 Here's my Twitter name if you want to pursue me in the Twitter space. You may be wondering what a futurist is. I wonder about that myself. The name futurist was given to me by my clients who said, you always talk about the future. So I became a futurist, really what I do is I try to understand things that go on in the next sort of two to three years and trends in the next five years and I develop simple ideas for my clients based on scenarios. So I'm not a futurist like Toffler or like Paul Sappho or like Ray Codeswell, thankfully. I deal with pretty much for me is the present. So deforming ideas and basically figuring out what to do, I travel the world basically speaking about these things. Here are some of my clients. So let's move right into it. As all of you know, of course, the change in the last two years has been tremendous. But who would have foreseen something like this? People playing music on the iPhone. I used to be a musician, so back then in those days you would get punished. If you go to a guitar store and you play stairway to heaven, you get kicked out. Big science, no playing stairway to heaven. I'm sure you know about what I mean. So in the past of media was all a relatively simple game. It was a pretty straightforward situation until now. All of a sudden in media we're facing the same thing that we're facing in other industries from the internet and it's drastically changing. The past in media was essentially a domination game. He dominated the producers, the artists, distribution, marketing, promotion, selling all in one place. Today's example of that, of course, is iTunes. So we have walled gardens for telecoms. We have captive customers and we have iPod controlling everything and everything under our control. We're essentially looking at a situation where this in the past was number one. Controlling the consumer, controlling the artist, essentially what I call an ego system. So big broadcasters were all about themselves, about controlling the institution. We still had the debate, of course. This is the demise of the music industry, it is the ego system. So basically the future is different. The future is about the connected customer and the interconnected consumer, about people collaborating. And this sounds kind of California where I used to live probably for too long. But it's all about collaboration and creating revenue models together. It's basically about the merging of these things into this sort of new ecosystem and so going back to what I said earlier, we're essentially looking at an ecosystem, rather than an ego system. That sounds very sort of obvious, but here's the master of all futurists. Let's see what he says about this. The global village is a world in which you don't necessarily have harmony. You have extreme concern with everybody else's business. And much involvement in everybody else's life. It's a sort of Anne Lander's column writ large. And it doesn't necessarily mean harmony, peace and quiet, but it does mean huge involvement. Marshall McLuhan, it does not mean peace, harmony and quiet. It means to a large degree a certain kind of chaos. We're in a similar situation now very much to before the orchestra plays. Everybody tunes up its mayhem, right? But then they play a song or an opera, right? That's in a way where we are right now. I think that if you think this sounds kind of new agey, I don't agree. I saw a post this morning on Twitter saying another one of those save the world presentations. So I hope you don't misunderstand me. I think this is a very, very capitalist development that we're seeing from ecosystem to ecosystem. If you're looking at this trend, this is from the latest Morgan Stanley presentation, Mary Meeker at Web 2.0. It's quite interesting. The trend from the users being on the carriers website, all the way to the 2008 trend where the carriers were reduced by 2 thirds of the overall output. So the attention of the user has shifted away from the walled place to the open place. This is a crucial development we're going to see there. It's basically I think the future success in telecom will not be possible without real and deep engagement in media and content. And let me get this clear. I don't mean telecoms getting into content production, becoming record labels, right? But solving the problem of how content is being transacted on the internet and on mobile networks. Without that, I think we're looking at a very, very tough proposal going forward for the telecom industries. So obviously you're with me on this. I mean, we've seen all the long mobile social and all that are major game changes, right? Back to the two people playing with two figures. What we're seeing here in this graph from Cisco is most of the data in 2013 coming from video. But that's not surprising to any of you, I'm sure, as well. But this is where a lot of the change is being driven from mobile, social, and of course, video. This is parallel now in a trend that in February of this year, for the first time ever, email was surpassed by messages on social networks. The blue line is email, right? So for the first time ever, you could say social media beats email. And I blocked about this a year ago. I said email is for old people. That's essentially becoming true now. It's for a different context, right? Does video beat search? Or is that the trend that we're going to see? I think this is a very, very interesting observation if we look at the sort of model on the web, the vortex model. I'm giving away here now that 10 years ago, I was in the internet bubble business with a music company. We had a vortex model. That means pulling from the left and from the right to create value in the middle. There's a company you