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Philosophy of Communication

Is Spotify the Darth Vader of Music?

by Walter Naeslund on September 8, 2009

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 And when their monopolized mode of distribution was suddenly outdated, and marketing was suddenly taken over by the music itself, it’s own viral distribution, communities like MySpace, and crowdsourced services like LastFM, the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.

What the World Will Look Like in 25 Years

by Walter Naeslund on September 1, 2009

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.

5 Questions and 9 Answers About The Future of The Internet – My Hyper Island Interview

by Walter Naeslund on August 27, 2009

A couple of days ago I was contacted by students at Hyper Island for an interview about the future of digital communication. Here are their questions and my answers:

1. What do you think will happen in the future regarding digital media? For example real time applications, Flash, Adobe Scene 7, Motion Graphics, Mashups?

Innovation Will Gravitate Towards the Efficient
It is always difficult to say anything about the future. Even the inventors themselves can rarely tell how their inventions will be used. Remember for example that Twitter was created as a way to let people know via SMS where the party was. Their invention then took on a life of its own in the hands of the users. On the other hand, this kind of “Darwinistic” innovation is a key feature of the digital technologies. Especially when it comes to innovation in the realm of open source and open APIs.

What we can say is that innovations will gravitate towards increased efficiency in different fields. And this realization is useful. Whenever you come up with an innovation or a campaign, ask yourself: will this make things more efficient? If the answer is yes, the innovation will stand a chance of succeeding, if not, it may at best become a short lived hype. In particular, innovations making collaboration and coordination more efficient are interesting when it comes to the internet since they promote themselves.

Good Bye Flash, Micro Sites & Poor Indexing
Real time applications will be important because they’ll make things more efficient. “Awesomely cool” but utterly useless Flash-based micro sites have always been a bluff and will increasingly be called as such by clients with a deeper understanding of the internet. Such sites make nothing efficient. Perhaps some people will disagree with me here and start arguing that I’m way too rational and that people buy with their emotions, but my bet is that these critics don’t understand the social web. What is often inefficient about these Flash-porn sites is that they are SOCIALLY inefficient. There is no way for me to efficiently share and discuss the content with my friends.

Recently we have started seeing “share”-buttons thrown into the mix, but these usually don’t tap into the actual behavior of people, and are just there because “social-media-is-the-new-hip-thing-and-therefore-we-need-share-on-Facebook-button“. Again, ask the question – will this make things more efficient in some dimension? They are also often inefficient in that they’re not indexed properly by search engines. The question then is, what are they good for? For inspiration? As some sort of interactive film? Very recently (like, right now) I saw one such campaign where they were actually showing commercials for the campaign on television! Making advertising for advertising must be the ultimate proof of failure and inefficiency.

Flash in general will get fierce competition as we will want sites to be more application-like, fast, optimized and useful. HTML5 will be a primary technology and may well put Flash and Silverlight in the shade.

Mashups & Commoditization
Mashups will continue to be super important because the idea of mashups resonates with the basic idea of innovation: take the best of what’s around and make it better. Since the costs of interacting with other open API innovations are so low, the total value of all parties in a mash up interaction will increase. We all benefit from mashups. If somebody has made the best map, like Google Maps for instance, there is not much point in using energy making a copy of that, but rather put our energy into innovating a new service and use their map. They win, and we win. More than anything, users win.

A lot of what required coding before are now commodities that you can pick up and just connect to something else through an open API. Smart people can thus create quite cool innovations by just putting pieces together. An internet-innovator friend of mine said that he’s very reluctant to try anything that he can’t build a first prototype of within an hour. He’s one of the most interesting and successful innovators of the new web in Sweden.

Real Time & Concurrent Editing
Technically, real time and concurrent editing will be important. I don’t know exactly which implementations of this will be the killer apps yet, but true real time collaboration is efficient and will become very popular. Not least by means of Google Wave. But we may well see other applications than these. For example live use of scripts for different purposes. There are a gazillion imaginable uses for such live scripts, but to get an idea, imagine a script being uploaded and run on a users iPhone returning different data depending on conditions such as position, battery status, orientation, in call status, who else is around, etc…

Real time and social search is very interesting and is an area where Google is lagging hopelessly behind. Here, Facebook and Twitter rule.

