 Here we are in London, the Institute of Directors. So that's good to do, it's so great. This is Robert Turcic. Hello, hi, I'm Robert Turcic. Great to see you. Fine, then finally, what do you do? Explain it to me. Oh, well, right now what I'm doing is I'm advising media companies, big and small, about what to do next. And that could be next month, next year, or several years out. But what's really interesting to me right now is if you think five years into the future, most people have a vision of their business five years in the future, but it's more or less an incremental change from what they're currently doing. And then if you ask them to look back five years, all of a sudden we realize, well, there are a lot of new things in the world that weren't there five years ago. The iPhone, the smartphone, YouTube's grown so tremendously in the last five years. Facebook has grown tremendously in the last few years. Even how mobile has pervaded our lives has shifted in such a big way because all the numbers from mobile around the world have grown enormously in the last few years. So mobile was always important. We always knew it would be important, but now we've reached this tipping point where a billion people, a billion people are carrying around smartphones with cameras and suddenly we're seeing 100 hours of video uploaded every minute to YouTube. And so it would be five billion, right? Yes, seven billion. So let me just back to the beginning for a second. So I'm directly on how the futurist or the keynote speaker tonight, I met Robert on the internet, so to speak. That's right. Not like what it sounds. It's not on a dating site. But basically, we talk about media and content and paid content, how to monetize it. It's very much alike our message. That's right. Well, I've been a fan of yours for years because I found your thoughts about music are informative not just for the music industry, but now just about every business is turning into media and where music goes, media will follow. So in a way, you've pioneered this path long before any of us. Yeah, well, you know, it was pretty straightforward. But let's talk about maybe quickly back and forth about the key trends for media companies, whether publishers or record labels or movie companies or broadcasters. So maybe we can just ping-pong back and forth quickly. You know, what are the key things happening right now and what do they need to actually look at? Well, I think one of the most important things, if I were in a media company today, which I'm not, thankfully, the most important thing is that I believe the big media companies have lost the ability to innovate, to truly radically innovate their business. And did they ever? Well, they were able to bring out hits and they weren't afraid, they weren't averse to big media transformation on a decade-by-decade basis, right? Well, the TV guys weren't, but they didn't want the city. Well, that's true. They resisted the magic. Well, you could say the same with television, right? Because they fought cable, then they accepted it because it turned out to be a good business, then they fought the VCR and the VCR became a good business, then they fought the DVR, turns out that works too. So yeah, the media industry has a tendency to fight the future, but every 10 years or so, they embrace a change. What's happening now that's important they need to recognize is the rate of innovation is accelerating because the obstacles for a startup company have basically gone away. So now you've got the crowd and the cloud and this knocks out enormous amounts of cost and it gives you a great, great scale very quickly. Social is like a free way to get marketing out there. Well, this is an important part of the cloud, right? Yes. Because when I did a startup in the 90s, we had to write, I think we spent a million dollars in just infrastructure. Exactly, right. And now we can just go around and for five dollars you can rent something at Amazon. Gary, that was true until 2007 or 2008, right? And that's the point of Amazon now. In the past, if you were gonna, let's say you were gonna invest in a company as a VC, you would ask the company to show you their plan for scalability. You know, the question would be, well, if you're successful, how are you gonna manage growth? It was always an issue. And so companies had to have a plan for that. Now your plan is, let's just go stick it up on Amazon and find out and if we need more scale, we can buy it tomorrow, no problem. We can get it in 15 minutes. So that removes not just that cost or that investment, but also the time that it took to figure out that plan, to build that infrastructure, the waste of money, the personnel that you needed to run all that equipment. That's all gone now. So companies can move much faster. Isn't part of the innovation problem. I mean, you're based in the US, and not the Andrews. I'm based over here, which is definitely different worlds, but in terms of the ability to innovate, isn't part of the problem that I found with my clients from the movie business or publishers is that they don't want to change the existing paradigm of business relationships and they don't want to self cannibalize. They'd rather be eaten than to eat each other. They keep telling themselves that, right? And they've been saying that story for more than a decade. I used to hear that when I was at Sony Pictures in the 1990s. Oh, well, the new businesses, the digital business doesn't generate as much revenue. So we're not ready to turn the lights off on our old business. We're gonna keep that going for a while. Well, you