may know called telco2.0.net, STL partners. They have developed this model called a two-sided telecom model. I'm sure most of you are familiar with this. So I'm taking a piece from them basically saying, I think what we're seeing is that we have upstream customers and we have downstream customers. And we're connecting them with a new model, which creates value on both ends rather than just on one, so that the vortex can sort of start spinning. That sounds indeed kind of futurist. Let me bring it down to a more basic proposal, right? On the left, the upstream. On the right, the downstream value. Great example of this includes eBooks. With eBooks, we're going to see that value created in the middle. I, between the content owner, between the distributor, between the user. And the same goes, of course, for mobile phone applications like Facebook and others. And I think this trend is going to really grow in the next few years. That will be a very interesting overlap of those two vortex models. So the vortex of speed drivers that we're seeing right now already being implemented around the world is essentially the idea of packaging, bundling. We're seeing this primarily with music, which I'll show you a few examples after this. We're seeing that with creating sort of a magnetism for brands and for companies and with an entire new toll booth strategy. In other words, who pays for content? Why, when, and how, and with what? It's completely up to discussion. I think this is a page for the telecoms to take and basically jump on this proposal of essentially creating utility-type models for media, starting with music, proceeding into books, games, and so on, because there are real solutions here that are needed and also already being looked at. So basically, if you're looking at the sort of progress in the next few years, in books, for example, we have this proposition right now where we're essentially saying that books are very expensive right now. But if you buy the Kindle, then it's still very expensive. It's just a little bit cheaper, like a book is $10 rather than $20 or maybe $13, but not cheap enough. So what's happening afterwards is that we're going to go to a utility-type model of flat weights and bundles. Music will be first followed by books, and that is going to look like this. We essentially have a new ecosystem of how we sell. And what we sell, in other words, is selling only starts with the flat rate, doesn't stop with the flat rate. In Germany, they're calling the music flat rate a cultural flat rate. This debate is raging as an antidote to the three strikes, which I'll comment on shortly. Ironically, of course, when we're done with the flat rate, we may well be selling even more expensive things afterwards. Content pricing will flip. In music, we're seeing a trend towards what was already true 10 years ago. A song for 10 cents would easily sell. Is there anybody here who wouldn't buy 100 songs for $10 or 10 euros? Everybody, why would you bother? There's one person. Don't be too public about this. The price is sinking like this. If you put all of the videos online, the DVDs of Warner, they would make one fifth, maybe only one tenth of the money. But what is happening on the other end of the equation is that all of a sudden, the 2% of people that are using iTunes-like service, they would grow like this. Lower prices and ubiquitous use. That's really what you want. Everybody paying a little bit to create a larger momentum. This is what we're going to see in music in the next 18 months, starting with companies like Glass of M, Spotify, Pandora, and so on, leading us very close to the model of Chris Anderson, the freemium model. Freemium meaning that you get something for free, only to then pay more for the premium. Very interesting model. And on top of that, don't forget, of course, the flat rate model means that you can build an entirely new business on top. And this is where it gets interesting. If you want to sell music books, films, television, on the web today, you cannot just sell the copy of zeros and ones. It isn't going to work. You have to sell added values on top of the zeros and ones, on top of the copy. It builds every single attempt to sell music on a per unit base or subscription has pretty much failed except for Apple. And what do they sell? iPods. They make money with hardware. So music by itself is not a selling factor. Everything around it becomes a selling factor, and this model is going to grow in all content industries. Perfect model for the telecom companies to sit on top of. Because creating value when something is really sticky is always going to be a lot easier. Take the New York Times. People are saying that if people stop buying the print edition, we have a big problem. Well, the fact, of course, is content is only 20% of the cost of most newspapers. The rest of the cost is this very building, the trucks, the printing presses, the ink, the infrastructure. So if the cost gets reduced by 80% in theory, we should be able to be able to shift it over here into this. Is that going to hurt the production of content? Probably not. But it hurts the entire business model around who sells what and why. What are we paying for? It's a very painful shift, of course. Big question mark if that is going to be successful when you already have an existing business. So the future really is, as I was suggesting earlier, the idea of bundle plus. Essentially saying you get the bundle as already included in the network access, ISP access, mobile phone contracts, and so on. And of course, the phone itself, like Nokia is trying. But then sell other things on top. This is the crucial Isberg effect. The bundle is only the way to get going. And