So Angry Birds is the smash of the year. The surprise game that has become a meme and catapulted (sorry) its makers Rovio to fame, fortune and a frenzy of merchandising and motion picture tie-ins.
But why are the birds angry? While we were in Tallinn last week at the Creative Hotspots event and economist Neil McEnroy of Manchester’s Centre for Local Economic Studies was probing the inner recesses of the creative industries, this was one of the questions that burned deepest in my mind.
Just why are the Angry Birds angry?
Is it that humankind has wrecked the environment and that now, as a form of punishment, we have to use the birds to wreck our own buildings in order to restore the natural balance?
Is it that the makers of the game would have made planes not birds but that this was not absurd enough and looked too much like 9/11? It seems unlikely that Angry Planes, a game where you catapult planes into buildings to see how efficiently you can knock them down would be quite as popular as Angry Birds. But in one of the Angry Birds night scenes, the birds do have these light tracers that seem more redolent of missiles than birds…
Or is this some kind of weird tribute to Hitchcock’s the Birds? Is this (like the Danish cartoons last year) another one of those offbeat and slightly weird Nordic cultural satires? Only sitting long nights in saunas in log cabins makes these things comprehensible apparently. Has anyone spotted a Hitchcockian cameo appearance of the great director himself yet in any of the Angry Birds scenes?
Last week, in the middle of the TED conference, I had the opportunity to talk to the Westminster eForum about file-sharing, remedies and how to move beyond the UK’s Digital Economy Act. As I’ve worked on this problem and explored what others have proposed as remedies, I am more and more convinced that Rights Registries are part of the solution we need to move to. In a digital networked world where our content moves around in mysterious ways, we need a digital networked solution to mirror and reflect that activity in order to create a new means of managing digital rights in a fluid marketplace.
But this cannot be a wholly owned solution, along the lines proposed by Google. Instead we need authoritative metadata databases that are open to search and open to updates, that are regulated by governments, moderated by authorised boards and not-for-profit. This kind of structure starts to offer significant benefits over our current proprietary closed systems which are hemorrhaging rights owners revenues. I have written a white paper based on my talk last week on the subject, which you can download from here: The Rights Registry 1.5
I’m very interested to hear other people’s thoughts about how we move forward the development of real practical solutions for digital media on the internet, based on going with the flow of consumer behaviour and encouraging all kinds of usage not punishing consumers for what the technology allows them to do.
One of the smaller points in the Spotify fund-raising piece in the FT that flashed around the globe Tuesday was mention of a “strategic partner” in the wings. This was widely interpreted to mean a record company. Some might have raised an eyebrow and wondered why a single record company would wish to take a piece of Spotify when it’s widely acknowledged that only when a service can offer all the content from all the labels can it be said to be in a position to offer a meaningful consumer offering (niche and genre-specific takes aside). These days however, Universal appears to be flying in the face of that truism by going alone in its recently announced services with both Virgin and Orange. Perhaps having such a high share of the UK market gives them that confidence. Music Week reported earlier this month Universal has currently 44.5% of the UK album market and 46.5% of the singles. As the FT argues, having a record label on board might allow the company to negotiate lower royalty rates. Artists signed to such a label might begin to query the value of such a deal to them however.
So might this “strategic partner” in the wings be Universal? Well earlier in the year, around the time of Spotify’s launch, rumours swirled around the industry about the cost and terms of Spotify’s licenses with the major record labels. Estimates from between £4m and £7m have been bandied about as the amount they had to pay in upfronts to the majors to achieve their slam-dunk comprehensive license pack. Hence perhaps the need to raise substantial sums again so early on. If that weren’t crippling enough, a new and sophisticated deal option was rumoured too. In the early naughties, taking some equity in start-up music companies as well as charging upfront royalty fees was common practice. I like to think I helped pioneer such deals during my time in Los Angeles with EMI. It was therefore widely assumed that the majors had repeated this practice in the case of Spotify. But, it was also alleged that the majors had created a ‘put option’ in their deals that would allow them to cash in their shares in the event that the company’s valuation reached a certain threshold. Such an option would be attractive to both sides since it would motivate the labels to collaborate with Spotify to increase its valuation and help Spotify by incentivising the labels to help Spotify and not some of its competitors.
