 Let me introduce Gerd very briefly and hand over to him. Gerd is a well-known futurist, author of five books. His background is in music and publishing. In 2006, the Wall Street journal referred to Gerd as one of the leading media futurists in the world. Gerd is a member of the Royal Society for the Arts here in London and he is a member of the tantalisingly named World Future Society. Felly, ydych chi'n gyfnod yn y bydd, Gerd. Thank you. Thank you very much. All right, so the future, I'll just switch my future machine on here. All right, good morning. It's a really great pleasure to be here. I was on vacation last week in Medeirfa hiking, being offline. Now this is the new luxury is going offline. So I was quite luxurious last week. So I run a company called the Futures Agency and this is sort of what we do. We listen to the future. There's no rocket science here. There's a Chinese saying that if you want to know about the future, I'll ask your children. And so that's what we do. We kind of look around three to five years from now all over the world to see if we can share four sides with our clients and our clients include many, many different kind of companies, media companies, technology companies and so on. I'm G Leonhard on Twitter. I have a new gizmo today called GerdCloud. If you're looking, if you're bored with the presentation, you can look up a network called GerdCloud. You can see it on the Wi-Fi. And just bring up any browser and type in password GerdCloud and you can access all of my presentations, my books. My latest book is called The Future of Content and it's free on GerdCloud. It's also free on the internet of course. So you can download it there or you can get the Kindle version. But basically just use GerdCloud if you want to download the presentation also afterwards. It's not currently on there because I changed it just a few minutes ago. I will put out the latest PDF later on and you can download it from GerdCloud. But only if you're not actually going to listen to what I have to say then you can play with the GerdCloud. All right, so first of all, of course, you know that data and connected to the internet is absolutely exploding. I mean if you're looking at this graph here from gest3.com, storage cost dropping, network access increasing, CPU cost dropping, bandwidth cost, I mean this is actually beyond Moore's law. I mean it's mind boggling. And this is happening on a global scale. The other 3 billion are coming online, Brazil, Russia, India, China, Indonesia, at a very fast pace. Clearly we can expect a significant amount of disruption and innovation which is pretty much the same thing. This box, what was it called? What was it called? It's a medical device that analyzes what you do. The tricorder. It's becoming real now. There's a thing called the tricorder express. You can sneeze into this machine and you can prick your finger and it will do analysis of your health and supposedly beat a doctor in the analysis in terms of speed and accuracy, which is doubtful, I would say. I'll beat a lawyer for all cases. But that's becoming reality now. It's a disruption all over the place. And this is disruption in the television business with a company called Aerio. Here's how it works. Anyone can watch live broadcast TV for free off the air with an antenna. Aerio has taken that antenna and needed unbelievable small. Small enough that hundreds of thousands could fit in the single world where you can access them from the internet and watch live broadcast TV as it enters. They can choose the TV you want. This is Barry Diller's new project and he has already gotten sued for it, of course. Needless to say. He's in New York, putting all of regular television stations into your app and charging for it as well. So disruption is a new normal. There's a great report by the Economist on disruption and is listing a whole bunch of things about disruption. I mean, every single point of these cheap smartphones, business social networks, data mining, cloud computing, holographics, all that stuff, it's all happening now. This is all science fiction stuff from Cory Doctor of Novels. It's all real now. Pretty mind-boggling, all happening at the same time. So basically, I said this last year, you can either be disrupted or you can disrupt. Those are the choices. So if you're in the media business, you have to find a way to disrupt and add more value. So that's quite clearly a tall mission and we're having this what's called Solomo, social, local, mobile. It's a keyword used by Kleiner Perkins, investor in Twitter and Facebook. I would add the cloud to this. The world of social, local, local services, Foursquare and so on, mobile and the cloud. And this is becoming reality now for five billion people in the next three years. So a lot of things will dramatically change because of this if you're looking at the implementations of this. The future is already here if we are willing to accept it. And this is the key question, of course. Are we actually willing to look at the future and what it brings to us? Gadgets on television gestures. This is Siri showing you a way to remote control. Bring up the sound, please. Remote control, your television using Siri. This is a hack, of course. So these kind of devices, and this is automatic translation devices, you can speak in English and it comes out in Japanese. Imagine what this will do to media if you can speak in English and it comes out in Chinese or in German of all languages of whatever. This is going to happen in three years. And