 Alright, thanks very much. It's great to see you here. It's funny that me as an old guy is talking to the future about you, with you, who are obviously a lot younger than I am. It's kind of funny. My original title for the presentation was The Future of Media and Advertising, but as I was working on this I realized I'm just talking about the future. So I cut the title and there's a few things that are entirely new in this presentation because as I was thinking about Google, the future of media and so on, I changed a few things and you'll see what that means pretty soon. So this is sort of the job that I'm doing. I'm putting together puzzles. I help clients basically understand what's happening in the future and how to mix that with the present in terms of devising strategies and so on. And in a way, you may know this scene from The Graduate when he's talking about the future. Of course he's worried about being found out by the husband, but it's quite different. So I wrote a bunch of books. One is called The Future of Music in 2005 and very sadly the book is still very accurate. I wrote a new book. Yeah, it's kind of, it's really funny, but when you read the book you're like, okay, this was four years ago, I can't believe it. My new book is Music 2.0. That came out in February. If you're interested, I have a few free copies. You can grab one later. If you want, I also have free downloads at music2obook.com. You can download the whole PDF on the radio headlight model which means pay nothing or pay everything as you see fit. My new book is coming out later this year. It's called The End of Control. It's not about music. It's about media and controlling the brand, how to make money when you lose control over distribution. These are my websites. I have various Twitter channels. This is one of them, the Daily Wisdoms channel, which gives you stuff I find on the web as a feat, like one-liner wisdoms. I can recommend that one. So if you're Twittering, if you want to waste more time, you can subscribe to that channel. Here's some of my clients. I've worked for record labels, publishers, advertising agencies, cell phone companies, wireless networks and so on. It's pretty much all over the map with this. Even this guy likes what I'm talking about. He's giving me his blessings, which is a good thing. Really, what I do in my life is I'm a blender. I take stuff from different directions. Clients take things from me and we mix it up with hopefully the outcome of being able to define the future. Here are some essential images. This is the world that we live in. As I was googling for change on Google, I found this. You see why in a minute. Don't worry, I'm not just showing you a train. This is a street market scene from Bangkok. It shows you how basically the railroad is transformed into a market now in a few seconds. So, interestingly enough, this is sort of the world that we're living in. The change is imminent. It's everywhere. If you were around, I was around in the internet bubble in the late 90s, I ran a bunch of online music companies. We thought it was all going to happen right there and then. We were going to buy EMI, the end of the 90s. Now these things are happening. It just took longer, but look at this. Now the private equity guys running EMI and pretty soon Sony BMG. One of the big things that's happening is that we're now actually connected. We're starting to be connected. It's only maybe about two or three percent of the world is on broadband, which isn't much. But connection is changing everything. It's basically creating a network of people, a network of users, and this whole thing where I think we're only in the beginning of understanding what it means to be connected. This has input on everything, on advertising, on media, on communications. Being connected is completely different. My son who's 18, my other one is 13, they live in a completely connected world. They don't do emails. They leave messages. They send stuff back and forth. They swap stuff. They share things. This is a completely different world in the way of course it's the Google world, the world that Google has helped to bring about. We're only at the beginning of this iceberg. When you realize this, basically when I was in Jakarta about three weeks ago at a conference that I did there for broadband, they're putting entire world in Indonesia, 260 million people, 85% Muslims, putting them on the broadband wireless internet connection, 16,000 islands. This kind of change that these people will have is huge. The change from disconnected to connected. So in a way, this is sort of a mock-up of a future world. We're all connected. There's media in there and there's lots of relationships. I wouldn't go as far as calling it love. But this is very, very important. This is about real relationships. Not about like 10 years ago when we just are happy to email somebody. This is a lot deeper than this. This is about real stuff. So central shift is this huge paradigm shift from the sort of central role. This was like old media companies. We're in the middle of everything. We run everything. Now you have this. So example for music, going from the network to networked. It's only a small difference. But the network being BBC or CBS or NBC, now it's about being networked. It's a whole different cup of tea again being connected. Now in music, for example, looks like this rather than having the sort of central record company paradigm. Now we've got all these small companies creating the same thing. But through a network. This is a completely different way of looking at the music business. And basically this is again the subject of my next book. This means the end of control because in the central system, it's easy to control. The music industry controlled the artists, controlled the radio stations, controlled the retailer, controlled us watching it or listening to it today. Last at the end gives us the tools for example to unplug them. At least to some degree, there will probably be new players here but still. So if we look at this, you know, basically today you have this on the web. Every possible page has a share this button. Pretty soon I'm going to wear a share this button. Because it's all about sharing, forwarding, bookmark this, do this. This is the default setting of the web now. This is basically a sharing and forwarding culture. Now you may think this is trivial, because for you it means nothing. I mean obviously this is the world you live in. But for a lot of people, this is a completely different thing. Being able to share your playlists, your TV shows, what you're doing, what you're thinking and even if you're drinking a coffee with or without milk or not. You know, sharing stuff is a whole new experience for a lot of people. And wait till we have, you know, a billion Indian people, Chinese people, Brazilians, Russians doing the same thing. What do they do with media? Well, they become media in a way themselves through the process. So this cow shows us aptly what's happening with the content industry. And the biggest thing that's happening here is they share this phenomena. The web has enabled us to share. Just like we used to swap tapes, you know, when I was a kid, record the vinyl or record the radio and then swap