If the magic number was $200m then it might just be that this new round of investment is accompanied by a more significant re-jigging of the ownership of Spotify with several labels seeking to cash in and help their suffering bottom lines, while one or two others choose to enhance their holding position. One of the great advantages of cashing out in such a manner to the labels would be that no artists would need to be paid since the revenue came from the labels’ aggregated position not through individual performances. Of course, until the day when Spotify goes public (something of a distant prospect in this market) we may never know. How any of this plays into Apple’s thinking about Spotify’s iPhone app is hard to fathom – if indeed Apple are aware of this dimension at all.
And from the perspective of a large record label, what real value would building up a single player like this bring in the long term? It is often argued that if one record company were to take some ownership in a big market-dominant player, then the other competitor labels would never play ball and would support a competing player. But that was an argument made in the days when one major label didn’t control almost 50% of the market. So this begs the larger question, as the architecture of the music industry continually evolves and reshapes, what path should a record company take in the digital arena and how does it achieve its mutation from a recording and marketing business to a digital relationship management company? How fast can one company alone, get ahead of the rest of the industry before the others catch up? As the speed of change increases so, it would seem, does the opacity of the game. As Mr Grainge, Chairman of Universal Music, said to me recently with a twinkle in his eye: “Oh, I’m very, very opaque”.
Posted in branding, EMI, Media, music 2.0, Music Industry
Tagged digital music, Featured Artists Coalition, Lucian Grainge, music 2.0, Music Industry, New Music Industry, Next Generation Artists, Universal Music
spreading ideas worth spreading
quotes from speakers at TED Global
“Globalisation will lead to a new Renaissance, a huge opportunity for innovation. But there are also two huge problems. Firstly, those who are left out and excluded. Secondly, managing growing complexity which leads to systemic shock (eg current recession, swine-fever, etc).” Ian Goldin
“Afghanstar, Poet of the Millions, the unintended consequences of Britain’s got Talent, in Asia and the Middle East, Reality TV is driving reality.” Cynthia Schneider
“Sound can be like a bowl of spaghetti, sometimes you just have to eat it and see what happens.” Julian Treasure
“Regret factors associated with cyber warfare threat could be equivalent to weapons of mass destruction.” Guy-Philippe Goldstein quoting US military
“It is better to be sometimes cheated, than not to trust.” Samuel Johnson quoted by Susan Kish
“Today, the information monopoly is broken, so brands need to find a place for themselves in this swirling mimetic environment.” Andy Hobsbawn
“The pain of psychological death + the pleasure of beating yourself = hunger in paradise.” Rasmus Ankersen
“The opposite of snobbery is your mother.” Alain de Bothon
“The trouble with our meritocracy is that in the 21st Century people own their own success, but they also own their own failure.” Alain de Bothon
“Obsession made my life worse and my work better.” artist quoted by Stefan Sagmeister
“Super massive black holes represent the breakdown of our understanding of the physical universe.” Andrea Ghez
“I found a dead fly and plucked a hair off its head to make a paint brush. I would never do that to a live insect.” William Wigan, micro sculptor
“Mirrors would do well to reflect a little longer before sending back images.” James Geary quoting Jean Cocteau
“In Mexico, the Indians played music to stay in touch with their ancestors, but in Africa they play to stay as far from the grave as possible.” Mark Johnson
“The internet can be characterised as random acts of kindness by geeky strangers.” Jonathan Zittrain
“Work places and institutions are preventing our efforts to use technology to create greater intimacy between ourselves.” Stefana Broadbent
“What’s wrong with placebo’s? They have very few side effects and most of those are purely imaginary.” Rory Sutherland
“As an adman, I think of saving as consumerism needlessly postponed.” Rory Sutherland
“Bio-diversity is collapsing, mass extinction is taking place in our fiels without anyone noticing. You don’t look a corn seed in the eye, as you might a panda bear, but we still need seedbanks.” Cory Fowler
“Leaving something unfinished makes it incomplete and gives one the feeling that there is room for growth.” 14th Century Japanese essay on idleness quoted by Marcus Du Santoy
“Some stars have swallowed their planets.” Garik Israelian