then there's people like us who are basically an older generation trying to make this work and we have issues like this. Unfortunately it's missing. So now we have our kids already being quite familiar with this new way of touching and making things work. iPad is very popular with kids, I'm not sure you know. Because it's easy to use. And then we have kids who are encountering something else. It is not the iPad and they're wondering why the magazine doesn't zoom. So I think you will find that this is becoming an attitude among digital natives. Why doesn't it work like this? And the answer is not to go back to them and say, please change your habits because it fits my business model. We can try but then we're going to end up like this guy on the left here who is struggling with technology and mistaken the iPad for a cutting board. Then we're sort of like this. We don't really know what the users are actually doing. I don't recommend you do this at home. But anyway, now we're entering a society to where all the screens are connected. All the screens including my wristwatch, my eyeglasses, my iris even, are all connected to the web. And basically people are expecting that we can engage with all these screens as the Intel Futures says. That we can basically say, okay, we can comment, we can rate, we can do all these things all the time. This is why we're doing the like button and all these things. And of course the key issue I said last year is the issue of control. Users want to have control over this. Of course on the other end of the equation receiving the urge of user control. We're not so happy with the user having control over what we do. Clearly that's an issue because business models are based to large degree on control. This is a real disparity that the user wants more control and we're willing to give less. In fact of course iTunes is the embodiment of that desire to have control back. I use it, but most people don't. It's not financially going to be the future for us. So there are lots of issues about this. Every screen is becoming some kind of connective television. Or radio. Every screen. Including the bus stop. Sending our Bluetooth promotions and all kinds of things. It's mind boggling. Rapid user experience changes that the Samsung television has motion control, where it can gesture, has voice control, has face recognition. The television recognizes your face. I mean think about the implementation of that in terms of privacy. So there's lots of stuff happening that is going to be quite different. If you're looking at what Lady Gaga has done it's completely use all these tools, social, local, mobile, all was on interactive real time, cross media, all those nice words. Actually put them to work. And build a whole career on connecting with her fans in this way. That is going to be a standard for filmmakers, for authors, for musicians in the future. So the question really is, are we willing to accept that our chess game is now three dimensional. I mean if you're a chess player I love to play chess, I'm not very good at it. But there are rules. I mean if you know the rules and if you read the books you can beat the other guy. Simple as that is math really. But a three dimensional chess game is not math. It's basically the rules are off. And we're now in the same situation where our chess game is now ten dimensional. Not two dimensional. Not linear. Again going back to the control issue here. So this guy Bruno Latour says that if we change the instruments we will also change the social theory that goes with them. And that's what's happening right now. The social theory is also of course our business theory. This really comes down the same thing. If we're going to use Facebook Instagram, if we're going to use causes to donate money it changes the fabric of society. And therefore also of course of business. One key point here is that we're now living in a world where basically access is replacing ownership. We discussed this last year I think it's actually true now. And it wasn't hard to predict last year or ten years ago really. Access replacing ownership means for example music services in the cloud, health records in the cloud, education in the cloud. So think about what that means. Access not ownership is quite tough actually when you're looking at for example music here is a graph from e-market to US numbers. Digital track sales are flat not really going anywhere streaming and clicking on demand is increasing. So revenues by that is increasing but it's not enough of course it's not enough people doing it. We'll get to that in a second. But clearly the same thing is true for video if you're looking at these numbers online video viewers exploding. And you have sites like wire play of course the Amazon Kindle Netflix and next issue which is doing the Spotify of magazines same idea flat rate for magazines. All that stuff is happening. Our choice is again either we're part of this or we're not going to participate because we find it to be disruptive. I mean artists who are currently opting out of Spotify you have to wonder if next thing they're going to do is opt out of radio. This is the same issue really. So access not ownership this is really quite a challenge and of course because access is handled by telecom company ISPs and operators. Our partners in crime or not in crime rather in absorbing the spoiler in the future are the telecoms right. So there is going to be lots of overlap I call this telemedia and within three years we're going to have a complete