the tapes. Now we're doing the same thing on steroids. The iPhone is going to allow us to share a gigabyte of music in the subway with somebody. This is just the question of getting the right plug-in. The same goes, of course, for other phones. So this whole idea of being able to sort of connect to others, right? This is completely unplugging the content industry scheme. Because that says basically you copy, you pay. You listen on the radio, that's okay, you don't have to pay, you're just paying sort of inadvertently. But if you copy, you have to pay with real money. So now we have a problem. In the copy paradigm is that we should be paying every time we click, which of course not very realistic. So what do we do here? The content industries are in a real turmoil. How do they make money if they don't control distribution? If they don't control the copies. If they're being disrupted, the copies are in the essence free. Last event is making music free. And so is every digital radio station and top 100 .cn in China very soon with music. So now people are sort of subscribing to people. This is a whole different, again it's trivial for you because you do this every day. But this is what's happening with friend feed and with Twitter with everything. We're subscribing to friends not just to this huge ocean of stuff. This is the social part of media and of course mass media is in there as well. So you're either engaged today or your t-vote. In other words, you work with people to bring them in, to attract them as a content owner, or they just cut you out. This is what happened to New York Times, Britannica, Associated Press. You have to be in there otherwise you sort of t-vote and cut out. Even if your content is inadvertently available as well. So the iPhone again is pointing this direction and so are many other phones in this turf. So in the old world we have this kind of marketing. Some people even argue that marketing or advertising only existed because there was no internet. You could argue that if I can make a connection with you, you're all going to buy my book and we can talk directly, why do I need to run an ad? Because if I have a network, the network will respond. So I don't really need to do advertising if my brand, you know, Audi, BMW, whatever is connected with the user. So this kind of thing in the past being more of a push mechanism. Push was very expensive. Again with music, if you didn't have a million dollars to market a big artist, it just wouldn't work. You needed the money. So this push is now becoming essentially a pull mechanism to where this is extremely hard to do when you're not, when you don't know how to pull people. When all you know is how to shout. So about 90% of the cases that I deal in terms of the work that I do with companies, they're very good at shouting. All right, monologues, messages, you know, top-down things. But to have a conversation, you know, that could be dangerous. The band can't be controlled. So this is a big change. So we have this sort of ecosystem that's being turned around. This is not just about surge, about content, about copyright, about any of these things, right? These are all interconnected, all the way to food and energy. Because obviously in this system, as we are connecting, we're creating a different ecosystem. I mean, many things that we're doing here in technology and surge and stuff is creating a new logic. What is the logic of YouTube? It has nothing to do with television. In terms of logic, it's a whole different case. Music in the future will be essentially free. But not free in the sense of the art is not being paid. Free in the sense of me using it. All right, compare it to water. When I go to the bathroom here, I don't have to put in my credit card to make it flush. All right, why is that? Because OMID pays for the water. Google pays for the water. Somebody does. And somebody has paid thousands of pounds to run those pipes. I don't pay for the pipes. I assume that there are pipes. If I'm at home, I have a pool, I fill it up every day. I have to pay more for the water. But I do have water. So with music, we're still at their place where we're saying, well, if you want the pipe, it's a dollar. All right, if you want to connect to legal music, you got to pay up. This doesn't make any sense. The pipe should be there. The network is the pipe. The music has to be in the network. Everything else comes afterwards. So we'll talk more about that in a minute. But I don't want to be too music-centric on this. So now we have this latest development to where we can actually connect with friends and people. This was, you know, for the last two years from LinkedIn to Facebook to Twitter to to a friend, whatever. This is Jaikou, I think. So we can actually connect with people. Now we have a river of stuff coming towards us. It's getting to be so bad that we have lots and lots and lots of input. I mean, we have more input than ever before. And everyone is different. Do you like an ocean of contacts? An ocean of information? I have 900 something RSS feeds. That pretty much qualifies me for the ocean. Do you want a lake? Do you want a stream, a creek, or a puddle? Which ones of these things do you want? What are you able to take? This is completely different for each person. And culture. When you take the tube in London, people read the newspaper. Some do SMS. You go to Korea, it's all electronic. No newspaper. No books. Just all doing stuff. Different cultures, different ways of using things. So in a way you could argue that this sort of overwhelming part of technology and media, right, is hitting all of us pretty hard because we have basically 1500 messages per day that are reaching us in different ways. I think this is increasing. Of course Twitter and Facebook and everything else is not exactly cutting back on these things. Maybe cutting back on the email a little bit to some degree. So we have to deal with this idea of being constantly reachable and constantly being pinged by people. In many ways, even in the 1600s, this guy was already overwhelmed with his Mac and his phone and saying like, oh god, how do I deal with this? I mean it's not like it's not possible, but it's certainly not easy. So what we need is filters. Meaning filters, context. Like 62 million songs are available. Do I want to download all of them? Just because I may be interested at some time down the road? Well, I have news for you. Of course kids are not even downloading anymore, right? You have to, you have to qualify for the free download. In other words, you have to pay to get the free download. So in many ways, it's essentially the filter, the recommendation, the context that creates the value, not just the content itself. So to get these filters to spin and to be meaningful is quite something that I think we can see in the evolution of the web. You know, web 1.0 was really all about getting the noise. This was MP3.com and SonicNet and real networks, you know. Just noise, noise, noise. Get as much as you can. Just having it available was a big deal. Web 2.0 was about making the noise or is about making the noise. You know, blogs, publishing stuff, self-publishing, all these things that are happening on the web. And then Web 3.0 sort of, that's the filtering idea, you know. If you want to check out a gold filter, go to thefilter.com. It's Peter Gabriel's project. Quite interesting about recommendation on a higher scale. I think, you know, if there is any such thing as Web 4.0, you know, we can go on till 100 here. It's really about smart noise. It's about finding a way to get exactly the noise that I want. And why do I care about somebody else's playlist if it's not relevant to me? Somebody else's search results. Somebody else's tags or bookmarks, right? It's all about finding a match. Finding and being found. So smart noise, you know, if you're looking at this sort of context, you know, if you were saying, okay, you know, what was I working on again? The New York Times made this research about how people are interrupted. It shows that interruption is a huge issue. 