“People could stroll and get their learn on. People could come to this sidewalk garden and chillax.” Candy Chang
“What do scientists do if paradigms fail? They carry on as nothing had happened, saying yes I know it’s wrong, but if it were right…?” Elaine Morgan
“African students study under streetlights at the aiport because they have no electricity at home.” Paul Romer
“3% of arable land is taken up by the world’s current cities inhabited by 3bn people.” Paul Romer
“80% of traded food is controlled by 5 multinational companies.” Carolyn Steel
“40 cities represent 90% of the world’s wealth.” Parag Khanna
“Dry areas cover over 1/3rd of the earth’s surface.” Magnus Larsson
“In India, 62% of all injections given are unsafe.” Mark Koska
“90% of the feature requests for features in Word – are already in Word.” Aza Raskin
“Organised crime represents 15% of global GDP.” Misha Glenny
“40bn batteries are disposed of every year.” Eric Giler
“Only 3% of GDP is invested in technology R&D annually” Geoff Mulgan
“Life is a series of things you’re not quite ready for.” Rob Hopkins
“Design is a priesthood wearing black polo neck sweaters and designer glasses. Design is too important to be left to designers.” Tim Brown
“I wanted to know what had turned my best friend into a terrorist and why she had not tried to recruit me.” Lorreta Napoleoni
“The music makes my therapy, I have no advisor, no one to talk to, music helps my imagination.” Emmanuel Jal
“To change the world, using no resources, use music.” Ross Lovegrove
“Tritium is bred from lithium, using the neutron.” Steve Cowley
“In ballooning we understand that winds, at different altitudes, blow in different directions. So in life, if we want to change direction, we need to reach different levels and to do this we have to throw things overboard, we have to get rid of a lot of ballast, certainties, dogmas, paradigms.” Bertrand Piccard
“The empires of the future are the empires of the mind.” Winston Churchill quoted by Richard Bernstein
“Always take ‘no’ as a question not an answer.” aphorism quoted by Geoff Mulgan
“We are here on earth to help others, what on earth the other are here for I have no idea.” John Lloyd quoting W H Auden
“Ice is the canary in the global coal mine.” James Balog
“If we refuse a single story and know that there are many stories, then we regain a kind of paradise.” Chimamanda Ngozi Adichie
“Roman military expeditions were just one long shopping spree really.” Carolyn Steel
“Architecture is retrofitting the world to our needs.” Bjarke Ingels
“There is a severe mismatch between what science knows and what business does.” Daniel Pink
“The musical work is in your head, conductors are building the roller coaster with sound as the orchestra plays.” Itay Talgam
“We are doing nothing, because we want to see what is the inner point of all the difference.” Brother Paulus Terwitte
Posted in branding, education technology, Green, lifestyle, Media, Mediatech, Statistics to rock you, TED Global 2009, venture community
Tagged Alain de Bothon, Andrea Ghez, Andy Hobsbawn, Aza Raskin, Bertrand Piccard, Bjarke Ingels, Candy Chang, Carolyn Steel, Chimamanda Ngozi Adichie, Cory Fowler, Cynthia Schneider, Daniel Pink, Elaine Morgan, Emmanuel Jal, Eric Giler, Garik Israelian, Geoff Mulgan, Guy-Philippe Goldstein, Ian Goldin, Ideo, Itay Talgam, James Balog, John Lloyd, Jonathan Zittrain, Julian Treasure, Lorreta Napoleoni, Magnus Larsson, Marcus du Santoy, Mark Johnson, Mark Koska, Misha Glenny, Parag Khanna, Paul Romer, Paul Terwitte, Rasmus Ankersen, Richard Bernstein, Rob Hopkins, Rory Sutherland, Ross Lovegrove, Samuel Johnson, Stefan Sagmeister, Stefana Broadbent, Steve Cowley, Susan Kish, Tim Brown, W H Auden, William Wigan, Winston Churcill
A few weeks ago, on a sunny spring evening in Stockholm, a friend of mine asked me to come and have dinner with a guy who he thought I might find interesting. We arranged to meet at a fabulous old restaurant located high above the city, looking out over the water – over the original Pirate Bay itself in fact. As we went up in the rickety elevator reached through a rather down-at-heel office building, my friend turned to me and said: “Oh yes, by the way, he has an interesting idea, he wants to buy Pirate Bay.”
We sat down and were shortly afterwards joined by Hans Pandeya. A native Swede, Hans comes from an Asian Indian family and spent several years working in Sydney Australia before returning to his native Sweden. His current company specialises in running internet cafes in various locations around the world. Hans is clearly an entrepreneur in the classic mould. We spent the evening discussing the pros and cons of the deal, the way in which it might look like a repeat of the Napster scenario, how we might avoid that and what my partner and I might do to help with a little scheme we were hatching.
