Reykjavík Grapevine - 21.09.2007, Blaðsíða 4

06_REYKJAVÍK_GRAPEVINE_ISSUE 15_007_INTERVIEW/MEDIA
A multitude of international music industry
figures and various professionals will con-
vene in Reykjavík in mid-October to attend
an international conference that focuses on
“The future of music distribution, Internet
marketing and related topics.” The ambitious
conference, promoted by the Icelandic Music
Export (IMX), is entitled “Who is in Control?”
If its keynote speaker, self-proclaimed “Media
Futurist” Gerd Leonhard, in any way lives up
to his moniker, the answer to that question is
a concise: “No one”. The Grapevine met up
with Leonhard and learned how one becomes
a Media Futurist as well as why the global
music industry needs to hoist up its pantaloons
to prevent its bloated behind from showing
more than it already does.
What is your background? Could you ex-
plain to us what being a “Media Futurist”
entails?
I went to the Berklee College of Music and
studied Jazz guitar there, so I’ve basically been
in the music business all my life, as a musician,
producer, concert promoter, etc. I spent 12
years as a professional musician, touring and
recording different projects and playing every-
thing from concert halls to cruise ships. In the
mid-90s, I started working for the European
Commission on a project that employed 800
experts from all over Europe – the Arts Educa-
tion and Training Initiative. We were looking
at ideas to improve the economic conditions
for artists, musicians and writers, to help them
make money.
After working on that project for two
years, it became clear to me that the Internet
was going to completely change the economy
of how artists, especially musicians, distribute
their products and make money from them. In
1994, I started my first Internet projects and
wound up working for ten different Internet
companies from 1995–2002, as well as found-
ing six of those myself.
Long story short, after the Internet bubble
crashed and all the companies died in 2001 I
moved back to Europe and wrote a book called
The Future of Music which became a bestseller
in the industry. It’s been widely translated and
pretty much everyone has it. There, share the
things I learned in my years in the business, and
since then I’ve been lecturing, blogging and
writing about the future of digital technology
and music. I talk about things like the proposed
flat rate system, artists’ direct connection to
the market, how niche markets are growing
more lucrative and how agents and managers
are becoming more important than the labels
– all things that are quite clear to anyone who’s
been following the progress for the last few
years.
I do a lot of work advising companies and
artists about the future of music. For the last
two years I have expanded into film, video,
TV, branding – in short everything that has to
do with content and technology, the overlap
between creative work, intellectual property
and how technology is using it. I help tech-
nology companies understand record labels;
record labels understand opportunities and
artists realise how they can market themselves.
Starting October 1, my new book, The End of
Control, will be available free of charge on-line
at endofcontrol.com. There I discuss how art-
ists, labels and publishers will have to give up
the idea of controlling who gets their content
and how, and how there are other things they
can sell than physical copies of it.
How, then, do you foresee the future of
music distribution and consumption?
The biggest change is that the model is moving
away from selling units to selling access. That
means that at first you have to give access,
in some cases for free. You provide a way for
people to find it on the Internet, blogs and
social networks like MySpace and Facebook.
You provide access for the larger communi-
ties in return for an ad-revenue split, so that
money is made from the web site but the
music is free for the user, very much like radio
is done. No one pays for radio, but there’s still
money being made.
The thing about music consumption is that
it’s changing over. The kids don’t want to start
by buying a physical product, although they
may spring for it later. As you know, those
aged 12–27 only want to click on a website
or through their mobile phone to check the
music out; they consume music in an interac-
tive way and aren’t ready to pay right from
the beginning. In the old way, you had to buy
the full CD before making your mind about
the music, while now I can check out a punk
band from Japan, listen to all of their tunes and
watch their videos for free – if they draw me
in and I become a fan, I will try and buy their
CDs and T-shirts and go to their shows.
This evolution is positive for the musicians
and the consumers, but bad for the intermedi-
ary, i.e. the music industry, which has made
almost all of its revenue from selling copies.
Very few artists made any money from selling
CDs, as most of the record companies tap up
85% of the revenue on them. So in light of
the old model, this new way of doing things
is excellent for artists and for fans but not for
the people in the middle, who now will have
to think of new ways to make themselves
relevant.