know, now I work with big media companies that say the exact same thing. It's 10 years later. What they're failing to notice, first of all, those digital businesses are now pretty big and they monetize pretty well. So at some point, they are gonna need to confront that piece of equation, which is, you know, if you keep staying with a dwindling business, your business will dwindle fast. You know this because of music. But there's a second piece there as well, I think. And that's about the speed of innovation or the resistance to innovation. So if the way you look at all new media and all new innovation is a threat to my revenue, it's a threat to my ecosystem, it's a threat to my existing business, it's a threat to my intellectual property, then basically you're conditioning your entire organization to view the future as a threat. And you're conditioning them to inaction. So when I talk to big media companies and I get to meet their piracy departments, I say you guys are the reason this company has lost its ability to innovate because you've taught everybody here that the future is bad, the future is evil, it's something we have to fight, we need new rules, new laws to shut it down. And that's actually a mistake. So I will give you the example of television. In TV, there are dozens of really cool video startups that wanted to partner with TV companies and help them transition. We saw this with music, right? They've been right Googled out. And well, no, what happens is they get sued into submission, right? Because the piracy team looks and says, yeah, but you don't have permission to be doing what you do, it's so they've taken the court. And now that startup company that could have been so helpful, instead now they're tied up in a court case, they might win, look at VO. VO just won a lawsuit. The lawsuit lasted for about five years. So they finally won. It's a startup-in-unit video company. The problem is VO's out of business. So they won, but it was a pure victory because now there's no company left. I use this image from a lot of my clients when I say basically you're living under a dome, right? Yeah. A bubble, like a dome, like a Mars station or something. You're living in there and inside of this dome, it's your environment. You're making the oxygen, you're making the rules, you're making the money. And as long as you do that, everything is fine. But what happened now, because of the web, is that people are drilling holes into the dome, everywhere, or they're going in under the ground. And the atmosphere out here is different from the atmosphere in there. And if they haven't had time to adapt to that atmosphere, they get an explosive decompression and they get killed. It's like, for example, in Indonesia, you have 82% of the population watches cable TV and satellite TV without having it. Oh, that's rough. In some other way, or in Brazil, it's 68% or something. So this over-the-top idea would be the only way to get them as part of a bundle. Yeah, that's right. So it's rethinking. But that is a factor that is not news, right? Watching internet video, well, for 800 videos, it's been around since the 90s. But really, with the advent of broadband and services like YouTube suddenly, around 2007, 2008, this became a habit, new habit. And the usage pattern is very different, particularly now that people are looking on mobile. So what have the TV companies done? Well, they've kept their content to themselves. They refuse to license it out to new companies. Look at Warner Brothers, refusal to deal with Netflix, for instance, right? So they withhold their content. They sue wherever they can to try to stop them. And now, that doesn't grow their business. What it actually does is it trains an entire generation on how to use BitTorrent. Because the fact is today... Sure, it creates piracy. We're here with... I've been doing this since 1994, really, in 2000. I've started with the future and stuff. You were an executive before. Now we're here and we have some learnings and we've done thousands of sessions. I've done, in fact, 1,600 presentations. That's either good or exhausting, it's very tough, which it is. Yeah, well, a bit more than I was a musician, even. But in any case, so we have some learnings. Let's put some learnings on the table. And if we're going to go forward into five years, what do we have to actually, what do media companies have to embrace today if they have the guts, which we decided that they don't really have the guts. But that's fine out. So you guys out there, if you have the guts, here's some bottom line. Well, I think a spirit of radical openness is something they need to embrace, because we know this from the web, right? Open standards, open APIs, open source software, open platforms, that seems to work really well if you want rapid scale and invite others in to innovate with you. Media companies are not set up for openness or transparency, everything's secret, every deal's done in the back rooms. I use a Tim O'Reilly code. You as publisher, Tim O'Reilly from O'Reilly. Of course. He says, basically, it's your as much, open as much as you can. The monetization sometimes requires a bit of closing. So it's not a black or white thing, but I call this open AMAP, open as much as possible. Oh, that's good. That's about right, that's about right. Because you can't make money when everything is open, but an open doesn't mean free. Yes, that's right. But at the same time, it acquires the audience when you're open. That's it. And people want to feel like they're part of this, right? The whole point of collaborative software and