, standards for licensing, getting away from using copyright as a hammer, not as a hammer for the artist to make money but as a hammer for the businesses to sustain their market advantage which is not a good thing. So clearly we have to move into an open system or none because my belief is that the whole thing will crash and we'll find a way to turn this into an ecosystem. I think we're going to see bundles and flat rates, ISPs getting involved, lots of telecoms and operators are interested in music. The music industry has to get off this idea of saying no, no, no to everything that comes around until it's proven that it makes millions of dollars for them. We have to move more into a flexible relationship, into experimenting, into looser legal regulation that allows experimentation and away from this idea of forcing the user to do what we have differently. The reality is the music industry has declined by 71% in 10 years. That is not an accomplishment and we still don't have a market that is actually liquid and friction free for music. So if you're interested in more stuff, I have written lots of stuff about the music flat rate just Google for Music Flat Rate and Music 2.0, my book is available for free downloading as you can see in the following slide at the end of this. Thanks very much for listening and I hope to see you down the road.