Mobile
And of course, mobile will be important, but there will be less difference between mobile and non-mobile. What is non-mobile today anyway? The iPhone is not a mobile phone with computer capabilities, it’s a computer that you can make calls on. And it has very comprehensive sensory systems like camera, video, positioning, integrated internet connection, gyro, accelerometer, compass, etc… Laptops have most of these too, but are lacking a few things like positioning and true mobile internet. The next generation of MacBooks will have a SIM-card slot and positioning. Mark my words.

Short answer: Real time. Mash ups. HTML5. Mobile.

2. What is the next big thing? (The new Facebook/Twitter for example)
The next big thing is Google Wave and all the amazing applications that will be built on top of it. Twitter will probably tip over and become mainstream in Sweden, but I’m not sure of it. Facebook with their aquisition of Friendfeed and their new search functionality is becoming very powerful as well.

3. Which trends do you see in digital media?
See question 1.

4. What qualifications will the media industry require?
Great rebels. Great thinkers. Great designers. Great writers. Great system designers/programmers. Great digital networkers. Great storytellers. Amazingly great leaders who can make all these other people love to work together. People who are not afraid to fail. People who can make the current Swedish labor legislation go away. Howard Roark.

5. What is the biggest challenge for the future in the media industry?
There are a lot of people today with power, who’s power relies on a monopoly of information and information distribution. These people will fight hard to stop anything that will remove their power. It’s very natural. They will eventually loose, but they will destroy a lot of value as they fight in increasing desperation. The music industry is the obvious example of this. It will be a perfect rerun of what happened when free-to-air radio was introduced.

Another challenge is our labor laws. Many agencies today have to fire people, but the law forces them to fire the newcomers, and the newcomers, on average, know more about digital communication. Also, for the same reason, they won’t be able to recruit the people their clients demand. This will create a downward death spiral. In nature, those who are able to change in accordance with the changes in nature survive. We are no different.

For me and for Honesty, this is good news of course, since we will be able to recruit the right people from the start.

Never Ever Ever Piss Off Creative People!

by Walter Naeslund on July 21, 2009

If you break something, you fix it. If only United Airlines would have had this moral policy when they broke Dave Carroll’s Taylor guitar, they wouldn’t have suffered. But they did. Oh, they did.

Because creative people aren’t like ordinary people. They don’t fight back with legal action that huge and rich organizations can defend themselves against. Instead, they fight back with emotional triggers, often using the deadliest of them all – humor.

In Dave Carroll’s case, the attack took the form of a song called United Breaks Guitar’s, and a corresponding video on YouTube. The video has already been seen by millions of viewers, and has gained plenty of coverage in different mainstream media and on blogs.

When coaching brands about social media, I always talk about “Google Equity”, an equity that is not built overnight, but takes time, effort, and most of all, the inspiration of others. The United Airlines brand, like so many others, has done this poorly, and thus can’t put up much of a fight when something like this happens. Last time somebody completely lost grip on Google was when US Airways Flight 1549 crashed in Hudson River. And now, the United Airlines Breaks Guitars is in the top search results for “United Airlines”.

My top advice for United Airlines and other brands is to put real focus on building Google Equity. Offence is the best defence.

But regardless, since Dave Carroll has promised another two songs and videos on the subject of his broken guitar, I really would think twice before pissing off a creative again.

Spotify Goes Mobile and Offline!

by Walter Naeslund on May 28, 2009

When I lectured at Stockholm School of Economics about the future of music and video I remember receiving a few critical questions about mobility: “What about when you’re mobile?”, “What about when you’re on a plane?”, “What about when you don’t have an internet connection?”. Ladies and gentlemen, here is your answer:

And by the way, here’s a little hint to Antipiratbyrån, Ifpi, Sami – Svenska Artisters och Musikers intresseorganisation,SOM (Svenska Oberoende Musikproducenter), Stim, Sveriges Författarförbund, Svenska Förläggareföreningens, Sveriges Filmproducenter och Film i Väst, Svenska Filminstitutet, Dotshop.se, and all you others who think that IPRED is a good idea: INNOVATE don’t LEGISLATE! Without filesharing there would be no such thing as Spotify. Trust me.

A Guilty Pirate Bay Verdict Will Make us Look Like Idiots in The History Books

by Walter Naeslund on April 17, 2009

In about an hour we will know the verdict in the Pirate Bay-trials. Let’s hope that people are being smart about this. Because a guilty verdict would not be good for anyone. Especially not for art and artists.

