 Hi, this is Gerhard Leonhard, media futurist in Basel, Switzerland with another take on Gertube.com today on the future of content. Content meaning of course, film, television, books, music and so on. I think the future of content as we can see in the news in the last couple of weeks, again this is April 2011 now, is the fact that content is moving into the cloud, Amazon just announced that you can store all of the stuff from your hard drive, music, films, television, whatever you've got in the cloud and then access it remotely from another device including television, mobile devices and computers. All content is moving into the cloud as you can see here using the Amazon snippet. So a lot of people that were worried about recording stuff and collecting things like DVDs, that is not our future because it's quite simply too expensive. The content that's moving into the cloud allows us to be somewhere as long as we're connected to the internet or we have it temporarily saved like SimFi and Spotify already allow. Then we can listen to music and then refill when we get connected somewhere else and that idea of content being in the cloud also leads to a very simple realization that is that it probably can't be controlled by one entity, meaning that in the future will very unlikely have companies like Universal Music or Disney Studios or Time Warner Television entirely controlling the entire food chain of how this works, it'll be more collaborative. And I think that the worst case of course in music again is the question that we had so many monopolies basically defining of how it all worked and our only chance was to take it or leave it. Now we're going to have models to have to do with mutuality. And I think the CEO of Google China said last year that the future of content is in creating mutually acceptable business models that monetize things in a new way through advertising, through subscription, through play on demand, through sponsoring and branded content. As you can see in this slide, I think what's really important is to make things available and to find business models that involve people from the telecom business, the content business, from advertising and device makers. So we're creating a new ecosystem. The future of content is not about one company laying down the law and selling units of copy. It's about the idea of creating an ecosystem where you create value for all involved parties. Kevin Kelly, who is a great pioneer in the field of future of content, the co-founder of Wired Magazine, KK.org, you should check it out, it's a fantastic website, lots of stuff there. He says that essentially when you don't sell copies anymore, you have to figure out to sell things that can't be copied. Because right now basically on the web, the web is a copy machine, the computer is a copy machine, the mobile device is a copy machine, all of these things can create copies. So we can't really sell copies anymore because they are available and we can't actually change that. So we need to figure out what else can we sell and the way he puts it, he calls them the new generatives, which have it to do with how people connect and here's a list of them on the slide. It's about creating immediate value. For example, if I'm a fan of a band, the band has recorded last night, there's a couple of interesting versions of the song. I would pay extra to get the versions of this song, but I wouldn't pay to just get one song a week later as a download. But I would pay to get it first thing. This is immediacy. Personalization, which means I get to choose the colors of the app or I get to actually hear the songs in Chinese. So I get Robbie Williams singing, but it comes out in Chinese, adubbed with another singer. You know, that sort of thing I would pay extra. High quality, for example. Imagine how many jazz musicians, how many jazz concerts or classical concerts people want to listen to happening all over the world, thousands of performances a day. If I could listen in a high definition version of the Blue No Jazz Club in New York tonight when David Sanborn is playing, I pay extra for that. I wouldn't pay to hear a song on YouTube and I think I shouldn't pay for that, right? But I could actually imagine paying $2 for a subscription to hear live music from a jazz club in high definition. So these kind of upselling things, well that's what Kevin Kelly is talking about when he talks about new generatives, interpretation, accessibility, making it available in different places. So ultimately it's not about selling content, it's about selling context, relevance, packaging, terminus, all the added values. For example in newspapers, we can't really say that the newspapers sold news in the past, they sold paper. When we bought the newspaper, we bought the paper, we didn't buy the words. So what's happening today is that now all of a sudden we're supposed to pay for the iPad app with the same news, but that's the same as paper, right? We basically, in this model, we have to think about other values. Why do I pay for an app? I pay for the app if it's customized, if it's good looking and it makes my life easier, right? If it actually organizes it nicely, if I can save time, that's why I pay. I don't pay to get news that I can see on Google. So basically that's the new generators. The future of content is to work out business models around that. As you can see in this slide, books are being copied all over the world. There's thousands of people scanning books into PDFs and making them available for free. Every single book will be available for free in the near future. Legal or not makes no difference. People will download them. It's a 500K download. I'm not saying that's a good thing, but this is what's happening. Books are being completely inapsterized and you'll be able to download them for free everywhere. The question is, will I buy a digital book for two euros? If I know that the content is done right, if the scan is good, if I can zoom up and down, if I can notify things there, if I can mark up things, if I can share things, would I rather pay two euros for that than for the pirated version, which is free, the answer is yes, but not 12 or 15 euros. So price point is crucial. The future of content is figuring out the right toll booth, the right price point at the right time. As this slide is showing, the future of content is connecting the cloud and the crowd. To take the content that's in the cloud and shipping