participatory media, is the audience wants to have a meaningful role. So today, if I were a producer, I would definitely cast my audience in a role where they had a chance to do something meaningful, not just tweeted or retweeted. But when you do that, you give them some control. You do. You lose control. The problem is, you know, when people are saying open, it means more risk. It's one also, participation means you need to let more people in at the table. It's risky to be open. It is risky, but on the other hand, it's much riskier, I think, to be entirely closed when you see the rapid scale these companies are changing at or these industries are changing. I think the biggest risk of all is to try to maintain tight control. That's an illusion. And that way lies disaster. Okay, so that's rule number one. Rule number two, I'll let me chime in on this one. Rule number two is that basically now we have what I call the digital default. Oh, I like that. Tell me about that. Yeah, everything is going digital and into the cloud. My health records, my movies. And it's all based on, I click and it goes. Yeah, that's right. So the digital default also means I buy stuff online. I compare things online. I rate my doctor. I use the map to find my way. And if it's not in the cloud, it doesn't really exist. Basically, if you're not in that digital place, you don't exist. It's true. So if somebody's looking for a service that will travel with them across devices and your company doesn't provide it, it doesn't mean that they're going to buy your content somewhere else. Well, it used to. This is no longer working. That's the goal. It used to mean that. So, for example, sports. Now, sports is next in this line of disruption, right? Sure. Because sports, you couldn't watch the game unless you had ESPN or whatever it was, or HBO or whatever channel it was running on, right? Like, the sports rides are highly contested and very valuable. And they're very expensive. So now it's moving into apps. It's moving into... Well, here's where that's interesting. So that actually pits sports leagues against broadcast companies. Who used to be partners. It was a very lucrative business partnership. In the US, the most successful mobile app is Major League Baseball. And they publish it themselves? Yes, I used to have it. It's a great app. And it cost... It cost mostly here. It cost $120. Like, most mobile apps cost a buck or two bucks, right? $120, but that makes sense, because they have content and fans who want to reach... These are the food chain conflicts, right? So... Yeah, that's true. Part of the food chain conflicts means that I think as a broadcaster, for example, or as a studio, you have to move outside the silo. Yes. So you're in the silo of making content. And this guy's in the silo of being a telecom. That's true. And this guy's in the silo of tech. And now they're all jumping into each other's game. And now that's not true, right? You're not in the silo anymore. So you have to... If you're a studio, you're a tech company, you're an advertiser, you're a brandler, you're doing all these things. And now the brands are becoming broadcasters themselves. Look at Nike and Red Bull and... Everybody can go direct to the consumer, and that's a shock, right? In the past, advertisers had to go through a network. And even the cable channels, they weren't direct to consumers. They went through a cable operator or satellite operator. But now everyone's in a rush to go direct. Not everybody's good at this. This was a rule before, actually, you could summarize. I always say... I think it's good to have some numbers here, right? Rule number four is that if it can, go direct it well. Yeah, that's right. And if you don't do it, someone else will. Whether it's Kickstarter or Netflix or Hulu+, or whatever, if it can go direct it well, this also goes for talent. Yes. Yes, so the idea of withholding your content from a marketplace because you think it's not priced right or it doesn't fit your business model, you're not withholding it or preserving any value. All you're doing is depriving yourself of the opportunity to learn, participate, grow, gain some knowledge. And the greatest example of this is Game of Thrones because this is not just the greatest TV show and maybe the best example of kind of pay TV ecosystem. It's also the most pirated show in the world. So really what HBO has done is it's training an entire generation how to use BitTorrent. More people are watching Game of Thrones via BitTorrent that are watching it on HBO as legitimate payers. So this is a crazy phenomenon. It's sort of a paradigm. The tough part being is that these things used to work, right? Yes, that's right. They forced people into certain behavior and they didn't have much else what they could do. So it's like the banks, you know, they forced us to pay them all these fees and stuff. And now we just use the mobile, you know, or we use PayPal or Bitcoin maybe. And telecoms, right? Skype is wiping out telecom. There's so much innovation in messaging. It's not just media. It's actually sort of pervading every industry. Wherever it touches media or communication or data or information, all of those things now are up on the web and in the cloud. Okay, part number five. Yes, part number five, we're already there. It's mobile. So people talk about mobile first or mobile only. This is not necessarily a helpful frame. The main message is you've got to move mobile to the center of your business because that's how we use it as users, right? So we use our mobile phone constantly. The mythological figure is 150 times a