28% of people say there's interruptions of things that aren't urgent or important. How do I bring down this noise to meaning? How do I go somewhere and basically have meaning sort of built in? And then we're here. We're at this place. Well, I think the Minority Report is this. Where's the Matrix? The Minority Report. You could do the old batch, right, John? So where are you identified by wearing something that tells people who you are and what you do? It synchronizes the ads as you walk by. This is already reality. It creates the window as you walk by by what kind of outfit you carry. What kind of location device you have. The best identifies people. Very scary thought, of course, for most of us, but not for all of us. Being able to identify not only the retinal scan, but electronic devices that talk to others. The constantly sort of mashed network idea. And this goes on into products. Becoming personally identifiable, for example, again in Japan, is the quick response though for the mobile. Here you can hold up your product and you can find out how many calories the burger has. Believe it or not, this is already working for people. In Miami, you can go to a club, people wear t-shirts with the quick response code. You can click on it and the screen shows you how old, what kind of relationship, what kind of sex you want. That's rather explicit, you would say. And then people can actually order drinks with an embedded outfit chip in their arm. So you don't have to bring your wallet. That's perfect if you're naked, for example. That's already happening. A lot of these things are very scary, but this is really a cultural question. This is not about technology. Do I want to share information? Do I want other people to track me? Do I want this sort of transparency? This is a huge cultural issue. It's not a technology issue. And I think there's something we have to keep in mind when we plan products. What does it do? What is the fact that Gmail reads my mail? As long as I'm not worried about where that goes, I'm fine with that. But what does it do in terms of culture? What is the next step? So this sort of syndrome, we're seeing this increasingly around the world. People, especially in the UK, I think what's the average time you get filmed in London is like five from the 50 times a day. So that worries people. And this idea of brands monitoring you and stuff, I think that's also a very big concern becoming transparent in this sort of system. Going back to this, so Walter Moseberg from the Wall Street Journal, he says the internet is a grid. Going back to the matrix. And we're all going to be living on it and carrying it in our pocket at all times. Now think about what I said earlier about connect and disconnect. This makes a huge difference for a lot of things, for the good and for the bad. But this changes advertising because basically if we do this, we don't need old-style advertising. It's not of any use to us, because it's not a value. We can bypass it. So this is from a mailing list I subscribe to, I won't tell you which, but it's funny, I picked this up yesterday just fishing around for Google. So this whole thing about YouTube sharing data with Viacom, I'm sure you track on some of these the conversations. They said in the mailbox, it says by retaining the data in the first place, Google destroyed the privacy of millions. These are messages you can find all over the web. This issue of privacy, of course, as I'm sure you know, is the major issue going forward. It's a bit of a chicken on the egg. Because what happens if you don't get people's data, you can't do anything with them. If this remains a dumb network, you can't sell anything. Advertising relies on the data being synchronized. The more I tell you about me, the better you can pitch me, just like real life. So if this doesn't happen, you don't get the data of the user, you have nothing. You add words are toasts, because you can't synchronize. So that is the chicken on the egg. You need the data. How do you get it? How does the user feel about this? So looking at this a little bit further, there's this guy Henry Jenkins at MIT. You should read his book too, Convergence, Culture, A Very Smart Guy. He says it's really not about technologies, but about emerging cultural practices. Today you could almost summarize that business really is about capturing the emerging cultural things that are happening. Taken in the opportunity from this viewpoint is not entirely based on just cool technology that's available. So if you take a view of culture being a central thing, broadband culture, connected culture, you get to this point where you say, okay, basically what we have here is a new cultural economy. This is the title of an event I'm doing in Austria at this interactive festival in September. That's the title of the event, which I pirated, obviously. So in this new cultural economy, what's happening here? What's the value? Who owns what we create? Who has the right to copy it? Who has the right to broadcast it? Who has the right of attention? And these are serious questions. Who owns culture? Disney, Sony BMG, Motown Records. Who owns what people create? Who owns culture? And what is culture? I mean, who is a creator and who is not? And who owns content? I mean, Google, of course, everything you do refers to content in some place, whether it's a blog search or news, content, content, content. That's really what the whole system lives on. So who owns content? Crucial question, a bunch of crucial questions. What is a copy? What is fair use? What is a use to begin with? When you're listening, is that a use or is that a copy? When you're reading something, are you sucking it up and making a mental copy and then writing a book on it? Are you stealing something? I mean, the argument of the associated press against the bloggers just four weeks ago, essentially saying if you copy more than one sentence or certain sentence, then you're guilty and then here you're not. I mean, you have to wonder where they live, what kind of world they live in. Do we have those fences? I mean, I don't see them, but... So what is an author? In music, for example, the principle writer of the creator says, I have the right to forbid you to make a copy. That's the law. The law says I have the exclusive right. Well, the law also said I have the exclusive right of my property all the way up to the moon. And if you fly the plane above my property, you