telemedia environment to where telecoms and ISPs will essentially work with content owners to provide content in ways that are currently unheard of except for Spotify and possibly other services. But all telecoms will become media companies in the sense of being a platform for media not producing media. So there's a big topic here then of course the biggest problem here is that as the CEO of FT.com said in the Huffington Post the deep paradox is that publishers need to unpick is that even as revenues plummet and their faith is shaken demand for the product is higher than ever before. People love music, people love motion pictures, people love news but how do they pay? It's the one to ten rule basically. Whatever made a dollar offline makes ten cent online. So we have to refurbish 90 cents from somewhere. We have to generate new values and that's the mission right basically for the consumer access is cheaper. We can say that we hate this and obviously we do hate this. I mean that's quite clear. I would prefer if you would buy my book in a print version for $17 and not download it for free or for a dollar. But the reality is I can't go back. I can't tell people to buy a copy because that's a better deal for me. I can try and we have tried but it's not working. So basically here using the Einstein paradigm we cannot solve our problems with the same thing that we use when we created them and that's our reality. It's actually quite hopeful because I think what's happening here is that if you're looking at for example a news business this is a slide from my friend Ross Dawson in Australia he's talking about all the added values that are happening in the news business which is how people pay filtering, community, relevance, terminus, novelty interfaces, insights, design all that stuff that is extra value. This is why I like Flipboard for example because it offers me extra value. So the key question really is in this the value is built around the content. The value is not in the zeros and ones of the download. So when I download a movie then I have the value there's lots more value around what I do there. And Kevin Kelly calls these the new generatives and if you want to really know about this just google new generatives Kevin Kelly who's the founder of Wired and he's mentioned them for example immediacy, personalisation, immediacy is the key behind for example the Metropolitan Opera in New York is you can go to a movie theatre somewhere in Iowa and you can watch the opera remotely but you can be part of it remotely for ten dollars. And this is an added value rather than watching on television you go together in a theatre it's an approximation of the real thing. Metallica has all of the shows available for downloading that you can buy and actually you can subscribe to them. So I want to give you a short demo of this Let me see just one second here. It's a little bit technical but I'm sure you'd appreciate it so give this a try here. Using a fabulous screening app here. Okay. Alright so I'm going to show you here for example what happens when I use my iPhone using an app that adds value for example Spotify you can see for example the value behind Spotify is not the playlists which I have many of as you can see which I really like and I've filled up the maximum here for my ten euros. So quite interesting but the value of Spotify is not that it's these guys here my Facebook friends who have playlists if I use a playlist here from Adrian Pope who runs Play It Again Sam here in the UK it will bring up all of his playlists so I'm going to subscribe to his playlist and download those songs or listen to them. The feature of the friends of course 3G is not working very well here so our cloud is not actually very active here but in any case that is the added value this is why I use Spotify I mean I can listen to free music on YouTube don't need Spotify for that so I pay ten euros for the friends feature value around the content the same goes for this app which you may know Flipboard Flipboard connects you with your Facebook friends and Twitter friends and it generates a magazine every couple of minutes a new version of it where you can browse to the stories and basically using whatever Facebook friends you have there and the value of Flipboard is not the story itself which of course is valuable otherwise it wouldn't be there but it's the way of finding it it's a curation tool I mean the same goes of course for the Kindle app which I'm sure you've used what's so great about the Kindle is not that I can buy the book I can buy the book before but now I can look at all these books and I can synchronize with how far I read it I can just click on it and it goes automatically to the latest place where I've read it on the iPad or in the Kindle so that is really a big difference in terms of how media is going to be used in the future let's go back to this here for a second it's probably a more elegant solution than this ok so second screens are becoming now the new generatives for television people second screens means about 45% of the UK residents that are on television are currently using a second screen while they're watching TV which is the iPad or iPhone or whatever Android device and lots of times talking about the content on the screen there's already an app by eBay that shows you all the stuff that's being currently shown on screen in the movie it shows you in real time to buy that stuff on eBay while you're watching for example the Ferrari that you can buy on eBay and then of course