Embrace Experience. Breath Innovation. Produce Intimately.

Sure the world has changed. But I think it’s time to realize that we haven’t changed much. A couple of years ago I was one of the people running around screaming that the world was coming to an end, that the traditional advertising agency model was over and that the world would never be the same again. In a way, we need people running around like that to initiate discussions and spark debate, but I also think we have to look outside our window and see what the real world looks like, because – let’s face it – the biggest and greatest agencies are also doing things right. I believe in taking EVERY piece of knowledge I can from these agencies and adding on everything new I can possibly find from the frontier and then pour it all in the blender. Will it blend? I think it will!

Production Intimacy

Just because an agency doesn’t understand search marketing dynamics it doesn’t mean that it can’t create massive results using television, print, and outdoor. Just because an agency has in-house production resources doesn’t mean it will loose it’s strategic capabilities. Quite the contrary. Personally, I believe in keeping production intimate for two reasons: First, emotion is in the finger tips, and emotion is such an amazingly important part of strategy that outsourcing it lowers communications quality significantly. Second, let’s face it, it’s hard to get the very best creatives on a freelance basis. At least that’s my experience. Feel free to challenge this.

At Honesty we try to have the same people on the production set (and in SEO- & conversion tuning labs for that matter) as we have at the initial strategy workshop. This plays into our philosophy of “Clarity & Emotion” where we try to simplify everything to super clear but emotionally punchy topical packets that inspire people to pass along the brand story. We really can’t outsource that.

Finger Tip Feel Requires Finger Tips (Not Robot Arms)

Occasionally, we outsource specific things like design, illustration or sound design. We’ve recently worked with a very established artist from Sweden for illustrations and a superstar designer from New York for identity, and they’ve both delivered qualities that we could never (and should never) have in-house. But that’s completely different from outsourcing all production and delivery. We can outsource roasting the beans, but we can’t outsource the barista so to speak. Finger tip emotional execution requires finger tips – not robot arms.

From Radical Idealism to Pragmatic Innovative

My journey has gone from radical idealism to pragmatic innovative. For me to be happy, I don’t want to settle with only having super progressive ideas. I want to make them happen. And to do that, I have to look outside my window and grasp the reality my client lives in. I want to create kick ass communication that we know will work in all media channels, while also building Google equity and evolving the brand through design and customer service. I want to take clients by the hand on a journey to greatness; I don’t want to do is insist on trying to teleport them to la-la-land. It doesn’t work, and no marketing manager worth its salt will let you do that anyway.

The Recipe for Success Then? This Is What I Think:

1. Information Clarity
2. Butterflies in stomach
3. Tight team of highly skilled individuals
4. Few strategy slides (tight strategy = consultants assuming responsibility for making choices)
5. Production intimacy

Funky Business Models vs. Great Minds

In the end, our business is all about results, and I think we can all see that advertising agencies are not as dead as some entrepreneurial people thought a couple of years ago (though I appreciate the ambition). There are a lot of great minds at those “soon to be dead” agencies, and a new and funky business model will never beat brilliant people when it comes to consulting businesses. Why? The consulting business is all about – you guessed it – the consultants.

As Spotify launched their iPhone app, the crowd cheered. The talented SEO-expert (and comedian) Simon Sundén publishes the follwing graph of Spotify Premium sales that went viral amongst us nerds. Half us us thought is was true, and who knows, it may be.

But even if this graphic joke isn’t true, it illustrates something quiet scary. Something scary that starts with an “M”.

Let me tell you a story to explain:

Chapter 1 – The Music Industry

Think for a minute about how the music industry works. This is an industry that has built it’s entire business model around their monopoly on information distribution. Largely, the monopoly has been built on the control over distribution of plastic circles. In recent years, as silver became the new black in the plastic circles industry, the information started to find other ways of distributing itself over the internet, and the monopoly of distribution started to break down.

Desperately, the record industry tried everything to stop these new an superior modes of information distribution by trying to sabotage them with destructive and inefficient “inventions” like DRM. When that didn’t work (because Darwinistic innovation always gravitates towards the efficient), they cried foul, and tried to persuade their friends “in Washington” to legislate and punish anyone who had the audacity to use these new and efficient modes of distribution instead of using theirs.