that to people, making sure it's relevant, it's good, it's timely, it's working. That is the future. Not to say, well, you have to buy a copy of my book and that's 10 euros. So to wrap up this topic, I think what's really important is that in terms of making money with content, is to say that, well, of course, it's not all free forever in every possible form, it's an upselling process. I mean, look at the games business. What's happening in gaming is that lots and lots of people have launched games and big companies have launched games where the first 10 levels are free, but once you've played the first 10 levels, you're 20 hours into the game and then they say, you know what, you can have another 50 levels for $20. And 80% of people are buying. That's called upselling, right? It's putting the tall booth in the right place. So if we need to figure out newspapers, books, magazines, what is the tall booth? Where do we put the place for the money? Because again, if you went over the Golden Gate Bridge and they would charge you $100, you would be quite angry and you wouldn't pay, you turn around and go some other way. But if it's $5 and you don't do it every two hours, it's reasonable and we like the bridge and we want to support the bridge so we do it. So the question is one of tall booths. So if you're running a magazine, you have to figure out what is the right point to give you money. And this is not a rule that can be standardized across the board in different cultures and different kinds of magazines. The latest example I'd really like is Bonnier's magazine called Popular Science, which is a fantastic magazine and they figured out a really great price point for the iPad. The iPad app is free, you download it, but then you can subscribe for $15 a year for all of the electronic issues of popular science, so popular science, not mechanic. Popular science, you can download all of those for $15 a year. That's a good value if you like this kind of magazine. But why would I pay $4 to download the latest issue of Wired Magazine if the exact same version is in print is $4, but my subscription to print is $10 a year? I mean, that's not a good idea. So basically putting up a tall booth that makes sense, that's what it comes down to. As you can see in this slide, advertising will play a huge role here. The future of content will always be based on some sort of subsidy by advertising. And as we have here in Europe, taxes, which are kind of inevitable here, but different discussion. I think advertising has always paid for roughly about 70% of all content that we consume. And that will continue. As you can see right here on the slide is that newspapers are getting a lot of money for advertising, but no longer much of the intention. And that will really shift in this discrepancy, will flatten out. So a lot of advertising will move into digital and into content, which is very good for getting paid. Finally, if you're looking at The New York Times, as it looks like on this slide, the big question is, can companies like this that spend 80% of their money on physical infrastructures, buildings, cars, printing presses, can they turn around and put it into a mobile device, get rid of some of the printing presses and actually make money? Will that work? And the answer is probably in some cases, yes. I believe The New York Times has great value. They will be successful. But the real question is, can we change from A to Z in this relationship? And I think most companies will have a very hard time doing this. If you're looking at the startups that have done it, they are much more about this already. Important paradigm on this slide is that it's a lot less about ownership and more about access. And that's happening across the world. Now people are starting to not buy cars, but to rent them, for example, from Zipcar. So you don't actually buy a car anymore, you just take it when you need it. And the same is true for newspapers, for movies, for example, for Spotify and music, for rental bikes that we have in London. You don't have to own a bike, there's 10,500 bikes or so from Berkley's. You can grab one when you need it. So it's less about ownership, more about access. It's more about bundles, as you can see on this slide, about upselling, about creating freemium, so-called freemium models. This is a long story, I will discuss in a different video. The question of free. A final point on content is, I think we're looking at what I call the gamification. We're going to have lots of games based on content, as Farmville and Citibill have proven. Those are based on gaming concepts. That's very much a growth business for the future that we're going to see. We're switching from this idea of saying, as it says in this slide, from the copying to access, this is crucial, because we no longer want to pay for the copy, we'd rather pay for flat-weight access. And it's about experience. So in the end, what's most important about my time is that I experience something really good. So video, audio, performances, games, I lack a good experience, I will pay for that. In the network society, it's not about copies, it's about meaning and experiences. It's not about putting up fences, selling units, as you can see on this slide. It's not about putting paywalls up that we have, for example, in the Times. It's not about kicking people off the internet if they do things that we haven't thought of in our business plans, right? So in digital content, my final word on this is that if you enforce control, when you should be trusting the user, it will kill you. As we can see in the music business and many other examples, it's much better to figure out a way to trust the user that they will make a payment when the time comes, when the payment becomes obvious, the payment becomes likable. That will generate new dollars, put in the tall booth in the right place and some sort of logic based on what the user does. So just to summarize, we're talking about cloud computing, we're talking about access, we're talking about a price point that works for everyone, we're talking about public licenses, we're talking about a new ecosystem of ISPs, operators, device makers and content companies. That's sort of where it's going. If you're more interested in this, check out my website, mediafuturist.com and my various slideshow on the future of content at slideshare, slideshare.net, Slash G Leonhardt. Thanks for listening and I'll see you down the road.