On Thursday afternoon, Topspin CEO Ian Rogers was a keynote speaker at Digital Music Forum West. His speech, which follows in its entirity, begins with a quick trip through the evolution of internet distribution and onto where we are now: the era of social distribtuion. Next, Rogers shares where he believes we're headed - a mass of niches influenced by a limited number of trusted brands - and the new opportunites we'll find there.
I’ve been working with digital music for nearly 20 years, first in academia, then with artists and software from Beastie Boys to Winamp to Yahoo! and for the last three years as the CEO of a company called Topspin who helps artists grow their audience and make money. Like most entrepreneurs I could talk for 24 straight hours about our company but Digital Music Forum only gave me 15 minutes and they set the rules for these 15 minute talks to not be advertising for our companies, so instead I’d like to talk to you about a big trend and opportunity tangential to our business I’m watching with fascination. I’ll share a few thoughts quickly and if there’s time at the end I’d love to hear your comments. If there’s not time, please head over to my blog where I posted this talk an hour ago and leave a comment.
20 years in digital music means I’m on the brink of being old and out of touch. Nevertheless, I’m in denial of this fact and still kid myself into thinking I can see around the corner into what’s next. I’ve spent most of the last 20 years thinking about media consumption and how the Internet will change it (the best thinking on this topic (and most other topics for that matter) is invariably done in the shower, does anyone have any tips on how to get the same clarity of thought outside of the shower?). I believe we’re on the verge of a new phase of distribution on the Internet, the era of the Trusted Brand, but before I get there let’s review what phase we’re in now and how we got here.
The Internet made the pipe that delivers us stuff infinitely wide. Instead of relying on tens of TV or FM channels (or a hundreds in the case of satellite radio and television), the Internet has brought us hundreds of millions of domains that any of us can create and program.
“The mass is out; the mass of niches is in. That’s what media is about now, in this world of ultimate choice.” – Jeff Jarvis, Buzz Machine
As a result, the shift away from mass media that, according to former People Magazine editor and creator/founding editor of Entertainment Weekly Jeff Jarvis, started with cable and VHS in the 80s has accelerated. Jeff said it well: “The mass is out; the mass of niches is in. That’s what media is about now, in this world of ultimate choice.” As you’ve probably heard me say if you’ve ever heard me speak on this topic: I watched Gilligan’s Island and The Brady Bunch every day after school because it was the only thing on I was remotely interested in. What I wanted to see was AC/DC’s Let There Be Rock. But it wasn’t on so I settled for monkeys throwing plates made of thermo-plastic explosive putty (anyone else remember that episode? it was my favorite by a mile). Our kids won’t know this reality. My 21 year-old (Ancient Aliens) and 5 year-old (Strawberry Shortcake) both watch absolute trash on Netflix, but it’s exactly the trash they want to watch, when they want to watch it, commercial-free. My wife reads about ten blogs daily ranging from punk rock moms to amateur cooking and willingly subscribes to twice as many daily and weekly emails from Blackboard Eats to Daily Candy. With 800,000,000 Web sites and 30% of the human population online today it’s impossible to argue our attention isn’t more scarce and fragmented compared to just ten years ago.
SIDEBAR 1: Of course a lot of us in this room saw this all coming fifteen years ago and talked about it then, at conferences just like this one. We all thought it would be here much sooner than it was. We were wrong. Technological innovation takes time and consumer adoption is sloooooow. But it does happen (to quote Victor Hugo (and Del Tha Funkee Homosapien), “There is nothing harder to stop than an idea whose time has come to pass.”). My mom called me last year to tell me she bought a Roku and cancelled cable (on her own, without any coaching from me). When I hung up I thought, “Well, that’s how long it takes. Fifteen years. From the time we said it would happen until the time it reaches the edges. Fifteen years.” It’s always good to set expectations appropriately when it comes to things like this. I don’t know why it always seems like there’s one group of people who think these changes are going to happen tomorrow and another that thinks things will always stay the same. As Hunter S. Thompson said in Hell’s Angels, “People who deal in extremes should expect nothing but trouble.”
Andy Weissman (formerly Betaworks, newly Union Square Ventures) turned me on to an excellent model of the evolution of distribution on the Interwebz/tubez/netz thus far. In the prehistoric days of the Web, we all typed URLs into crappy browsers that produced text on a grey background. Then the pages of the Internet got categorized into indexes called “Portals” (if you’re so young you never saw Yahoo.com when it looked more like Craigslist.org I’m jealous). Google search is a feature of our browser we take for granted now but when it came on the scene and you could truly find what you were looking for on the Internet it was a major innovation and ushered in the next era. Now, via Facebook and Twitter, the content actually COMES TO YOU, you don’t even need to type into a search box to find it.