Why so desperate, you may ask? Well – this was all they knew. It was not them, but the musicians who created the music. What they, the record industry, had to offer was marketing and distribution. And when their monopolized mode of distribution was suddenly outdated, and marketing was suddenly taken over by the music itself, it’s own viral distribution, communities like MySpace, and crowdsourced services like LastFM, the music industry was suddenly cut out of the loop, unable to provide value. And like the dinosaurs before them, their fate looked sealed.

Chapter 2 – The Innovators

But the file sharing systems, though hugely more efficient than the plastic circles, was not perfect. Billions of redundant copies of the information had to be kept on harddrives where you wanted to access the music, sharing the music meant sending over entire files, and meta-information was incongruent. Instead, thought a group of innovative individuals, one would like to take the route of the semantic web and have ONLY ONE instance of every file, with congruent meta data, stored in ONE place so that we could share it by only sending links pointing to the specific files. Then each of us could have access to all information and create a hugely efficient market for sifting out the very best. A more efficient model to be sure, and as we know, Darwinistic innovation always gravitates towards the efficient. The group of geniuses created and productified this new and superior mode of distribution. And they named it – Spotify.

Chapter 3 – The Cartel

And here, the music industry saw it’s chance. In one of the weekly meetings of The Cartel, the organisation they had set up together “to act for the common welfare of artists everywhere”, one executive stood up and said – “we can’t stop every single individual on the internet, but we can stop one company! We can threaten to destroy their new value, and claim part of it as ransom! We can regain our distribution monopoly by using their own value against them! But we have to act quickly! If more inventive companies emerge and compete, like Chilirec for instance, we will loose this last chance for survival of our kind. Sure, Chilirec will try to sue us, in fact, they already did, but that’s no match for our lawyers. We have our own people in the courts”.

One young assistant’s assistant, who had observed them in silence from the end of the table, mumbled quietly “but what value will we contribute? How will we make things more efficient? Will this not stifle competition and put an end to innovation?”? BE QUIET! Roared an executive at the end of the table. THEY NEED US! THEY WILL SUBMIT OR BE DESTROYED!

Said and done. The Cartel cheered and applauded. “If we all agree to let Spotify use our music, and let Chilirec use none, we can cut any deal we want. They have no chance to do this without us. We can use their new invention to return to the times of the distribution monopoly! We can be rich! Maybe we can even keep all new releases within Spotify and NEVER NEVER NEVER release the files to anyone else! Trying to hack Spotify and batch down these files will be easy enough to stop! We couldn’t control the data on the plastic circles, but we CAN control the data on the Spotify servers! We can even demand to own part of Spotify“! The room went silent as his words resonated through the spines of The Cartel directors like a chilling wind. Own the only source of music… on the planet.

Epilogue

When Apple realized what hit them it was too late. A year earlier, soon after The Cartel’s spirited meeting, Apple had given away their last line of defense and allowed the Spotify client on their iPhone. As the power of the iTunes store faded away, Apple tried in a last attempt to launch their version of Spotify, called iTunes Unlimited. The service was impeccably polished, integrated into their brand new Wild Cat operating system, and could play songs while texting on the iPhone, something that the Spotify client couldn’t. But what was the use of all this if they had no music. Or at least, just enough music not to be able to compete with Spotify. The number of Spotify exclusive songs and artists soared and left the rest of the industry in rubble. A lot of people said that “we should have seen this coming when Spotify restricted the iPhone app to paying premium users”. But now it was to late. The war was over. They won.

At least until the rebels on the far moon of MySpace started their indie music rebellion. But that is a whole other story.

When I went to ad-school I felt that the school was in many respects molding people into replicas of what ad-people were supposed to be. Now I feel that this is perhaps about to change. The other day I got interview questions from Hyper Island regarding digital trends, and today I got another question from Berghs School of Communication regarding “what the world will look like in 25 years“. And despite the fact that a question like that is hopeless in terms of giving the correct answer, I can try to provide some humble thoughts on the subject.

First, the world will be what we make it. That may sound like an empty phrase, but it’s really quite the opposite. It is a way of living, of working, of acting, and of thinking. If you live by this belief, make decisions and take action, this will not be an empty phrase, but the best estimate of the future that we can produce.

But aside from this answer, I will try to give you an answer to your question that is a little more pragmatic. Looking at what communications will look like in 25 years we can try on two scenarios.