A guilty verdict would do little to boost sales. I believe we’ll see the opposite result. Darknets and stealth services (like Pirate Bay’s own would evolve quickly. Innovation incentives in the legal realm would be smaller. We would do little but slowing down inevitable change. From a wider perspective, it is just not intelligent.

If they are found not guilty however, it will be considered a future oriented statement. One that would benefit artists, culture, our country, and eventually the world. The music industry will have to come up with something better and more useful than Pirate Bay, and to be honest, they already have. Though Spotify would perhaps need some healthy competition. Spotify is just one small step, but it is a step in the right direction. This type of evolution is where we are going. A guilty verdict would just make us look dumb. Especially in the history books.

From the angle of the artist, nobody has put it better than Paulo Coelho:
“I didn’t start writing to get rich, I started writing to get read”.

Read more:
Here, here, here, here, here, here, here, and here.

Or if you don’t feel like reading, listen to this interview with Mr Coelho:

High stakes (news.bbc.co.uk)
Pirate Bay trial – the music industry has its say (timesonline.typepad.com)
Disaster! No One Pirates Or Downloads Our Music For Free (torrentfreak.com)
Pirate Bay confident of trial win (news.bbc.co.uk)
The Independent: Why Sweden rules the web (independent.co.uk)
IPREDator, the Terrifyingly Awesome Privacy Tool Prepares to Launch (readwriteweb.com)

Checkmate. Spofity Opens Up API To Developers.

by Walter Naeslund on April 7, 2009

Finally it happened. Spotify released libspotify, thereby making it possible to develop third party applications to interact with the Spotify platform. I know we’ve all been talking about it since the start, and that it has been a long time ambition, but we were never quite sure if they would make the move or when. And now it’s here. It’s a big day.

Besides being a very cool display of culture to us nerds, it is also sound for other reasons. If we look at the Twitter case for example, the avalanche of third party software developed for Twitter is a big reason for Twitter’s success. Also, Spotify has clearly stated that they want to be a music platform – not a community, or a music recommendation service. And now, they don’t have to. While there have been different tweeks before, like Scrobblify, we will now see magic happening with Last FM, Facebook, Twitter, and probably a gazillion other services that I can’t even begin to imagine right now.

This is the future of music. We will laugh at The Pirate Bay trials and IPRED before long. Mark my words.

(Read more here).

Think Twice Before Even Dreaming About Using IPRED. Or Associating With Anyone Doing It.

by Walter Naeslund on April 5, 2009

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.

Viasat Pushing of Against Ipred Towards a Better Positioning

by Walter Naeslund on March 31, 2009

I‘ve written quite a bit about the Pirate Bay trials and how the music industry is undermining itself and its own business. As of tomorrow we have a new law in Sweden, the IPRED-law, allowing copyright holders to go after downloading youngsters. Any such attempt is of course entirely in vain. I’ve written about it here, and you can see this concept being popularized in recent articles here, here, here, here, or any of these. And these examples are only from 1 Swedish, very large newspaper.

Anyway – just in time for this new law, Viasat presents a study by Sifo showing that most people are sceptical to this new law. Not only that, Viasat, who are themselves “victims of piracy” state that they are NOT going to utilize this law AT ALL.

Now, this law is suddenly useful, though perhaps not in the way intended by the record labels. A brand like Viasat opposing the law may give them a nice position, branding them as future- and customer oriented.

Smart move.

I Never Want To Be Anything But An Amateur.

by Walter Naeslund on March 15, 2009

I‘m sitting here reading a blog post by Ted Valentin where he reminds me of a quote from Chris Andersson’s The Long Tail:

“… In the late 1970s and early 1980s, the combination of the electric guitar, the arrival of cheap multitrack recorders, and the fine example set by Sex Pistols gave licence to a generation of kids with no musical training, obvious talent, or permission from anyone to start bands and record music. /… / For a while, the assumption was that to be a musician, the right way of learning was to copy the masters. So you should start by playing covers, reading music, and maybe going to music school. This was the notion of paying your dues: Do the circuit, and play the standards, because that’s what people want. Do it right. … “

I can’t remember that quote from the book, but this time it hit me like a brick. That’s exactly where we are headed in the communications industry as well. We’re going to see some serious amateur rock n’ roll communications in the future. Mark my words.

Amateurs do things out of love. I never want to stop doing things out of love, even if it’s what happens to pay my bills. I want to remain an amateur. And since it’s no longer a matter of big institutions or expensive equipment, I think I can.

Philosophy of Communication