can't do it. So American farmers, 1945, sued. This is the example from Larry Lessick where he said that they sued against the airplanes flying over the farm because it's their property. All right? Well, of course, it was government airplanes. So that's kind of a weak position. But anyway, the government said, oh, that's fine. You're in principle, you're right. But if we allow this, we can't have airplanes. We're in exactly the same position with music copyrights. Right? If we allow the exclusive right of the creator to prevail in this way, we can't do this. Right? The copyright can prohibit basically anything. All the cool stuff on the web is illegal. Max tape, songs are project playlists. I mean, hundreds, hundreds, hundreds of cool stuff that probably all of you are doing. Not even going anywhere near file sharing, right? Or Gmail box sharing of thousands of things. So we have to get used to a new definition of what this means, a new kind of usage right, which I'll talk about in a second. But this is just to flag some of those issues. So now, of course, in addition to this, we also have the situation where each culture is different. I want to just show you this video to illustrate how different cultures are. It's a good German. Yeah. You can see how you park. In Germany, cars are a great source of pride. And any accident, no matter how minor, is always taken very seriously. Just across the border in France, there's a more carefree approach. HSBC, we have an interest to make the importance of local knowledge. HSBC, the world's local bank. So HSBC made some pretty cool ads about this whole thing, right? But now let's zoom back and say, okay, this local difference is obviously, you know, that's extremely important in this whole debate. Hollywood, right? The dominance of Hollywood is winding down because quite simply, we get other places, right? They are cranking out 7,200 major motion pictures a year. Hollywood and what makes 300, right? These films are widely available in all different forms and shapes, right? They don't have the sort of ownership model that they have in Hollywood. So what is happening worldwide is that the market share of Hollywood product is declining. Just like English language on the web, as I'm sure you know, has declined from 70% to 36%. Because now we have other options and we need those options, right? So Hollywood in itself isn't going to be that sort of major, make it or break it. Do you have some movie or don't you have it? It's basically, if you're looking at this population growth chart, where's the growth obviously in the developing countries? So what does that mean for content? I think ultimately that means we cannot assume that our way of dealing with content, the value attached to a copy, value attached to copyright as such is going to prevail here, is not going to work, right? Indians aren't going to buy 30 rupees a piece on iTunes songs. It's just not going to happen, right? This is obviously they're leaning towards more of a flat rate access approach, right? Basically a bundled situation, right? Which doesn't do away with copyright, but it establishes a new type of usage, right? So this dude, Medvedev, the Russian president, I was fortunate enough to be at a place in St. Petersburg called the International Economic Forum, where I had a speech about the future of copyright. And I listened to his speech in the morning. It was quite interesting. He was talking about economic egoism. Sounds very communist, of course. Funnily enough, he was quite right on. There were about 3,000 people listening to his speech. So basically what he meant that economic egoism meant until now, if you saw market opportunity as a company, if it was open, if the market allowed you to move, you would move and you'd market the hell out of it. You'd just do whatever you can to make money. And that was okay. You know that the Indians want to smoke, so you do advertising for smoking. You know Chinese people want cars. You make ads for cars and they buy cars. You don't care about the streets having issues or greenhouse effect or whatever you have. You just basically take the market opportunity. So the major TV studios have said to Russia, if you don't wipe out the piracy and all the free stuff, you're not going to be part of the club that gets enough money for the harvests or for machines or development. It's as simple as that. Very straightforward economic issues. Because now we're in this place where this doesn't work anymore. Why doesn't it work? Because we're connected. Everything we do in one place connects to something, somewhere else. So the record label's not providing a license to the likes of Napster, you know, 10 years ago, or the likes of Last FM, as of just last year, or Myspace or YouTube, for that matter. Has a ripple effect. It's not just that they can do it because of course they are entitled to do it. They have every right by law to do so. But does it make it right? Methodist argument says it's not. Because it creates situation, for example, in the record labels where thousands of companies are illegal or they cease to exist. They either stop doing what they're doing or they adhere to the demands and they crash. I mean, you see this all the time. So this kind of thing is a major change in terms of the business paradigm that we're seeing everywhere, especially in media. So this sort of smashing up with this idea of economic egoism is what we're seeing in the future. And this sort of paradigm, especially in the media business, the New York Times, right, the labels, the studios, and of course lots of mobile networks, my way or the highway. We basically run this place and we can do this because we can. So you better come in with us or not. So we're basically moving to this paradigm. We're all there creating something together because if we don't do it together, it won't happen. This is the kind of ecosystem I'm sure Google is looking to build because it's a mutual effect of making money. It's not a one-way effect of making money, which means you lose, I win. But explain that to people. This is why my next book, The End of Control, is pointing the finger towards those issues of control. If you prefer control over money, then continue on your merry way. You won't be making the new money because it doesn't work that way. I mean, in this system, we're essentially creating the new ecosystem that's connected. This is an entirely different logic of how business works, of how media works, of how sharing works. So in this case, really trust is the key. This sounds sort of California hippie, you know. Like Paul McGinnis said, the manager of U2 said in a speech about piracy and the internet service providers, he said that these people in California, meaning Google and others, have this California geek hippie dreams about sharing and all this stuff and this all bullshit, they should just go to jail. So I think if you're looking at successful companies, trust is totally the key. This is not some pipe dream. You have to earn it, maintain it, keep it. Look at the nine inch nails. They trusted the audience to say they're so interested, the download is free and this thing, the $300 Outro to the Looks limited edition was sold out in four hours because they trusted the audience like the Grateful Dead 30 years ago to say, take the music. If you like me, you'll give me more money. Of course, they're in a position to do it. That's not everybody can do this. So we have a survey from Ableman Consulting, it's a PR agency, right? They said that 55% of people would take direct action against the company if they objected to its practices. 