In scenario 1 we make the internet asymmetrical. We let legislation rule what can and cannot be sent across the internet. Material which is not permitted (like “pirated” information for example) will move underground and will be sent using stealth technology. Much of the information flow of the internet will be encrypted jibberish, undecipherable for any sense-making technology wanting to make use of it and invisible to human senses that could otherwise have been used for collaborative sense-making and coordinated collective intelligence.

The goals of those wanting to control certain information based on their nostalgia of the times when they had a lucrative monopoly on distribution will not be reached because of ever improving speed and convenience of stealth technology. Instead, the huge resources that will be put into creating these technologies (love of music for instance is a powerful incentive) will be of great benefit to those who have truly evil intentions but smaller resources, notably terrorists and criminals. Since the only way of stopping “piracy” will be to do so at the infrastructure level (service providers can be real and effective gatekeepers!) this is where we’ll eventually end up, banning encrypted traffic altogether. And presto! The internet as we know it is destroyed.

Also in this asymmetrical scenario, we will start charging for the use of bandwidth. Me, being a strong believer in free markets and competition, opposing this kind of asymmetrical access to the internet based on resources may sound incongruent, but it really isn’t. Much in the same way roads and  equality to the law are the basis for efficient competition (imagine the transaction costs of paying different prices for different levels of use of different roads), I think that access to the internet should be considered public infrastructure that will benefit competition, production, innovation, and market efficiency. But in the asymmetrical scenario, this will not be true anymore, and instead old business models and old distribution monopolies can be recreated by content companies using their funds to squat certain infrastructure lines and only provide access to their content through these. This may perhaps sound fair, but what will happen is that the abundance paradigm of the internet, the free flow of information, the “to each according to his ability” (the reverse of the famously Marxist slogan), and the rise of man through collective intelligence will stop.

I’m an optimist. I don’t think that this will happen.

In scenario 2 we retain the symmetry of the internet. We treat it like infrastructure in place to make markets and information flow efficient. Like a great system of streets and water pipes. In this scenario innovation will flourish because we can all do what we have always done, build on each others innovations, but we can do it with unprecedented efficiency. We can try and fail to a very low cost, we can learn from the mistakes of others, which boosts human efficiency enormously. This increase in efficiency, just like earlier technology leaps such as industrial farming, will create vast amounts of cognitive surplus that we can use for further innovation and production. Note that even resources that seem to be wasted on chatting with friends and Twittering create value in the form of information coordination and add to the collective intelligence. We can learn how people talk, we can cluster information, we can find new synergies and draw new conclusions.

Gossip will become hugely more efficient in this transparent world of efficient communication. This will lead to vengeance and gratitude being distributed with much more precision in answer to bad or good behavior and will make us all behave better and cheat less.

Digitally replicable products will not be products, they will be marketing for products where there is still tension between supply and demand. Musicians will try to get their music redistributed as quickly and widely as possible in order to fill venues and cut deals with brands, authors will do the same with their audiobooks to get speaking opportunities and sell hardcovers, filmmakers will use their films as vehicles for brand building and profit off of their brand, while also providing vehicles for other brands. Ludicrous legislation regarding this will be laughed at in 25 years. So will the crude methods of product placement of our age. The cinema experience cannot be pirated and we will see huge product development in terms of widening this experience. Their temporary monopoly on the film itself has made them lazy in this respect.

There will not be a difference between our digital identity and our physical one. All interaction with us will be permission based, and we will grant permission to those that we like and receive value from. Interuption marketing will be long since dead. The notion of publicly reachable phone numbers and email adresses will be laughed at as cute relics of the past. Our identity will be our identity and we will call people, not numbers, by whatever means is most efficient at the time, voice, video, text, images. By default our precense in the digital and analogue world will be publicly available. The benefits of this will outweigh the drawbacks. At times we will switch this off, just like we close the door when we want to sleep.

The semantic web will be obvious, and we’ll look back at how the internet was and smile at how we had so many copies of everything and how inefficient everything was. Of course each object will only be available in one absolute, so that any update will only have to be done once. Of course each of these will contain data representations fit for each semantic understanding of that particular data. We will be able to search, deploy scripts to ask questions and make calculations, and switch between real time representations and the historic dimension. This will all be very intuitive.

Since you are asking me to describe what the world will look like in 25 years, it is a bit ambitious to think that one blog post will answer it all, but these are some ideas of how things will be. If that’s what we decide to make them into. Because still, I think that my first answer is the best one – the world will be what we make it.

