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Gerd Leonhard: Facebook to re-do the content business (says Zuckerberg)…

...as such, disruption is certain in 2011, says our favourite media futurist. Fascinating times indeed!

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Mark Zuckerberg Web 2.0

Mark Zuckerberg, Founder and CEO of Facebook, was recently referenced and quoted in an interesting piece on BusinessInsider.com that covered the Web 2.0 conference in San Francisco (photo is captured from video linked to below). I thought I would share some of the key snippets and then comment on them, as I think they contain some key messages for the music industry.

“Facebook expects insurgent entrepreneurs to “reform” the film, TV, news, e-commerce and music industries with the help of Facebook. Some of these companies will be incumbents. Some will unseat incumbents. Facebook will then – perhaps through credits or advertising, but also perhaps some other way – tax these companies in exchange for the value it has added” Here is “Zuck” quoted:

“Anything that involves content or specific expertise in an area – games, music, movies, TV, news, anything in media, anything e-commerce, any of this stuff. Over the next five years, those verticals are going to be completely re-thought. There are going to be some really good businesses built. Our view is that we should play a role in helping to re-form and re-think all those industries, and we’ll get value proportional to what we put in. In gaming, we get some percentage of the value of those companies through ads and credits. But that’s all because we’re helping them…”

You can watch the video of his session here (the quote in question is from 21mins45s).

I have said for a long time that Facebook is essentially a broadcaster (for now, simply transmitting us to each other), and that they will become a leading player in over-the-top (OTT i.e. not on cable but on the open web) content. Zuck’s quotes should settle the issue I guess, but more importantly, here is what I think the music industry could learn from this:

  • The music industry will be totally disrupted and re-booted by outsiders, once again (just like back in the first days of radio – an illegal medium, at that time, as well – and Philips & the invention of the CD Player, etc), only that this time it will be the artists, writers, composers and producers that will be the key negotiators, not the industry itself
  • Facebook is communications infrastructure, really; almost as important as the highway or electricity. Facebook has risen to this social, hyper-connected ‘super-power’ status because it gave THE USERS the control over what happens, i.e. it offered a fantastic platform, an elegant organization (as Zuck likes to put it) to us, for free – and in return we gave huge value back to them, via our constant and faithful participation. In my humble opinion, these are the lessons that the music industry could learn from Facebook: give more value than you take (Tim OReilly), become connectors not just directors (Kevin Roberts, Saatchi), mutuality as the business model (Alan Rusbridger, Guardian), and finally: “the dogmas of the past are inadequate to the stormy present” (Abraham Lincoln).
  • All media platforms will become ‘social’ i.e. become platforms for their users, connecting and engaging them, not just broadcasting to them – broadcast becomes broadcast, central becomes decentral and networked, mass media becomes masses of niches, and monopolies… fail miserably.
  • What the users say about content (word of mouth/mouse), and what they do with it, becomes almost as important as the content itself, i.e. Meta-Content – content about content – is what will co-define the value of everything we produce. Basically, one can no longer define content only as ‘what I created and what belongs to me’ – what the users fka consumers think about it, how they share it, how they may remix it or rate it, will matter a lot, as well.

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  1. On December 3, 2010 at 6:06 pm DieterK said:

    “The music industry will be totally disrupted and re-booted by outsiders, once again (just like back in the first days of radio – an illegal medium, at that time, as well – and Philips & the invention of the CD Player, etc), only that this time it will be the artists, writers, composers and producers that will be the key negotiators, not the industry itself.”

    Radio wasn’t “an illegal medium”. Music publishers & record labels used broadcasting from the beginning to promote their stuff.

    When Philips invented the CD the company wasn’t an “outsider”. Philips was – via PolyGram – an important player in the music publishing & the record industry.

    Yes, many record managers didn’t see the potential of CDs at first, but there was no disruption (apart from the need to build new factories) at all: The majors were “re-booted” in their old form & function. Thanks to the CD (and MTV) the old system got 20 more years.

    When the music/record industry gets “re-booted” in the next decade it will be by companies like Apple, Microsoft & Google. Not by individual artists, writers etc.

  2. On December 7, 2010 at 6:40 am Gerd Leonhard said:

    Hi Dieter : Not so. Radio was illegal because it was unlicensed. The CD had zero to do with polygram
    Google etc play a big role but the artists as a collective force will matter more than ever.

  3. On December 8, 2010 at 10:10 pm DieterK said:

    Hi Gerd, sorry I don’t understand what you mean:
    “Radio was illegal because it was unlicensed”.
    Outside of America, radio was licensed by the nation states and organised according to principles of public service (BBC). In America (at first) everyone had the right to run a transmitter (amateur radio). In 1921 the Department of Commerce licensed 31 radio stations. Special frequencies for commercial broadcasters were established in September 1921. Now the hams were marginalised and the foundation for the network system (RCA, NBC, ABC) was laid.

    “The CD had zero to do with polygram”
    Apart from the fact, that the (at the time) only CD factory outside of Japan was owned by PolyGram. And that Philips used PolyGram artists like Dire Straits to promote the new format. The synergy between software (PolyGram) and hardware (Philips) was so great, that Sony (hardware) made the fatal decision to buy into software (Columbia Pictures & Columbia Records).

    Neither radio nor the CD were “disruptive” forces (in your sense):
    ASCAP used radio to stabilise its monopoly. In 1939, almost 20 Years after the introduction of radio broadcasting, ASCAP was still so powerful that the radio industry had to establish Broadcast Music Inc. (BMI).
    And the CD revitalised the (then) six major labels.

    “artists as a collective force”
    Artists (singers, bands etc.) are individuals with no collective bargaining power. Only songwriters are (through their collection societies) a “collective force”. But even songwriters have to accept “new media clauses” etc.