53% would share negative opinions and 46% would ignore them. This is your punishment for distrust. And guess what? Who is the most distrusted company in the world? All right, the Recording Industry Association. I don't mean to harm them, they're just an exceptional case of stupidity. But there's many others. If you go down this road of enforcing control, you're in deep trouble, especially if there's nothing to enforce. If you're just sort of saying, okay, I really would like this too. That is not the reality. So we have these issues to where this is sort of evaporating. We have trends that we're seeing everywhere. Multilateral consideration versus egoism. That means a company that has a business idea has to consider what's around the execution of this idea. What happens if we do this? Who else has impacted? Is it just about me rolling out two billion new cars into China? Because I can? Or is there other effects? Who's going to make money in the long run? Can we share and collaborate versus walling off? This is the great paradigm for the mobile networks, right? They weren't interested in that until just a year ago. All of a sudden, they're all interested in sharing collaboration. All of a sudden, Nokia says, it's all about sharing and openness. Of course, from their viewpoint, it has always been to some degree. But so walling stuff off is not a good idea anymore. Collaborative competition. Sounds like a dichotomy, of course. They're actually working together to achieve stuff. Skillfully open. Google is a great example. People think of Google as an open company. But of course, I can't see your source code. Not that I would want to. So there is a certain skill of keeping some away and keeping some open. It's not an either or scenario. It's a scale, transparent versus secretive, trust and merit versus control. These kind of paradigms you can see popping up everywhere. Now, what happens with advertising here is that basically, advertising as we know it is toast. If you apply any of these things, we don't want advertising. None of these things can be achieved with advertising. With the advertising that we know. I mean, AdWords aren't obtrusive, but do they create value? They may, but in general, what is an ad? Trying to capture my attention. So I'll talk about this in the next slide, but let's sort of summarize. I found this somewhere on the web last night. Quite interesting. This person says, why is Google, why do they insist the goal is to organize the world information? Because markets, networks and communities can organize economic activities radically more efficient than firms. Think of this paradigm. I have what this means, right? That the collaboration, the working together can be more efficient than one firm doing it. In the pharma business, it's already happening. Used to be 3, 400 researchers spending $600 million to build the next superpower pill. Now it's 17,000 people collaborating on Wikis. British Telecom has 16,000 people blogging internally. At IBM, it's a network called, I think it's called Bumblebee. 30,000 people on Wikis collaborating. So that is the power of collaboration that we're seeing from here. And of course now, if you're looking at this sort of being a trust issue, I got a couple of quotes, which I thought were kind of interesting. Pittman says, Google Labs will become more transparent in its interaction with the end users. This was just from yesterday. I had sort of quoting on this. And this is the other one that was quite interesting from Marisa saying, trust is the basis of everything we do. As it was fishing for trust in Google, I found this on Google. So we want you to be familiar and comfortable with the integrity and care we're giving your personal data. This is the key issue, not just for Google, but for everyone else. People feel comfortable how you use their data. There are some calculations that an active music user is worth 1,000 euros a year by the data that he creates, by the sharing, the tagging, the rating. If last of M can get each of the users to be worth 1,000 euros to advertisers and brands, they'll be bigger than Viacom. And of course that's the CBS idea. Can we use the data that's created around the content to extract value from it? Which of course is a trust issue. You've seen this all over the web now. We're sorry it's no longer available. The control key has been pushed. So now we have the New York Times. Just as an antidote to this. A few months ago they said, everyone can now have access to archives. They're paying the reporters $400,000 a year, hundreds of them to be extra smart, investigate stuff and dish it up to us. And they've been doing that for what, 100 years, right? So when their web came along and said, there's no way we're going to just make this all available. Just know we can't do that. There's no oursfeeds, no inside of the times, right? So they came up with Time Select, which was an access-based model. $59, I was once stupid enough to actually pay for it. So there's 257,000 people including myself that paid for it, right? Congratulations, the New York Times, the biggest newspaper in the world got $12 million. Wow, fantastic, right? This is an utter disaster, of course, compared to what they could be doing because also their relevance on the web just completely skyrocketed, just blew up, right? Because they couldn't link to them. So six months ago they said, okay, now everybody can do it. And of course, what's the argument? As search becomes more dominant, we took down the pay wall and sold advertising. Wow, that's good, right? I mean, of course, selling advertising turns out it's not quite as easy as it looks, right? Because advertising on the web has to be different. Advertising in the connected world has to be radically different. Otherwise, it'll keep declining in value. This is not the same thing. So very good example from the New York Times where they said, okay, now that we do this, we also have to keep on thinking up new things, right? So now they put bloggers on the homepage and the Time Machine allows you, like the Wayback Machine on the Internet Archive, allows you to pull up the actual print editions on the web and browse them, right? So they cut the idea out to create more pool. We have to create more value, right? This is happening in every single media company in the world. Television, radio, book publishing, magazines, right? The Czech people pull them add more value, sell stuff around it. The Britannica, great story, right? Look at the graph I got from Wikonomics, right? The blue line is Wikipedia and the red line doesn't even exist as a Britannica in terms of web views, right? So now, after 10 years of this, they said, okay, never mind, we're giving away subscriptions. The Britannica emailed me, a useless blogger. Emailed me to say, do you want to try Britannica online for free? Just three months ago, which I thought was great. So I did, and