day. No one can prove whether that's true. But the fact is you do use your mobile a lot. You look at it first thing in the morning. You look at it at night. You know, you're using it for all your apps. So in a way, I think of it as like my ignition key. And just yesterday here in London, I was showing some friends, media on their Apple TV with my iPhone. And it was kind of cool. It was like I brought my whole media collection with me over here to Europe. And that's a thing that I encourage every media executive to get their head wrapped around is how people are really using mobile because it's really rapidly becoming the first screen. I know that's a crazy thought because most people use TV. Yeah, it's basically this market screen device and usage, right? And the other thing is social, local mobile, social mobile, people are saying, I think the problem is that lots of people who are in the media business, especially publishers, they don't live in that world. You know, they live in the world of the television over here, newspaper here, and the mobile for email. Well, their experience is so limited in so many ways, right? So you have to actually live in the social local mobile. Yeah, because I think the numbers are really quite shocking and probably by 2007 we'll have five billion people connected to the web. 80% of that will be on mobile devices. Which is why Zuckerberg is already talking about three billion on Facebook. Three billion, right? But they're halfway there already. Yeah, we know two billion more. I didn't think that I'd get through three billion, but I mean, basically what's happening is the social networks are the next broadcasters. Yeah, that's a good way to go. Broadcasting to each other. And so the mobile thing is a centerpiece of this, but one advice to the audience out there, if you're not close to this, then spend four weeks doing everything you do only with the mobile. And then you'll understand what it means. And not talking about just the mobile headset, but also tablets. Downloading your content and watching your content, bringing a PowerPoint presentation or maybe keynotes better. So next point relates to that, I think is what I call big data. Yeah, that's connected, exactly right. It's the idea of saying, well, I don't know what that is. This is one of those taglines that everybody's laundering all day long, like social media. But anyway, big data basically means an unheard of volume, volume, variety, velocity, and value of new kinds of data that's coming. So this is a huge, huge wave of data that's coming that allows people to be analyzed and customized for advertising and all these things. So big data is now becoming a major driver of media because data is the oil of the economy right now. I agree with you, but I think a lot of people in the media business fail to understand what big data really means. So we think of a proprietary data asset. That's a concept that really fits on a social media site because the user is generating all this content and there's both the social graph and the interest graph so we can extract a lot of interesting patterns from them. Now think about a media company. When they think about their proprietary data asset, it's usually a show or a song. These are very poor digital assets in a digital environment. They're easily stolen. The value is quickly depleted. They're very expensive to produce. They're hard to protect. So they don't really perform well in a two-way network. But they're missing the point. If that's all they focus on, what they're missing is that there's two other layers of data. Each piece of content has metadata around it and there's a lively competition springing up right now. This is a very rich area for innovators because media companies have missed it. They're blind to it. So innovative companies are creating metadata and they're aggregating and exchanging. It's the content that wraps around the content and then there's the usage pattern. So for instance, if you look at a cable TV company, they have knowledge of what every single person is doing. They just have really crappy systems for tracking it and extracting it and turning it into something usable. Well, I think one of the things that I'd like to say about this is basically that in some instances, the metadata may be more valuable than the content itself. It's possibly true, right? Because it generates this glue, this layer. So if you get permission from the user, if you get them to participate, then it becomes something that's really valuable. So basically the value is generated around the content. Yeah, that's right. Like you can see, for example, in books or magazines like The Economist, the value is around this content, for example, by listening to the conversation, the comments, the link-backs. The Huffington Post, that's the example, or the Atlantic Magazine, or what have you, they're creating this huge thing around it. So big data, in my view, is a major driver of, in fact, of course, it relates to advertising. So when you have exact data and the television, this is sort of a scary thought, the television knows who you are. It should, right? Well, maybe it should not, but basically all of these devices know who we are because of what we have allowed to share. Right. But we don't really listen carefully to that data. In the media business, like we're deaf to that information. No, but I mean, Google and Facebook and others. And the new Microsoft, the Xbox One, is designed for this, right? And Intel has a proposal to this effect. They do as well, that's right. And so does Cisco and others. So look at it this way, that the TV companies failed to innovate. 