Facebook go in public this year will we have a Facebook remote control for television? yes not a question of when just if but when clearly Facebook is the biggest broadcaster in the world already it's roughly 1 billion users so I think this brings up tremendous new opportunities the social, local, mobile cloud idea right but the question is if we're jumping from the glass into the bowl make it a bigger bowl right are we really ready for this right are we ready for those new requirements and they're based on collaboration they're not based on lawsuits right then not even they're maybe based on law but not on the execution of a 50 year old paradigm so we have a significant issue here right we have to reinvent how it works together how we make money and the money making part of course if we're looking at the issues that we have are we going to control consumption make content unavailable and forced payment restrict sharing well some of those things may be useful some of the times but most of the time they don't make money they do something else maybe make us feel more entitled to money but my view is that I think we have to look at this a little bit differently I think the next three years we're going to have many policy and paradigm changes as far as content is concerned Fred Wilson, the lead investor in Twitter says restricting access to content is a bad business model in the age of a global network that costs practically nothing you distribute on distribution is zero but of course production is still just as expensive as before so we have a disparity again the New York Times has now decided in their wisdom to cut down from the 23 pages I could see before to 10 to force me into their payment model which is $5.95 a week and I love the New York Times I'm quite happy to pay $50 a year but $5.95 a week to read what's free somewhere else maybe not so things like this I'm a faithful user of iTunes and Apple TV and I watched a movie and 23.5 hours later it gives me this message I can't finish watching the movie that I've paid for because there's software saying I can't can we really expect this to be a solution for the future I know why we're doing this and all this stuff but it doesn't make any sense so we're going from a system of independence which is Disney Universal Music big companies basically having vertical power to a system of interdependence I mean if you look at all the success in the last 10 years Skype, Twitter, YouTube, Facebook eBay, Amazon they're based on interdependent business models which means collaboration and working out what I call hypercollaboration instead of having hypercompetition we have to have hypercollaboration why is it that the publishers have not invented Flipboard I mean all of their content is in Flipboard and there's many arguments about this clearly because we don't know how to collaborate and this is going to kill us if we don't change this because basically it creates huge opportunities to outsiders if you see in this for example what's happening in the US the only real place for growth of television you see it right here is Netflix everything else not growing so ease of use, choice, price values brand translates into dollars why are 24 million people today paying $10 a month for Netflix are they all like mad or are they all the exception to the fact that nobody wants to pay it just shows that it has to be done right and then people will make a payment so Brazil, Russia, India, China go online at fast pace we're going to have 3 billion more producers, users viewers coming online entering the middle class which is going to be absolutely huge and they will have content loaded devices with freemium access with bundled connection to the web using devices like this this is a tablet from India called the Arakash it's $35 for this tablet the price is going to go to $10 $10 for a tablet I mean imagine all the stuff that we can do with 3 billion people and we find a way for the commerce model so consumption this is consumption on mobile devices clearly the future is mobile I predict that between 50% and 75% of all content will be consumed on mobile devices in the next three to five years that may connect to larger screens but basically run by mobile devices so we live in our world that is referred to a network topology as a distributed network moving from the centralized to the decentralized to the distributed our future looks like this what I call the network society and the network society requires network media this is our mission is to become networked to figure out how we are going to offer things in the network society network media means things like central distribution systems shows that sell directly on the internet all the different cloud systems over the top content BBC iPlayer Xfinity from Comcast China internet and basically what we are seeing here is that going direct is also becoming a real option Amazon Kindle I mean clearly there is a lot of change coming up in the publishing business by people being able to go direct and this is now becoming actually feasible Seth Godin has already said he is doing it the premier leak may be sold to Apple I imagine what that will do to the likes of ITV and others we may doubt this will happen but clearly going direct is becoming more of an option going through Kickstarter and crowdfunded services and so on so really this is becoming quite real looking at this of course what it causes is fragmentation I mean our challenge really here is going to be to figure out how fragmentation can be