I'm trying it. Won't comment anymore on this, but now they're saying, why are you doing this? Well, we'd like more people to see it and talk about it. Well, what a realization after 10 years, right? They'd like more people to see it. So now you have to give it to them. I mean, this is a pretty big admission, right? You wish the movie studios, the record companies, would have the same admission and say, we'd like more people to hear our music. Imagine that. Imagine that I could type in the name of an artist on Google and just listen to it, right? That would be, I mean, technically speaking, it's nothing, right? But that would be great because more people would hear it, right? What do you want for your artist, from your content? Do you want to be heard? So now they're also saying, are you giving the money away with all the free stuff? And they're saying, no, we don't think so. On the contrary, people using our products will subscribe more. This is the logic we arrived to after 10 years. This is why you need some futurists to tell you about where it could go. So again, a bit over the end of the control here, and then now we're looking at this thing as the next step, right? The Kindle, e-paper, fuel cells, right? Five years from now, huge shift in the publishing industry, right? When we have this, it's just now starting. Ours ask feeds of books, news, personal net-vibes type pages, Google Reader, everywhere in the world, updating your own electronic paper, right? What will this do with the publisher? I think this is where it goes back to economic egoism. My vision is that people at Google would figure out a way to make this whole ecosystem stronger, right? And that is a complex task, because these guys don't know how to do that, right? They're still dumbfounded. So the challenge for content owners now is to make money around the content. Think of a book, right? You buy a book, it's 10 quid, there's no ads inside. There's no connectivity, it's just pure content. It's essentially a penalty for the interface, for the print, okay? You buy a CD, it's the same thing, it's just the music for the most part. Now this is happening, you get all these digital products, everything around it matters. The bottom line is, I wrote this myself, content used to be 100% paid for, and now it's not, right? Now we must put content in the middle and create everything around it, right? That's what the record companies call, for example, a 360 deal, right? Trying to get the artists to do all of those things, like advertising, sponsorship, get part of the tour money and all these things. That's happening everywhere, starting from Robbie Williams and others. Again, going back to emerging culture practices. What is the value of an artist, of a song, of a motion picture, is not the copy of the zeros and ones. It's the experience, right? It's the connection, right? It's the real meaning of the artist. And there's hundreds of things around this, including, as is common practice in China, every single band has a corporate sponsor, right? That's how it works in China. A band says, we like your music, we'll put you up at a party, but we'll also fund your tour, right? That's also how it works in Africa. So this sort of view of the future, right? It's based, you know, if we look at the past, the sort of scarcity stuff that we had to deal with, right? There's only 25 radio stations or so you can possibly have on the dial in the past, right? There's only a certain amount of stuff you can ship around the world. There's a certain amount of airwaves, CDs, record stores, TV channels, bookshelves and so on, right? Now the future basically kills the scarcity idea. We don't, we're no longer scars. I mean, all this stuff is there, unless it's like a statue or something, right? It's there. So we're moving into sort of an unlimited world. How can you expect the business model from the limited scarcity world to work in this world? You can't. You need an entirely new value model. The value of copyright is to say, you make a copy, you pay me. That works just fine if I have a way to prevent it. In this world, I don't. It's unlimited. So what's happening here with this titanic of control, as it's very quickly sinking, right? And basically what we're seeing is sort of a flat lining of control, right? And that means that we have to look urgently for models that are based on trust and merit and quality rather than controlling of an ecosystem. And for many brands and advertisers, it's a major problem, right? We don't want you messing with our video that we have paid a half a million dollars to produce and promote the quality of our product. We don't want you remixing that and putting stuff over it, right? We want to run the brand. Now the marketing offices of major brands are all thinking in the other direction and saying, what can we do to engage the users to pull them in rather than to shout at them? Which means that we're sort of losing control to a large degree moving on to a different paradigm, right? This is a letter that you may be getting from Virgin Media if you're unfortunately enough to be a subscriber, right? They said, if you don't read this, your broadband could be disconnected, right? Because you may be one of those people that is downloading stuff without permission, right? We unplug you and we take the plug out if you're lousy, if you're not a good citizen, right? If you don't ask for permission. And then the next letter is going to say, if you download these PDFs, you're going to be unplugged and the next one is going to be, you read the wrong thing, we'll unplug you, right? I mean, this is a very interesting development. The idea behind this is to say that, you know, we still control the ecosystem rather than to say, you know, we give permission a hundred years ago, radio was illegal. Well, in the UK, many stations, including Radio London and other ones, were out the channel broadcasting, right? Those were pirate stations. If you want to read a good book about this, read The Pirate's Dilemma by Ned Mason. It's a great book, a friend of mine who wrote it. So a hundred years ago, radio was illegal, right? And the Ereco companies and artists and publishers said, we won't give you permission to do this because it destroys our logic. People won't go to a concert when they can hear it on a radio, right? So that's not good. Today, I think we're in the same place. It took 20 years to get a license for radio, right? I think in the next two years, we will have a flat rate, a bundled license for the use of music on the web. That means as soon as you connect, you're legal. You're blessed to do as you see fit, just like radio. Nobody has to watch out what they listen to on radio or who they dial up to. So the end of control as we knew it is coming. It's a huge paradigm shift. It's from the total control paradigm to the total empowerment. Again, it sounds a bit sort of California, but when you think about the most powerful thing that can happen is to empower the user to do these things and find a way to extract value from them. So it's no longer about the certified and sort of central authority, the select few authorized professionals. They will, of course, continue. There's no doubt about that. But it's also about the combined