it's only the very first step. And again, music is the most obvious place. You can sell access to high-definition recordings for people who love jazz or classical music, easy sell. You listen to the badly streamed version on Pandora Last of M, whatever you have. But if you want high-definition, you buy into the high-deaf club for another 50 euros. People would do this, because they see value in high-definition. Things like live streams, virtual goods, social commerce, and so on. This is the ideal place for telecom companies to be involved. Because guess what? In this model, data is the new oil. The data that is being generated that's being used and that can be used for things like next generation advertising is a huge amount of value. Forget everything you know about advertising today. It's a $670 billion industry shifting towards digital, mobile, and content supporting. So there's a great amount of value there. We do have to ask ourselves, where is the value of content? Is this the value? That's what it used to be. When you buy a book, you don't have ads. 100% of the book is paid for with your money, the writing. Not the writer, but the writing. So that was the past. The future is going to be a little bit more fragmented, as I'm sure everything else is pretty much becoming more fragmented. It is moving to a model to where we have a selection of different values, context, curation, timeliness, embodiment, relevance, and many other values. Chris Anderson's new book called Free is being given away for free at wire.com. The Amp3 you can download for free. If you buy the edited version, which is half of the length of the other version, so four hours rather than eight, you pay $8. He's going to get you to pay for him to cut down the version and make it shorter. That's the package. And we're going to see those models all over the internet, adding value. That's what people will charge for. This is the past, selling the file, the copy of content. The future is selling the package. If you want to read to more about this, then you should check out kevinkelly.org. He blocks about this all the time. So what we're seeing in the future is essentially a big shift. What matters is no longer that we can actually download. That matters to some, of course. But what we download, who we connect with, what we select, the context, the curation, the New York Times won't be read by their readers because of their writers. That's one part of the equation, because of their curation, because of trust, because of all the stuff that they serve up that's extra. I will use iTunes, not because I get legal music, but because they give me guidance to what I should select because of all the added values. So there's great opportunity here, I think, in this space, if we're looking at this direction, to lubricate the system and make it liquid. Telecom companies have in the past not want to get involved with this because it's a dangerous place. Are you responsible in parenthesis? This has to stop, because if you don't do this, somebody else will be the lubricant. It's already happening with Google in China, where they have taken responsibility for legal payments of music for the Chinese search engine top 100, which is owned by Google. Here's Group of Murdoch. The digital age is almost over. The aggregators and plagiarists will soon have to pay a price for the co-opting of our content. But if we do not take advantage of the current movement toward paid-for content, it would be the content creators, the people in this hall, who will pay the ultimate price, and the content Clapdomaniacs will triumph. The content Clapdomaniacs will triumph if we don't start paying for content. That's very interesting. Is that wishful thinking? Or does he want his competitors to do this, to see them sing first? This is a very interesting scenario, basically enforcing payment of this nature has been tried. Doesn't work. What works is to get payment by empowering the user. It's as simple as that. That is the model, of course. That's a telco model. Anyway, if you're a telco business, what are you waiting for? This is your turf empowering the user to get the payment. So this model isn't going to work. Building walls, we've tried this in music. Now we're going to do it with books. We're going to get DRM books. That model isn't going to work. The quickest path towards economic suicide is to build a wall around your content. And that is what is the big opportunity in this space right now to help working on this model. Spotify. Anybody know Spotify? It's pretty well known music service, started by a guy named Daniel Eck in Sweden. This is Spotify on the iPhone. Mobile app this time for the iPhone. So here we go. I'll just open up the app to see the Spotify playlist I've created previously. Select the playlist I want. Choose a track. And as you see, it'll start streaming pretty much immediately. Next, I'll go back to the playlist and show you a feature we really like. Tap the offline playlist button. Select the playlist you want made available offline. And all the tracks will be synced to your phone. The celestial jukebox that we've always wanted, right? That seems to be Spotify. Well, there's a tiny problem here. The tiny problem is quite simply this. The content and pricing and licensing issues cannot be solved without the engagement of telecoms. Spotify has to pay close to one cent per track that they play. If they're lucky, I don't know what exactly the deal is. They pay one tenth of a cent. But either way, this will amount to billions of dollars of license fees, right? I mean, I'm sure other people have done the math here. This won't work just like Nokia comes with music. The telecoms have to get engaged