15 years ago I was talking to cable operators about a new kind of set-top box that would be able to track people's usage and cameras that could see, you know, the retina and register individual people. We could sub-segment the household and all this stuff. We could tell if it was a dog watching or a human being. And they recoiled from it. But now Microsoft, the Xbox One, they've introduced it. So you could say, gee, that the incumbent companies failed to innovate. They had the opportunity, we even explained how to do it to them. And they failed completely and utterly to see the possibility. Now a new generation of companies is coming and they see that as their opportunity and it will redefine the business. So what's happened is a failure to innovate within these industries doesn't stop innovation. It just means innovation is driven outside and it grows up and it takes a long time so you don't see it right away. But now all of a sudden, those information empires on the internet are so much bigger than the traditional media. I think this failure to innovate is largely based on the orthodoxies, you know, the assumptions of life. Right, that's true. They can innovate if they ever decided to. But they believe, for example, like recorders believe that controlling a copy is the ultimate paradigm. And so they sued 50,000 people and a decade later they're making 70% less money. So it's a question of your belief. Right, and now the film students are following that same strategy and they're suing even more people and it doesn't work for them. Well, I think so. So bottom line is if you're a publisher, you should get a big data officer and you should figure out what to do about data and all these things and how to use these assets and how to work with companies that are the new oil companies. Many people are saying in fact, Google is the next axon. Sorry, Google. I don't think you are. But in any case, you know, and many people are saying Google is the next matrix now, which is kind of interesting as well. Potentially, yeah. Let's talk about advertising. So how is advertising changing because you know there's roughly, what is it, 650 billion dollars a year spend on advertising. And if that is going away from traditional television, so what's gonna happen with that? Well, so it hasn't gone away. So the sad news for all those online video companies is that they haven't actually been very successful in turning TV dollars into internet dollars. They'd like to, they keep getting better at making a proposition, but advertisers are quite conservative and so those dollars stay with TV and they probably will for a little while. But there are a couple changes coming. So we can start to see the outline of the change. The first one is this year at the upfront in New York, all the big broadcasters came in and their big message was multi-platform. Everybody talked multi-platform. You can buy all of the ones. Yeah, what they're really saying is we're putting some of our shows on some of these devices and then they point back to TV because that's still where the big dollars are. But they heard the message, advertisers want multi-platform. All right, fine, we'll give you that, right? So they're working on that. The second thing to pay attention to now is increasingly ad agencies in New York, particularly the media buyers, the digital side is taking over the traditional side and so what you're gonna start to see is all those metric-driven, automated tools from the web, they're gonna start to pervade the traditional media. Then traditional media will start to resemble the web much more and you'll see the two things blend together more. So that's good. And finally, I would observe this. Advertising used to be a creative business. Think Mad Men, right? It's not. Now it's an analytics number-driven. It's a big data business just like you were saying a minute ago. Advertising is a big data business now. That's a shock to the people in advertising, the creative people find this anathema when I say it, but it's absolutely the case now. It's a numbers-driven, analytics-driven business. Much of that's driven by the experience on the web where you can literally A-B test, you can do a real-time exchange, you can buy an exact audience, deliver precisely to that audience, things that were unthinkable in traditional media, but increasingly that too will start to show up on television, music, and so on. I think, of course, that the saving grace of what we're seeing in television is that it's actually converging with the internet. Yeah, that's right. And with mobile, and with social. That's why I'm so bullish on video, because TV might have its challenges, but video consumption is going up and down. I think if you're looking at the advertising pie expanding because of gamification and apps and so on, then television can be part of that expansion and being part of the offering. That's exactly right. Which unlike publishers, it's very easy for them to do, for example, second screen and those kind of things. While a publisher that is completely spoiled by the huge margin of the past, looking at the analog dimes coming in or pennies, then it's not the same. So it's harder for them because they don't have the attention monopoly any longer. So if you had a magazine, you had a monopoly by the fact that everybody had it, and that's much easier for them to pull up the same kind of hat out of the rabbit hole they had. But you know, all these companies find, when they do jump over the digital divide and start to become digital companies, they