You may remember me writing about the Facephone a while back, and also about what I called open permissions. Well – the world just got a step closer to that scenario. But it’s not coming from Facebook, It’s coming from Google.

In addition the groundbreaking technology of Google Wave, Google’s new service Google Voice is also waiting to be rolled out. Still only in private beta, Google Voice could become a nightmare for network providers like AT&T or our Swedish Telia if they don’t drastically rethink their business models. Google Voice takes over your voice-calls much like Gmail took over email. It’s just better than what you are used to, and sets up your phoning into something similar to the open permissions functionality I mentioned above. It’s not all the way there since it still uses phone numbers, but it’s a crucial step along the way to putting you in the drivers seat of your own communications situation.

Read more about Google Voice here.

Im out in the sailboat reading a couple of newspapers from yesterday and the day before. A couple of different articles caught my eye. One of them is by Thomas E Patterson, media researcher at Harvard university. In the article, he talks about the future of the newspapers, or rather the production of news in general. Print media is in a crisis, more so in the US than in Sweden, but it is only a matter of time before we have the same situation here. One of his points is that quality news reporting is produced by the newspapers, and thus the newspaper crisis is really a crisis not so much for the papers but for the production of news in general and ultimately for our democracy.

Well – perhaps. But something tells me that a world of information liberty and low cost for production and distribution should tell a different story than that of LESS quality information. From a birds eye perspective it just doesn’t make sense that removing the need for expensive equipment and institutional organization should lower quality of the output. What WOULD have this effect is if the demand for such quality information is really much lower than what we have believed earlier, and that people have just read quality news because it was the only product available. If this is the case, lower quality news reporting will be the inevitable outcome. It’s just evolution. But I find that hard to believe. Sure, perhaps we’ll have a period of bad news reporting, people taking advantage of this, causing for example democracy trouble, but as long as we keep the internet free and uncensored, this pendulum will swing back. It always does. Sometimes violently. Let’s hope that this will not be the case, but I think the real danger isn’t the death of an outdated business model, but legislation threatening internet liberty, such as the the Swedish FRA- and IPRED-laws and the French HADOPI variety.

At the Esomar WM3 Conference the other day, I got a question about copyright:
“But what about the rights of the artists? Do they not have the right to make money off of their work?”

My answer was that the business model needs to change in a way so that digitally replicable products are considered marketing fot the non-replicable ones.

But an even better answer is this one:
Prosecuting the Pirate Bay and other open networks will not stop file sharing, but push it underground. And while the people who want to make money off of the artists spend their time and money on these trials, they DON’T spend their time innovating new business models and services. THAT will ensure that artists will have a hard time making a living.

So, yes, I think that artists should definitely be able to make a living off of their work, but the record labels, publishers, and studios are the ones NOT stepping up to the plate.

We are now starting to see the effects of the Swedish IPRED-law, which states that copyright holders can go after individuals downloading protected content. Apparently, Swedish internet traffic has now dropped by nearly half. And since when is that a good thing? I thought traffic was valuable?

I believe that you can never be quite certain when you make predictions about the future, but in this case I think that the case is quite clear, and that we can now see the evidence emerging.

But first off, I want to be very clear that I am on the side of artists and other creators of value. I have strong opinions about this subject, but they are all about realism. Not about anarchism.

What the IPRED-law is doing is to protect an outdated business model for music, motion pictures, and other content. It’s implementation will remove incentives for product- and business model development like for example Spotify.

What’s worse, however, is that it directs valuable resources to evil forces, such as terrorists and criminals. Why? Well, a lot of people care about music and film. Much more people, in fact, than are criminals and terrorists. And thus there is a broad base for recruiting creatives to help keep music, film and other content free. If we go after file sharing individuals using the IPRED-law, there will be strong incentives to develop stealth file sharing software, and a large and powerful community engaging in it. We will quickly see increasingly sofisticated software of this type appearing and being deployed. With file sharing, we’ll be back to where we started, but criminals and terrorists will have brand new fast stealth tools which they would never have had the resources to develop themselves. And even if this if perhaps an exagerrated fear (there is after all already great stealth services out there, as well as bad guys using them), it clearly shows that this law will be completely useless very soon because of people learning to use these stealth services.