I explained to him at length that whatever he thought he was buying, if he changed the service to one that pays rights owners and charges users – almost by definition – the users would flee – en masse. All that he would really be able to buy is the brand.
And a brand whose values and business model are radically altered from what they were built from is a decidedly diminished asset.
Not to mention the lawsuits – the current one – and the ones that haven’t woken up yet…
Nonetheless, Hans remained determined. For a start, the tax benefits of one Swedish business investing in another might mean that he would only end up paying 50% of the asking price – so his investment is not $7.8m but nearer to just under $4m. Secondly, Hans felt certain that if the Pirate Bay had 100 million users and that only 10% of them stayed with the brand, then there was a great business to be built. My partner and I disagreed, but we had an interesting and enjoyable meal and as the sun set over the winking waters of the bay , it was clear that Hans was determined to go ahead with his plan. We wish him luck.
Posted in branding, EMI, Media, Mediatech, music 2.0, Music Industry
Tagged digital music, music 2.0, Music Industry, New Music Industry, p2p, Pirate Bay, pricing
The Digital Britain debate is a curiously British affair. If we were having this discussion in the US, we would be talking about Net Neutrality and the implications of maintaining a broadband level playing-field with access for all and regulation for all while reconciling the needs of businesses to run services and users to retain privacy and civil liberties.
Here in the UK, the assertion of the need for “universal access” is one of the key needs to achieve what Carter identifies as the best possible outcome from Digital Britain which is Digital Governance and the digital delivery of public services. And this laudable aim, then leads us quickly into needing to discuss the future of public sector broadcasting in the shape of Channel 4 – and strangely leaving the BBC quietly out of the scenario for change.
Lord Carter said today, speaking publicly for the first time since the publication of the report, that he hopes the effect of Digital Britain is to help set an agenda that will re-boot the economy both through public sector investments and private stimulus so that we could replace some of what we became over-dependent on in the Financial Services sector with what we might become grateful for in the digitally revitalised creative industries. There is a tension here between the public and private agendas and it is similar but crucially different from a tension in the US’s net neutrality debate.
While there is considerable debate on the future of Channel 4 and its public service remit, there is precious little discussion about how to stimulate new business models, encourage risk taking and commercial experimentation. The acknowledgment that some of the content industries might want some new protections online is almost incidental. The Rights Agency, Digital Britain’s proposed solution to reconciling the differences between the music industry and the internet service providers, would effectively regulate a process which is already in place today, enabling whistle-blowing on alleged large-scale online copyright-infringers. It would enable the ISPs to maintain their safe-harbour protection and lack of liability for what they carry over their networks by throwing a bone to the content owners to allow them to continue to criminalise their customers – albeit only the very naughty ones.
One of the arguments at the heart of the Net Neutrality debate is about consumer desire to maintain a free and open internet which enables all users and all businesses to communicate, transact and share content without regulation as against an interest from corporations and ISPs to monitor and “shape” traffic and content and to offer various levels of quality of services to those that are prepared to pay for more bandwidth and accept more regulation. ISPs are stretched between a universal access model where they take no liability for what goes across their network and they simply create margin through scale (ie compete with each other for numbers of users and pricing), and more of an old-fashioned walled garden approach where their networks are restricted and the content that moves around them is more tightly controlled and where they can charge a premium for premium content – a kind of HBO online. It’s an unenviable model right now as consumer prices drop and infrastructure maintenance build-out costs increase. It would suggest that the need for content on the networks is going to be greater than ever. Yet, Virgin Media, for example have just failed to get an innovative new music service off the ground because they couldn’t find a solution to the demands made by the record labels who are all too desperate to retain their old ways of making money. It’s hard to see what the incentives are in the Digital Britain report to resolve these kinds of conflicts.
In the UK, the debate is too skewed towards public service issues and not sufficiently engaged in helping meet business interests and formulating viable forms of commercial stimulus. Instead of trying to figure out the balance between public interest, civil liberties and personal privacy as against commercial interest in innovation and in delivering new more profitable services, we are focussing on how best to spend the taxpayers’ pounds on public service provision and the surrounding dependency ecology of small production companies and programme-makers which Channel 4 was originally designed to stimulate. As a friend who is a veteran media buyer whispered to me this morning, as Lord Carter rose to speak “Nobody in the advertising industry gives a @#$%! about Channel 4, they want to know what Carter is going to do to help create real new sustainable businesses”.