discover to their dismay that the margins are lower on the web, because there's a hell of a lot more competition. But I think here's the bottom line, this is, I was trying to tell my client, yes, it may even just be 10% of what you made before, but the global audience of 5 billion people connected. You got it, that's right. And if they're all gonna be a fan of the Lilyhammer show or whatever, you can advertise on that, and you can have brand and branded content in the Instagram advertising, that is a lot better than the thing you ever had. I'm with you. This is like the Kindle. If you're gonna sell a book for two laws in the Kindle, but your potential audience is a billion, you're gonna get a lot more people. You're gonna make money, you'll make profit. You may not make the same profit margin, but you'll reach a bigger audience. And frankly, there's also a limited amount of people's time and attention, so you want that big audience if you can. Here's the way to look at it. Media, traditional media, is all about revenue maximization. So that's close it down, lock it off, force a subscription, control the audience, all those things, right? It seems like in digital media, it's all about audience maximization and not necessarily revenue maximization. So the two things that are opposite ends of the spectrum, right? If you're gonna maximize revenue, you're gonna minimize audience. But if you maximize revenue, you have to also have control of the audience, right? Well, that's very hard to do. And you can't do that anymore. So I call this a transition trauma, right? You're in this space where you say, you can't control the viewers anymore, and the brands, and the message. So you can control your own content, but that hasn't really changed, right? So in the future, you have to find a way that you can involve them in this process. And this is where the big disconnect is happening. It's true. So it's not that the money isn't there, the money is there. I mean, people are paying for stuff all over. I mean, look at Netflix, you know, 43 million subscribers. It's about to find that. And they're spending a hundred million out of new series. So I think it was the economist in the presentation I saw the other day, I think it was Tector, actually, who was talking about the primal thing is that we have to look for is a reason to pay. What is my reason to pay for this content? And it can't just be one reason. For example, you know, I'm not subscribed in the New York Times just because the writers are good. I'm gonna subscribe, well, they are good, you know, there's no doubt about that. But you know, I'm gonna pay 300 bucks for it. So I subscribe because there's 10 other reasons that make it, it was basically indispensable to my life. And then I'm in. This is like Major League Baseball app, you know, pay 120 bucks a year. If you're a fan, you're understandable. It's worth it. Exactly. But not if it was a thousand dollars. Probably not, right? But that would be revenue maximization, right? So they're getting a good balance because they're getting fairly high money for an app. Well, very high money. Well, it's four cents, but they got it. That's true. But I would forecast that for books, for example, we're gonna see lots of books, novels in the range for $1 to $5. Yeah. Because they'll be written more painlessly and published quicker and without the publisher. Yeah. So I would pay more for a shorter book. I think there's a lot of, the model right now is broken, right? You get someone who wrote a good article for the Atlantic and then you say, great, we want that article turned into a book. So now go add another 160 pages to what really should have been maybe a 40 page piece. I'd rather have the 40 page piece and I'd pay five or six bucks for that or break it into five books, five mini books. And they'd probably pay a couple of bucks for each of those. You can assemble that same package. You know, we have this idea that the way media is, the way we grew up with media is how it's always going to be. But the fact is, if you look over the long, like centuries, it changes, right? Charles Dickens used to sell books by the chapter and that's why his big books, we get them today, you know, bound the rate of thick like that. People bought them as pamphlets one by one. That's why each chapter ends with such a great cliffhanger because he wanted that audience clattering for the next chapter, right? So he got the subscription business. If that's how authors have to write in the future, we'll probably write better. It'll be more entertaining. People will read it more thoroughly. They'll read what they pay for. It might actually be better. I think what we're seeing is one of the big switches now that we're seeing from the first part of the internet. Now that very soon we're going to have five billion people connected. So a lot more musicians, publishers, story writers, film producers and so on will have a landfill, a huge landfill of stuff. So curation and filtering and making sense out of it is a huge drop. That's what publishers should be doing. It is. And look, we know this because this happened in the past. When the magazine boomed. That is going to be even bigger. I understand. But Reader's Digest emerges a really powerful thing because they did a digest. There were so many magazines. Nobody could read them all. So they did that for you, right? Harper's used to do this as well, where they would take selections from magazines and gather it into a compilation. So for sure we know this is a proven strategy that works when there's proliferation of content. People will