power of masses of people. In advertising, you're already finding that brands are trying to talk to the consumers about the next campaign. Brands are even trying to talk to consumers about the next car they should be building. They're trying to make a direct connection between the people who are actually the users. And music, of course, that's completely evident. And lastly, again, going back to Medvidit, is no longer about just actions guided by your own concerns, but also by others and by the value of the network. So going back to this keyword of the new sort of cultural economy, I think this is something we are building, of course, very much here, of course, in the next couple of years. There's lots of stuff to be figured out. How does it work? How does it relate? One thing is for sure, digital content is not the same as a chair or a television or a car. The same logic does not apply. Whoever says stealing music and parenthesis on the web is the same than going to a record store and stealing one does not use email. Because the logic doesn't apply here. This is not entirely the same thing. Ownership enforcement now is a lot less important than usage permission. When radio was licensed, it turned from a zero business to an 18 billion dollar business in the U.S. within two years. Imagine what would happen if the music companies and studios would give Google permission to share revenues for the free use of content on search. How much money could you generate from this? What Vidit was doing for free in China and therefore being the market leader. Giving permission for the use of content is really the very first step. And interestingly enough now, with the advent of old web streaming including now films and videos, listening and viewing now really is copying. Anybody who says that listen to music on last fm or any sort of on-demand service is not the same in iTunes? Well, yes, if you're not connected, it's not the same. But since most people are now always connected, and especially in the future, what's the argument? Why is that different? And ultimately you could even argue that searching is getting. I mean that's in the case of Baidu that's actually true. But as soon as you can search, you have access. So what is the logic? You know, how does this work? Value can no longer be defined by unit sales. For example, of records of DVDs. So here we have BPI Chief Jeff Taylor saying a couple of days ago. This is very interesting I think in the context of our discussion here. The BPI is a British photographic industry running the lobby for the major labels. He says, we don't believe that society can allow the free consumption of content to persist. Wow, that's quite a statement. I don't know, do we have control over the free consumption of content? Is there any way that we can not allow it? Yes, it may not be legal, but in reality, can we not allow it? Can we resist? Can we refuse? Can this license be refused? Ultimately, I don't think so. These mechanisms are available. In your mind, you can refuse, but you have to find a way to actually empower it and make money off it. So they remind me of a bike that's driven with square wheels. It's like, this is not going to go anywhere like this. So here we have a 1925 record company guy saying, the public will not buy songs that it can hear almost at will by a brief manipulation of the radio dials. Now, radio turned out to be the biggest innovation in the music business for 50 years, right after this. The same exact argument applies to the internet now. The public will not buy music that can be achieved by a brief manipulation of Google. And think about that argument, same argument, basically. If you can find it, you have access, you're not going to do XYZ, which used to pay money. What happened with radio is that people listened to radio and they said, oh, wow, this is a good thing. I should go to the gig. I should buy a t-shirt. I should download the music. We have exactly the same logic here. So the old toll booth, especially music was like this. Okay, you got the music, you have some sort of device carrying it, and there's a toll booth. All right, you have to go to the toll booth. iTunes, one pound, whatever, right? And boom, you got the money, right? The new logic is like this, you have a network. A network could not just be the network itself like wireless or ISPs, but also network like social networks, social media, and of course, search engines, right? The music is in the network, put in by people that are on the network. And the toll booth are also in the network, right? Meaning that when your access is already paid for, right? In other words, the value that you create as a user creates payment mechanisms of various kinds, not just advertising, upselling, commissions, referrals, all kinds of things that, of course, are your daily job to figure out how to do this. This kind of thing creates what we call the pool of money. So the idea, essentially, a flag-rated approach to this content issue, I think that's what we're going to see in the future. And now we have to ask, of course, the question, so what is content, really? I mean, is it just a copy of a professional production, some certain creator? Let's redefine it, okay? Text, music, audio, images, video, and of course, that's the central sort of copyright paradigm. These are owned by people, right? That was the old sort of idea. I'm not saying that's wrong. I'm just saying what is the practical approach to this now is that we have to be a little bit looser on this, right? Because if we just consider this content, we have a problem with the people formally known as the audience, right? Because they don't think of it this way, right? They're remixing, they're recombining, they're doing their own stuff, they're publishing stuff that may be some copied, some not, right? This paradigm is very hard to enforce now because these people are now engaging, right? So we have to think of this a little bit differently. We have to look at all the stuff around the content, text, rating, packages, skins, usage history, all the stuff that I could call meta content if I want to be using GeekSpeak, right? Data, essentially, right? Now, this kind of thing creates a wider context of what I would call content, right? That creates the value to the original producer of a song or a motion picture or whatever idea, right? This is a view that I think a lot of people are coming around to, right? The users themselves are creating content in the use of this content. All of this really is content. So we have this evaporating distinctions, you know, the creator and the non-creator, the professional, the non and the amateur, right? I mean, these are various sort of artificial distinctions that we can't really afford anymore to think of it like this. Is a blogger a professional or when does he seem to be an amateur, right? The same goes for musicians. Is a guy who is doing cutting and pasting, is that a musician, right? Or is it a cutting and pasting artist? Now, all of us are really both. Now, I think this is going to be a trend that is going to absolutely explode with the use of mobile devices, because then we can do it on the fly and quickly. So content 2.0 is sort of a two-way conversation. That's already here. I