I’m going to give my opinion on what comes next, but first a sidebar about the media I care most about — Music…
SIDEBAR 2: As I mentioned, I’ve been trudging away primarily with digital music my whole career. I can’t help it. I don’t care about much else. This in spite of what many a smart person has told me over the years: Son, there are better ways to earn a living with your skills in this Internet era. But I’ve chipped away, from pre-Web to MP3.com to Winamp to a long dark winter of denial where the music industry tried to put the entire Internet back into the proverbial toothpaste tube. We fought to get music licensed. We fought against DRM. We fought congressional tribunals who ruled Internet radio should pay 125% of revenue for the same rights terrestrial radio pays 0% for. We fought bully performing rights organizations who thought they deserved 5% of ALL of Yahoo! and AOL’s revenue because each had a radio service (which they subsequently abandoned for these very reasons — “who needs the headache of music? when you’re trying to run a business?”). We argued with label heads who thought their path to getting $17 per album again was by taking 75% of whatever was in our pocket and 50% of our equity. Through it all, we continued to try to find ways to innovate. We loved music. We knew other people loved music. We knew that someday the music would be available on the Internet legally and we’d be able to build great ways for people to enjoy it and thought we just needed to find the right angle. But we did it in the face a headwind that sent great innovators like Shawn Fanning and Dalton Caldwell away from music and into other industries, heads shaking, mumbling, “Fuck all y’all.”
But something is happening right now in music. We’re at an inflection point. It’s not an exaggeration to say Internet music has finally arrived. Why? What’s different? Well, until 2011 the music industry has been trying to PREVENT music from experiencing the evolution of distribution Andy described (see above). Spotify’s free service, which hit the US only earlier this year, represents phase 1: all the music is finally available, legally, for free. MOG’s web-based free service is comparable to phase 2: all the music, well organized in a Web browser. Music is easily organized by genre, artist, and album, so all services have excellent built-in searches, but now that the music is freely available I’d expect search engines to start to include play buttons when you type in the name of your favorite band to an Internet search again (interestingly, Yahoo! and Google both used to have such features, but apparently turned them off when the underlying services were too crippled to be useful. Bing still features an unattractive “Just install Silverlight and you can listen!” experience). Most importantly, Facebook’s “Listen” integration just brought music into the social distribution era. So think about what happened in 2011 alone relative to digital music — MUSIC WENT THROUGH THE ENTIRE EVOLUTION (FINALLY) THIS YEAR! (Most of it in the last month!) Holy hot sheezy wow.
Now, we need consumer adoption to catch up but it does seem like the ball might finally be rolling downhill…
So if those are the first four phases of Internet distribution, what’s the next phase? I posit it’s the era of TRUSTED BRANDS.
Everyone is a publisher. Consumers have unlimited choice. But what will they choose? How do we find what we want to consume? Everyone wants us to click on this, subscribe to their that. As the noise floor raises, consumers are naturally going to be looking for help finding the bits that are most relevant to them. Our social graph will always be an incredibly important filter. But look at the “innovation” Google+ brought and the “subscribe” feature Facebook just rolled out; they’re both Twitter-like unidirectional “follow”s, so I can follow the stream of someone who I’m not friends with. Why would I want to do that? Because I’m interested in what they have to say and trust them to be one of my filters, even though I don’t know them.
A two-step process is about to happen and at the end of it we will have a new set of powerful influencers who will drive consumption in the same way major TV networks and radio did in the past.
“If you get an 8.5 or higher (out of 10) review on Pitchfork, I can get you a worldwide touring business and probably a million dollars in touring fees.” – Marc Geiger, William Morris Endeavor
1) We are becoming a mass of niches, but each niche will have at most a couple of outlets which are far more powerful than the rest and drive consumption in the space. For example in independent rock music: Pitchfork and Stereogum. By being passionate, honest, and trustworthy, both have built strong brands which actually move the needle when they write about something. It’s a fact: according to Marc Geiger at William Morris Endeavor: “If you get an 8.5 or higher (out of 10) review on Pitchfork, I can get you a worldwide touring business and probably a million dollars in touring fees.” When bands using Topspin are successful getting their widgets to spread across the segment of music blogs Pitchfork and Stereogum lead, those two leaders are the only two blogs who make up multiple percentage points of traffic, all the rest are less than 1%. These brands have real impact today, and that impact will grow significantly. More importantly, we’ll see that impact spread to many more niches. Every niche will have at least one power player, one node whose multiplier is bigger than most of the others combined.