used or not used or be re-bundled be re-aggregated because everybody is doing different things now so it's really quite a challenge here that we can see and then we have social networks no matter what you think of it the interesting part is here that this is a game essentially a gamification and the advertising that will happen there are very powerful forces and clearly we are going to see lots and lots of things where basically we can say that media companies become platforms I mean look at the comparative value of new media and old media Google, Facebook, Yahoo, Netflix and so on and old media the market value is about even this will completely flip in the next 10 years in fact it will emerge of course so we are going to see lots of things that will be quite challenging for us for example the difference between global smartphone users with roughly 1 billion now to 5 billion I mean that business model is extremely powerful for everyone that creates content so in the social ways we have to figure out how we can use this new power that we have and this goes to the issue of data we have to figure out what we can do with our data and what not this is a very lengthy process it's also the first time that this is actually possible we have to say maybe sometimes we have to shut up and not share something we have to be responsible this is a new power that we need to learn and Facebook clearly is shooting to own the socially integrated web I mean own it in the sense of Microsoft so there is a question I think that for our future is do we really want more walled gardens I doubt it I think there's a room for it and we have of course a beautiful walled garden right here with apple and others but I don't think that will work advertising real quick and then we'll wrap up advertising of course is a driver of the content industries about 70% of all content is funded by advertising rather than people paying directly or a mixture of the two of course so we're going to see this disparity between advertising spending and consumer time as you can see print for example a lot more money spent on print than people actually spend time on all that is going to shift back towards the web I mean if we're looking at these stats it's quite clear the biggest growth in 2015 is all digital, interactive, social online advertising that will impact all of our business model because it's roughly $1 trillion that people spend on advertising and marketing so that funding is going to shift and clearly in the next three years that budget shifts will be massive and what's called big data which is what we generate all our stuff are cookies our movements on the web and how we move around and what we say and what we like and what we forward and all that stuff big data will fund big content in parenthesis because data is advertising so clearly if you're in the content business you are in the technology business you are in the advertising business and you are in the data business that is actually a very close relationship these days and we are already paying with our data I mean how does LinkedIn operate you guys are all on LinkedIn I'm sure how do they operate they use your data to attract other people looking at your data and they make $450 million I think of $500 million last year doing this and selling it back to me for $19 so I can spam you I mean it's amazing right I mean all this stuff is basically as Twitter the same thing right selling our attention back to others who want it that's the most traditional way of advertising you can think of right so we're paying with our data and this will become a huge business I mean this is clearly the business of Google, Facebook and others is to have us pay with data so the question is you know if content is free is that a Faustian bargain is that a bargain to where I'm saying you know I'm going to get free movies on YouTube in return they sell my data to advertisers so they can look at my Gmail and dish up some interesting ads but if I don't want that can I still have it I mean clearly this is going to become a major issue in the next couple of years you know we also want to retain our privacy and this is becoming a much bigger issue pretty much every day but can we have the cake and eat it research by the Wall Street Journal saying if there's a do not track button on a website that would wipe out your data where you're coming from right and the browser would you use it and I did the vote and I said yes 90% right but how can we expect not to share our data and still get the free stuff well we obviously can't that we have the cake and eat it so there's a real challenge for us in the future I think the content business model pretty much depends on it so to wrap up my presentation two important points first of all you can't avoid risk if you do you run the course of looking and saying basically we've considered everything every potential risk except for avoiding the risk as the cartoon says right so we have to be more risk open and as you McLeod you have to engage or die I think I said this last year as well our choice is not to disengage and just say well we won't do this because we don't know what to do or we don't want to do it that would be very bad I think our future is engagement in figuring out new business models new generatives as Kevin Kelly has said so thanks very much and we're going to have a discussion later on this we're not taking questions now are we we're not taking questions now okay we're going to have a discussion later thanks very much for your time