mean, if you're looking at what's happening with the contribution of content, user ratings and reviews, customer testimonials, discussion boards, right? The user is already creating this content. If you can capture some of this, which you already are doing, of course, I think then you're in a pretty good position. So I've looked at Google. I found this somewhere on the web, I forgot where, but these are the growth rates for Google for last year. I'm sure you're more familiar with that than I am, but I Google, of course, exploding and a bunch of other things. So I've looked at this and said, okay, what has to do with content, right? Of course, video search, blog search, web search, and these are all content related things, right? These are all based on the blog search, of course, the maps, right? I Google, and everything is based on content. I focus on the others, don't have any content. Yeah, well, that's a good point. It's not content, it does maps. It's probably incomplete, you know. My point is that everything you do here is based on content. And everything else is, but you have to follow. Yeah, yeah, pretty much. I mean, I think you're right on that. It's probably, I mean, Google talk is not so much about content in that sense, but to some degree also, of course, you could call that. What's the distinction you're making between content and industry? Okay, good question. No, I'm not really making any distinction. I think you're pointing out a good point. You know, this is all about content. Yeah, it depends again on how you define content. But, you know, ultimately, my point is that if you're looking at content as being the central point, I think figuring out the ecosystem around content, as I was pointing out earlier, is a crucial job, right? Because I think many content producers themselves will expand into becoming context providers, like last of them is curators, aggregators, and packages. For example, what will happen with radio? Radio stations will become curators of content, like they already are, but they won't be insisting you listen at a certain time on a certain frequency, right? A lot of people, like record companies, labels, publishers, they will provide a context that will do packaging, that'll provide all these things to add value to the sort of curation process by doing all these things. I already wrote about this like three months ago. I think lots of blogs will essentially become record companies. Hype Machine, Pitchfork, Elbows, all these companies are essentially the next radio one. They're writing reviews and putting out the music. Think of that in a larger context, especially on mobile networks. You have a radio station. So if that is content, what is advertising? If we define content in a wider field, like we have using meta content and data, what is advertising? I think we have to hit the reset button as far as advertising is concerned. I think we need to look at a larger context of this. I think the internet is essentially forcing us to reinvent advertising. And I think this is a very large mention. We're talking about $700 billion a year. And right now, maybe 10% of that is digital interactive. So this is a big job. If you're looking where this is leading us to, I think advertising is really publishing. Basically, publishing something that promotes a product or service is getting to be almost the same than creating publishing products for entertainment purposes. Great example is BMWfilms.com. You may be familiar with it in 2004 or 2005, I think it was, where BMW spent about $65 million on making movies with James Brown and a bunch of other guys in the US and they sold 15% more cards from these movies. They didn't even have a single logo of BMW. Essentially published something that promoted the brand in some way. I think this is a very, very large realization that with publishing, getting users to pay attention in return for getting free content. First step, I think in the next 12 to 18 months, music will be free, supported by people paying attention to some branded content or advertising, if you wish. But not advertising at disrupts, but valuable advertising. In other words, rather than paying for iTunes, I'm going to say, well, here's my profile. I may be looking to buy a car this year. I may be looking to do a cruise ship trip. You can send me something that's an exact fit of my profile and advertisers will essentially pay for the music. I mean, in a way, that's not really new, because radio is the same model. So this is where we're heading and that goes with the flat radio. Just two weeks ago, Orange and France announced that you can have the orange music package and all you can eat package for 12 euros. The next step is to have the 12 euros paid by a brand. So music feels like free. This is the way we're heading also first with music, then with film and television content. Yes, we have to wrap up. So I think the key to the future of advertising, I think is the sort of right blend of sharing versus privacy, which is, of course, a cultural thing, a local thing. You know, if you have people like this, they're not very good for advertising because they are sort of protected. People like this would also be a problem. But I think explicit permission to temporarily and safely use the data, I think that's where we're going. And this is a very huge subject, I think that lots of people are looking to solve. If you look at this site, telco2.0, you can see some of the trends towards using the data. I recommend you download some of those slideshows. You may have seen telco2.0.net. It's some very good data on this. So I have to summarize this. I think the bottom line is, I think medium content is in the network and so must be the advertising. In other words, it doesn't do us very good to disconnect the advertising from the content in this way. I have one more slide I need to show. Just walk over here for a second and then we're done. If we can, we can take some questions, but as you can see, I had various few other things here. So I'll give you a quick summary and then we're there. I think just to summarize, I think economic egoism is what I say is very much 1.0. It's sort of the past, right? Doesn't really work any longer. I think we're just now seeing that coming into fruition also with the global crisis in energy and food. It's very much related. Data is content is king. If I can mix it up like this, it's not just the original content. Advertising is publishing. Fields like free content is what we're getting. That's already here. And trust is the number one mission across the board. You can download this presentation, by the way, I'll put it on later on the web today at mediafuturists.com. There's many other ones too, but you can get this one. And relevance over quality. And lastly, of course, I got to say this, I think the end of control is shaping up everywhere. This is a very, very large shift that we're seeing in the sort of connected ecosystem. Thanks very much for listening. And I want to tell you also not to forget to escape occasionally like this key is doing. And this is where you can reach me by email or on the web. Thanks for listening. I have some books here. Just take a book if you would like one of those music books. If you got the interest in-