At the beginning of every year, as the music industry gets over its winter hangover by inducing another one at the Midem conference, the pieces of the puzzle that used to be called the industry fall into place again. The process of getting together and discussing the state of the nation is ever more needed when everyone is embarked on rebuilding the architecture of an entire industry. Taking stock and gaining a fuller perspective are more and more valuable when the ground is constantly shifting beneath our feet.
A few of course are also tasked with the additional burden of trying to maintain their living from the dwindling pieces of the old industry. The majors have a really difficult task in doing that and, as they struggle to manage their transition from one model to another, they do everything they can to try to slow the whole process down and prevent other players coming in and stealing the ground from under their feet. It’s a sad fact that after ten years of creeping transition and increasing economic pain, the process hasn’t changed that much. The majors are still making it difficult for others to do business with them and try to extract as much cash from technologists and venture capitalists as they can, whilst paying out to their contracted artists as little as possible.
But there are a lot of reasons to be optimistic about the new digital media business that is starting to grow up between the cracking paving stones of the old analogue one. The number of startups and vigorous new companies trying out new models is larger than ever. Despite the recession raging around us, many of these companies have got sufficient funding to struggle their way through the next twelve months and come out the stronger on the other side. For those that don’t, there are still plenty of people looking closely at this industry, searching for bargains and seeing the potential becoming clearer daily.
So what does the new landscape look like and where are the gaps?
Increasingly, it really does look as if the distribution piece of the puzzle is sorted out pretty well. There are the major retailers of the catalogue for download or stream or subscription (iTunes, Amazon, Rhapsody, 7Digital, Nokia, all playing in the game – as well as the advertising funded crew We7, Spiral Frog is apparently still going and maybe even QTrax ). There are the new digital platform providers who are trying to offer artists clean and simple means of going direct to consumers (Myspace, Topspin, Mubito, Musicglue, Audiolife, bandcamp, etc). And there are the consumer focussed folk who are either trying to aggregate content to make the fan’s life easier (Facebook, iLike, Shazam, etc) or provide discovery and recommendation services – either by human intervention (the playlist) (Mystrands) or by algorythmic cluster analysis (Imeem, Muxtape, Songkick for gigs, etc). There are the radio/tv type services that really just happily stream stuff at us and try to make that a bit more of an interactive service (Pandora – US only, Last FM, Spotify, and of course YouTube, Hulu – US only, Muzu, for video, etc).
Now we’re just starting to see a few companies focussed on the data that’s thrown off by all of this work (Hitwise, Bandmetrics, etc). I’ve talked before about data because I see it as the component with the greatest potential in all of this. If there’s one thing the web throws off it’s tons of data. In this area one big question is whether the killer app is an aggregator service that scrapes and mines and spiders and tries to track everything that moves – and then license that back to everyone. That’s the Nielsen model. Or is it customised, commissionable tracking service you can hire for your artists and their competitors? Or is it a built in set of metrics that some of these platforms start to offer to help provide and sharpen the feedback loop of marketing and consumption?
So I think there are two key gaps – one is really good web marketing and promotional tools. Where are the companies that are creating simple tools for artists to create viral word of mouth affects across Myspace or Facebook or stickiness for official artists’ websites? A new data-driven one might be Buzzgain – but it’s early days to tell what they’re doing and they look like quite an expensive service upfront. Seems like the digital platform providers need to develop more tools like this and incorporate them in their offerings to artists – and I’m not convinced that they’re doing that too well yet.
The other gap is for the fully comprehensive business that brings together the artist services side with the consumer offering and makes use of all the data that it is gathered from both sides of the equation to sharpen up their effectiveness in bringing fan and artist together. The bigger players like MySpace Music ought to be well positioned to do this, but somehow they’re not there yet. Newcomers like Topspin or Imeem could be consolidated together to create that opportunity and then build out the switch in the middle to make it really effective.
So expect to see this coming during the next few months – and somewhere to confuse us all on top of this is the increasing need to find ways of using the cash flow of brands to stimulate the content flow of bands. That’s what we used to call an advertising revenue model but which today can’t be called that – because we know that’s going away. So here is the really interesting key to all of this. The biggest advertising driver on the web is Google and their biggest revenue mechanism is serving TEXT classifieds in our faces. Wow! With all the creative, design and styling skills that have made advertising so interesting over the last few years – in the beginning of the 21st centry – it’s back to TEXT and all the intelligence is in the back-end contextualisation analytics. Truly we are still in the foothills. There really is some very cool stuff yet to come!