My prediction is this: five — wait, almost fell for the over-optimistic entrepreneur thing — FIFTEEN years from now we will all rely on a set of trusted brands to deliver us our content. Each of us will probably get more than 75% of our content from less than ten brands that we follow. What draws us to these brands is trust, trust that was hard-earned by honesty and and the delivery of value in return for our precious time.
2) The Internet will reach our living room and car, and these same brands will become our trusted filters there, replacements for today’s “networks” and “channels”.
We’ll trust these brands because we know when we tune into them they’ll deliver what we want. As a result these brands will transcend the Web. When we turn on our Internet-connected TVs we may jump straight to our favorite show but some of our time will be spent tuning into our favorite BRAND because while we don’t know exactly what we’re going to see when we turn there we know it’s likely awesome (“Tier 1 to me”). When we drive the “stations” we tune into won’t be slices of RF spectrum someone bought and programmed, they will be the familiar aesthetics of our Trusted Brands. It doesn’t take a huge amount of imagination to picture Pitchfork and Howard Stern having excellent, form-fitting experiences on Internet-connected TVs, in cars, and on tablets.
We have more of everything, but one thing we will never have more of (until society takes me up on my plan to disregard the sun and extend the “day” to 36 hour intervals) is time. As such, the fragmentation/niche-ification will not go on forever. In the next phase of the Internet we (as consumers) human-naturally look to get the most of our time by choosing brands which suit our tastes and personalities and trusting them to help us make sense of the noise.
Most of these brands we’ll be tuned into fifteen years from now don’t even exist today. Very few brands we interacted with in the old world had to be deeply trusted. There were only so many newspapers, magazines, tv channels and radio stations. We didn’t have as much choice so they didn’t have to appeal *directly* to us, just more to us than the other choice. So RIGHT NOW is a GREAT time to start a brand. Do it right and you could be one of the truly powerful brands of the future…
But very few will do it right. Most will fall into one of these fatal traps:
1) They will suck. Sure, it’s obvious, but being a brand people want to spend their time with takes a certain bit of magic not everyone has. Great brands are (to paraphrase Supreme Court Justice Potter Stewart) like porn, we can’t define ‘em, but we know ‘em when we see ‘em.
2) You have an agenda. Owners of copyright cannot be Trusted Brands. If you are at a record label or a TV network I have terrible news for you: YOU CANNOT BE A TRUSTED BRAND. I worked at a record label owned by my friends where our friends were the artists and we chose who we signed very carefully. Still, every album isn’t great and as the owner of the copyright you’re never going to be the one saying, “Stay away from this one, it’s a little stinky.” If you make content you can (and should endeavor to) be a brand people follow, but you will not be as powerful as the Trusted Brands of the future who are one meta-level above you. Don’t try. Be the best creator of content you can be and people will respect and follow you for that reason, but never in the same way they will trust true arbiters of taste.
3) It’s unclear where you stand. Open an issue of Rolling Stone, turn to the reviews section, and count the number of reviews that have 3 stars. Really? You don’t like or love anything? It’s all just ok? Why the fuck are you telling me about it then? In the future we don’t care about anything that’s three out of five stars, time is too precious. We want help finding what’s awesome, or knowing what to avoid. As Bob Lefsetz schooled me: have balls, speak your mind. That’s how you build trust and audience.
4) You don’t invest in the other screens. I know. It’s hard. You’re a writer, not a technologist. You’re not made of money. You can’t make an iPad app, a Boxee app, an app for the Samsung TV, an Android app, a Facebook app, a deal for the new Amazon thingy, a sexy Flipboard integration, etc. But some brands will have the trust AND the bucks to be everywhere. That’s a magic combo.
5) You’re impatient. If your “I’m going to be a Trusted Brand!” business plan has you becoming “The Next MTV” in three years time, you’re not gonna make it. There’s only one way to build trust: organically, and it takes time. These are not the kind of sexy businesses venture investors like. These are bootstrapped passion plays.
Many will try and most will fail, but some will have the magic, pull ahead, and make it. And culture will be better for it. Instead of our radio spectrum being dominated by one company with a small handful of playlists we’ll have brands competing to be our first stop because they deliver the most value the most consistently.
It’s a great time to start a Trusted Brand in a big ass niche and an even better time to be a media consumer.