pay for the valuable service. I read your newsfeed for this reason because you're always posting interesting stuff. Put in the coins. You need a tip box. I'm going to put up a paywall. That's exactly right. So I mean, I like to keep a bottom line for everything so people can use it for Twitter, right? OK. So what a bottom line for this is basically, I think the distribution has been replaced by sense making. OK. Yeah, that makes sense. So distribution is still a big deal. If you're going to reach 100 million people, you can't do it on the mobile phone quite yet. And it won't work even for 100,000 people streaming in real time in many ways, right? So that's still a big deal. But very soon we'll see the shift over until you're going to pay for sense making and for the content and for the packaging and the design. That's right, Flipboard. You're not going to pay for just for having it. Right. And just an undifferentiated web page isn't really worth very much, so you're not going to make. Like, you know, why do people pay for Netflix? They don't pay for the movies because they can get the movie anyway. But it's low enough to pay for the convenience of all apps. Correct. And it's so well done, right? This notion that just to use your example a little further in Netflix, that I can watch, I can start on my phone, turn that off, now look at it on my tablet, it picks up in the exact same spot. Then I go to my TV set, it picks up in the exact same spot coming from my PlayStation or Xbox or Apple TV. This concept, which seems so obvious to everybody who uses Netflix, TV companies still haven't figured out that that's what users want. That's valuable to them because now the content follows them in a way that they can use. Convenience, it's utility, it's ease of access, discoverability, findability, all these things you're just describing. But when you explain that to a TV person, it's like it's the first time you've ever heard of it. I think one of the other challenges in this context is that many of the rights owners, especially the larger rights owners, whether they're publishers or movie companies, they want to have this new accomplishment of doing all these things. But they also want to have the old, which is the control of a distribution, the windowing, the time releases, the authority to control whatever the green people watch it, whether people in Tunisia or whatever, they want all of that plus they want the new stuff. And that's not possible. So this is why you can't have the KGNED. You can't have control and, at the same time, have a much larger global audience. Newsflash is the media business. Control is an illusion. That was the past. If you're still operating out of that script, you're looking in the rear view mirror, even when you're in the fast lane. You're probably going to crash. Yeah, going back to the paradigm of Timorati is very, very important. I think that open is how you build an audience. And when you close a little bit, but you make it so it's acceptable, that's how you can monetize. Sure. Look, iTunes is a great illustration of that. Yeah, but iTunes, of course, has a walled garden syndrome. Yeah, it is. And it has monetized, but it's not going anywhere. It's not going anywhere. Understood. But it's open and closed. They're at Facebook, right? It's a proprietary platform that's sort of open, and you can sort of innovate on top of it. It's open enough, right? And there's a degree. Maybe they should be more open. I have the same problem, if you look for somebody at Spotify, which I really love Spotify, just for the record. People say, I don't like Spotify, but I do like. I'm a subscriber. They're challenged with their business model, but that's not their problem. Now, here's the problem with Spotify is exactly this problem. Spotify wants to be open and give the music to the world. Yeah, great. Even for a dollar a week, or for $10 a year in the developing countries. And that could only be achieved by bonding with the telecoms. Oh, people, yeah. So it's because they have the distribution. That would make sense. So the telecoms would love to buy this, but not for 10 euros a month, or 10 dollars a month, because it's way too expensive. But think about this. The labels want to get paid. If two billion users pay a dollar a month. Right, it'd be a gigantic weight for the labels. That'd be two times that, be 24 billion. I agree. Now, the labels are saying, this is all quite nice, but it's a theory, because right now we've got CDs held still, and we have items. And we want to keep control. So go over off and stick with your 10 million. And this means the death of Spotify, in the end. Well, it definitely gates their growth, and that is a real problem for them. This is a death. But it's the record label's problem, man. It's ultimately going to haunt them, as well. This is another example of a media company killing the company, trying to help it make the transition, because they insist on their own economics. There's a lesson behind this for the entrepreneurs in the audience. Stay independent. And stay in a place where you can decide to launch a degree like YouTube did for a long time. We would never have YouTube, if Chad Hurley would have asked, the studios for permission. Permission. Yeah, that's true. And of course, a lot of stuff to do was sort of in the gray zone, you know? But anyway, we have YouTube. Or even firmly in the black zone, right there. Migrating. We have YouTube now as the biggest broadcast in the world as a result of not playing the game totally by the book. Well, in every company, it's been successful, right? Facebook, there's