And what about open wireless networks? Will they all disappear now? That will not make brands trying to utilize IPRED very popular, and will actually damage the country’s progress towards connectedness. Read on.

Because another angle is the branding angle. And here it becomes very interesting when opening todays newspaper DN (unfortunately not linkable yet). In one article you can read about how people are boycotting the film- and music industries. Here are some examples of quotes from the public cited in the article:

“I’m completely going to boycott the music- and film industry now. Earlier, I’ve spent an average of 1000kr (ca $100) per month on cinema, DVDs, concerts and CDs. That will now end. All this will be cancelled”.

Or this one from a middle age person:

“I’ve never file shared in my life, but now I have to if only to show them that they can’t scare us. Let’s fight to protect our last rights. I have just downloaded file sharing software and figured out how it works. This will be fun”.

Or this interesting one:

“Let’s demand a seal for artists entirely without association with the major labels”. Now wouldn’t that be interesting.

Like I wrote the other day, we can already see smart companies, like Viasat for example, taking advantage of this, publicly promising NEVER to have anything to do with the IPRED-law, and thereby end up in the same future oriented category as for example Spotify.

If I were a copyright holder today I would think once, twice, and three times before even thinking about using this law. It may very well cost you your brand.

A few days after the fact I read this article on Realtid.se. The contents of the article are nothing jaw dropping. The comments on the article however, reflect the fact that so much of this discussion is taking place well outside the realm of relevance. People are talking about whether or not artists should be able to be artists, something that would require them to get paid for their work. Fair enough. But it is utterly irrelevant. Art will not dissappear. Neither will the internet. I will not waste energy on this discussion. Like most things, it will evolve Darwinistically.

To be productive we have to discuss value. The business model of charging for copies is obsolete. Some copies, such as physical books, have a certain value and will prevail. CDs are just a hassle. So are digital self hosted files really. So where can we add value? Here are some examples:

1. Hosting. Hosting music and syncing it between players is a hassle for the consumer. Especially if you have to authorize the player (In which case the stolen product is actually superior to the purchased one. Go figure).

2. Shareability. An effect of sharing a central database of music is that sharing music only requires sharing a tiny link. The evolution of sharing services is still somewhere around the stone age.

3. Upping the S/N-Ratio. There is just so much music! Finding the stuff you love could easily be a full time job. In my engineering days we talked about upping the signal to noice ratio. Last FM and Genious has scraped the surface of this field, but here you can create real value. And again, a centralized music database makes this much more effective.

4. Augmented Intelligence. Yes, Jan Guillou, I know you’re upset about your audiobooks and that I’ve been focusing on music. But here is an idea for audiobooks as well: If a centralized service keeps track of what I’ve “read” of what audiobook it can help me mine this data (since audiobooks are also available in text form) and help me draw conclusions that I would perhaps not otherwise have seen. I’ve personally co-developed a service doing knowledge clustering for the television industry. We could just as well do it with this data. Suddenly the person using this service is smarter than the person downloading on Pirate Bay. Again – this is real value. If anyone out there would like to develop this service, give me a call. I’ve made quite a bit of progress here already.

The current discussion about Pirate Bay is a joke. We will laugh at it ten years from now. If that.

Now this is a very interesting and sober article on Web 2.0. It also highlights how immature this business really is (even though it does make the case that it is really quite old for being this immature).

I find it especially interesting to see that the Facebook staff consists of no less than 600 people! What on earth are 600 people doing every day? And at what cost! Unbelievable.

A while back I wrote about MySpace on my other blog (which has been asleep for some time now while I’ve been busy with this one). Last night MySpace launched it’s 2.0 version, and that is of course big news for the world of social media.

I haven’t played around with it much yet, but a quick look reveals big improvements in speed, modularity and smartness. This redesign will probably play a key role in MySpace’s comeback, though I’m still a bit sceptical to exactly how modular it really is. We’ll see.

In any event, I think that the combination of music and a social platform is lethal. We’ll see what this will amount to, but if I were Spotify for example, I’d be a bit worried. (Quick tip Spotify: Sell yourselves as a music communications tool, intergrate better with existing social networks, and figure out a smarter business model than super annoying ads).

Oh, and by the way, I’m thinking of changing my other blog (the Walter Naeslund-blog) into a Swedish language advertising, technology, and social media blog to complement this one. What do you think of that?