The small record companies have already
figured this out; all of them are becoming
agencies now. Distribution is easy now, you
can have it on the net for almost zero cost, so
what they do is specialise on helping the artist
making the best possible music, and marketing
that and promoting to get attention. The only
thing that matters now, if you’re a musician, is
getting attention, and there are a lot of ways
of getting it.
Bands are seeing the importance of build-
ing a brand name. If you have a million views
a day of your blog and 5,000 people down-
loading your video, you can build a brand
from it and don’t have to be so concerned
about selling a CD. You can still sell them
to anyone who wants them, but the main
focus should be providing access. You have
to build the audience, to borrow a marketing
term, it’s a big switch from “push marketing”
where you force your product on people via
advertising and flyers, to “pull marketing”
where you play a gig, provide a good web-site
that features downloads and free streams to
social networks; all of these things work to
pull people in. If what you’re offering is any
good, they’ll get stuck, and if it’s really good,
they will become loyal fans. And then you can
sell them something.
Lots of bands don’t sell any CDs at all,
instead making all their money from concerts.
Grateful Dead is a good example, and Prince is
a more recent one. He gave away his last CD
for free in England recently because he could
make more money from playing a concert.
There are many, many ways to make money as
a musician aside from selling copies, whether
it be licensing songs for movies, television
or computer games, selling concert tickets,
merchandise, writing a book even.
So to summarise, there are two changes
evident. One is from access to ownership,
where you now make money by providing
access, and the other thing is that musicians
and labels will have to look at all the differ-
ent ways they can make money as musicians
– but first, they have to build a brand. Robbie
Williams made seven or eight times more from
branding and ads than record sales. The artist
has nothing to worry about if you download his
music, it doesn’t take away from him, provided
he is smart enough to see the opportunities
at hand.
Iceland is being discussed as a suitable
test-market for the new flat-rate system.
Do you see this happening?
The proposed model is simply a network li-
cense. Rather than saying that everyone has
to pay when they want a song, we give them
access to everything and charge a flat rate
for that access. We provide a license to the
telecom operators and portals and anyone who
has a cell phone or any other kind of network
access can get all of their music from there.
I think it would work over well in Iceland
because there are no major music labels in the
country. It’s so small that even if nobody would
buy any CDs, it would be relatively painless for
the labels. The experiment is thus contained,
and you can study the results. I think the total
market for CD sales in Iceland is around 10
million Euros, so this is very possible if you
do the math. If everyone in Iceland pays one
Euro a week for this access, and that revenue
is distributed to labels and artists in accordance
with the number of streams or downloads a
track gets, everyone will make more money
and the consumer will also pay less. Iceland
is also suitable because the people here really
like their music, and there is lots of local talent
that would benefit from an early start in this
model.
What we have to do is create value for
the composer and musician, a system where
we don’t bother charging for the individual
song, at least not in the beginning. If you had
to pay for every song you heard on the radio,
you wouldn’t listen to it. We need a system
that’s all wrapped up in a flat rate, a system
that’s ad supported and whose many operators
would take care of the consumer costs instead
of ad revenue. The ISPs and phone companies
will probably wind up paying your one Euro
per week fee for you, if you agree to watch a
couple of ads per day.
So, you ultimately see this evolution
as benefiting musicians and music-fans
alike?
I think that no matter what we do, the users
and what people used to know as consum-
ers – which is not that easy anymore – the
user will get benefits everywhere. There are
1 billion people on-line, 1.5 billion people
watching TV and 3 billion with cell phones.
What’s happening is that the user is becoming
more powerful, as there are so many of them.
Anything that keeps the user from getting
his desired value is swept away. If you put a
rock in a river, the river will get around the
rock, it will find a way, and this is how you
should view the users. There’s no use in try-
ing to place rocks in their way to stifle their
route, you should rather try and go with the
flow. Travel agents, for instance, used to book
your trips and flights for you, a process that
you now take care of on-line. There are still
lots of travel agents around; they have simply
reorganised what they do.
Future Music
Text by Haukur S. Magnússon Photo by Gulli
“Bands are seeing the
importance of building a
brand name. If you have
a million views a day of
your blog and 5,000 peo-
ple downloading your
video, you can build a
brand from it and don’t
have to be so concerned
about selling a CD.”
Drífa ehf, Sudurhraun 12 C, 210 Gardabaer, Iceland, Tel +354-555 7400, Fax +354-555 7401, icewear@icewear.is
since 1972
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