clearly evidence that in the beginning, they bent the rules, maybe broke the rules. Apple, the origins of Apple, are kind of murky this way, Bill Gates, the origins of Microsoft. So innovative companies break things. That's what they do, right? Well, this is a big deal for the comments, right? Disruption. Yes. And again, my bottom line is you disrupt or you are disrupted. Yes. And this is not new, but now on the web, the speed of this is fast. Yeah, it's fast. And that's currently, because of these things we were talking about a minute ago, the cloud, the crowds, social, mobile, these things allow you to innovate fast with not much resource. So now you can launch a mobile app pretty cheaply. We met a guy the other day, a young kid who's developed over 80 apps himself. So people are building this stuff on their own and knocking it out. They're hiring people on the app. You know, there's companies like pharma companies like Genome Tech, they have their own app that they give to the businesses, their partners, to work with them on new medications and things. They have an app store, right? So why does one of the students have an app store? It makes no sense to me. If I can hire somebody on the web and get them to build an app for me in a week, what's wrong with these entertainment companies? There should be an app for everything. So part of it's... There should be an app for the producers and an app to submit. And they convince themselves that they have some kind of quality and therefore they need a lot of approvals and a lot of meetings and a lot of personnel and a lot of stuff. Well, the European Broadcasting Union, which is the Union of Public Television, I held a speech for them three weeks ago and I can't figure out why they're not getting it. These are the most powerful TV companies in Europe. Collectively. And then not getting together and saying, you know what, we're going to have an app store. Yeah, we're going to have our own app store. And this will be nothing. You'd find people doing it for free. Just to be part of it. Plus they could collaborate on the development of the app so they could unify metrics across the board. They could build something, a framework that they could all use and modify for their brand and their content and their language. But they could share infrastructure and knock out a lot of the cost. They'll never do it because they always believe they have to control their destiny. Well, this is another thing. They need control. Now, paradigm problem is this hypercompetition rather than hypercollaboration. Yes. And if you're looking at the tech companies, they'll collaborate with anyone. You got it. You know what? Because they know what they need to own and then everything else can be free, right? So you control your piece, but then the rest of the value chain, you can collaborate, you can outsource, you can give it away even, right? It's the rule, actually, Craig Newmark is the pioneer of all this because he used to say back in the early days with Craigslist, he'd say monetize, but don't over monetize. So know where you get paid. Find that one thing, control app. But then the rest of it, you can be a little bit more relaxed about the rest of it and let other people build a business on top. You don't have to own all of that. So the companies have been successful by allowing third-party developers to come in and build apps. They actually let those companies build pretty successful businesses. This is happening now. The pharma business is happening in the car business. I mean, all of the major car companies, I've worked with some of them, they all have open innovation sources. Yes. And a lot of the R&D happens from the user. That's right. I mean, this is completely obvious, I think to anyone looking there. So I think- So why can't I do that on my set-top box for my cable or satellite company? Why don't they let me go out and build an application to manage the UI? Why can't I just get the API data for what channels are where and build some cool navigation system or my own curated list that I could share or trade or publish if I wanted to? They won't do it. And as a result, the problem there, it's not like they're going to maintain control or maintain their business. They're going to simply drive innovation to some other platform that lets them do it. Maybe it will be- I mean, look at the self-driving car in Google, right? Yeah, Google has driven the self-driving car forward and it runs on data, it doesn't run on gas, right? That's right. It runs on data. And now what they've said is, you know what, we don't intend to build these things. But they force BMW and Audi involved when all the other guys say, oh, shit, now we have to do this also, right? And this is what's happening. And I think for the media companies, if they do this, they become sort of reactionary to this and they usually oppose to the consumer. Yeah, that's right. And that's a bad place to be and that has to be reversed. Anyway, we've got the end. So- We can talk all day here. If you guys are interested what Robert Turc chicken and Iger Linhov could do for you, you could ping us and let's put our Twitter names here if you can see this. So I'm at G Leonhard, okay? All right, bye. Okay. And Twitter, of course, is the way to get in touch with us. Don't, please don't email us. That's super, that's superplex, okay? So that's what is Robert Turcic.com, T-E-R-C-E-K for Turcic. And I'm at futuristgird.com. Great. That's my new URL. So if you're interested, we'd be happy to come over and inflict some pain on you. Thanks very much for tuning in.