to work out these deals on a much larger basis. And I think this is going to be crucial for the future. Here's already one of those deals, three in the UK. Anybody from three here? Three in the UK has made a deal for Spotify to be bundled into the handset for 35 quid. You get the music plus calls, plus SMS, plus all the other stuff, right? Very interesting development. This already happened in other places as well. And of course, this points squarely to the solution of the issue is the collaboration between telecoms, advertising, next generation advertising, and social networks. That's where the juice comes from, right? That's where the money flows, right? If we can ever figure out how to get one connected with the other, right? It takes a certain amount of pressure to get this, which is public, open, and standardized content licenses. As in radio or television, this is what we're going to see. There is no radio station wondering about how much they're going to pay for playing music. There's a law. There's a provision. We're going to see this happening as well in the future of music, and that's the bomb within Spotify is that this doesn't exist. Right now, that is a very tough position to be in. I think rights holders and content owners have the choice between controlling and declining revenues or open up and find new revenues. And this is your moment if you're in the telecom business. They need you to figure this out. All the choice they have is keep up the control as we've seen in music, DVD sales, content from Murdoch all the way down to his son. Controlled way of getting more revenues isn't going to happen. The only choice they have is to open up and go with what you're offering, which is market access. And please forget what you know about advertising when we talk about advertising. This kind of advertising, I took myself by land, disrupted advertising, the news that nobody wants to see or this kind of advertising on YouTube showing me a way to buy US Airways tickets when I watch a video about the crash at the same time. This is kind of stupid advertising, right? That isn't going to bring in the money. So what we're going to see is a complete restart of what advertising means. Advertising will become content itself. We're going to see this kind of yelling effect that we had offline and on the internet that isn't going to be happening on the mobile. $675 billion moving into this kind of situation should be plenty to support a lot of free content, just like it has in the past with radio and television. So I could see the French president until now or up to now just passed a law in France last week saying that people can be disconnected if they download illegally, which basically means everyone. So what we're seeing here is passing a law that nobody cares about anyway because everybody is guilty. This kind of development obviously, the idea of doing this really is friction is fiction. That's all you can say about this. Anybody that has anything to do with this knows that it's just not going to work to pressure people into buying something at a certain price because you think you can control the network. That is something that is not going to last. What is going to last is collaboration. And as Eric Schmick says, let's hear what he says. But we do know is that this product is getting built. And so the challenge and the opportunity is to figure out how to make money in that. But you won't get there by suing your end users. You won't get there by preventing this technology from happening. It's going to happen. OK. I think if we all believe in this, I'm going to save you this one with Charlie Rose at Enderson. You have to watch that yourself on charlierose.com. But it gives us more because we don't have enough time. We have to move on with books. Books are going to be 100 times as big as music. Education. Think about this happening on a flat rate access model. That is going to happen. The idea of getting books in the stream, that is absolutely, humongously, a huge business that you have to get into. So we're looking at this course of events, essentially, music, news, games, and books, and television, and music, and so on, moving into the same stream. If we're out of time, let's please skip to slide number 42. So as a summary, what we're seeing here is a complete convergence of previously disconnected places. And you're lucky enough to be right in the middle of this. Telecom, content and media, advertising, social networks, essentially, moving in together and creating a very interesting new telemedia environment. I think the telecom space has to take the leadership here because there's a lot of good things that you can bring to the table to solve these issues across the board. We're looking at a situation like this to where there's many people fishing in the telecom bowl, including, of course, Google, Facebook, and Twitter. And that has to be solved. I want to advance to the third last slide, please, the third one before the last, because there's a lot more, yes. Otherwise, you'll be here on Sunday, and I want to prevent this, right? Okay, so just to wrap up, it's not about transporting the bits and the content, it's about transporting the meaning of that content, the context, the network, the relationships. Think about media as a service just like we're now talking about software as a service. Media as a service can be humongously successful starting with music and get you into the flow of entire new revenue models. So just to summarize, and I'll be really gone, ecosystem, collaboration, content like a utility, collaboration, and lubrication, WD-40. Thanks very much, and please feel free to harass me on the internet and do escape sometimes.