Come and See Matthew Snyder, Founder/CEO ADObjects at CMW March 12, Toronto

I wanted to share my thoughts on the importance of mobile for the fledging music industry. YoY, CD sales are going down and down, and digital is growing, but not at the rate of what the CD business created for the industry. With digital piracy just existing as stronger then every and p2p networks offering the convenience, availability and breadth of content, this new industry form is something of constant debate.

The Mobile App

However,  I bet my money on mobile!  It has been discussed that the App is the next frontier and form of media format that gives a variety of options in addition to the music and video content that can be charged to the end-user as simply as one-click.  This has been constrained a bit as Apple is keeping these reins so strongly close to their chest that  true App innovation of delivering Mp3′s and other content as a convenient distribution channel over the quick and easy p2p networks is just at its infancy.  This was proven true with iTunes and the delivery of  ”ala carte” content as a viable option over the p2p networks where users were in fact willing to pay for content if the delivery was right. More and players are entering the game with the music download businesses to compete again the almighty Apple, and now that the playing field is evening out between Apple, Nokia-Microsoft, Google, RIM for the next gen Smart Phone devices, this new model will clearly present itself as in the next year as the most efficient way to categorically sell content via applications and not just store-fronts.

The proposition was validated with users going and buying content via an iTunes app, but for an artist to have their own App to sell music directly is part of this overall formula.   This type App merchandising and marketing will evolve and potentially drive Apple to explore more options then just the delivery via the iTunes store.  Instead of going to a store to searching for it,  the vast array of better user interfaces and offers will multiple this App experience.  The package of all the peripheral offerings ( video footage and music video’s, interviews, freebies, t-shirts, collectors items, etc…) associated with the Application as well as the ability for users to to be part of mobile dedicated fan list.     The App can breath life to the true culture and personality of the artist as the content can link to the real-time social networks and create opportunities for direct conversations back-n-forth. Fans have the opportunities to explore more then just the music, but the entire life-style and “taste-maker” trends of the Artist for just about any context ( places, fellow artists, and philosophy).  Even the charitable movements can be explored with “Gifting” as we saw with Pearl Jam and Oceans which is just the beginning of the entire business dimensions.   The App can live not only by a limits of distribution like for a physical CD, but can be delivered virally via those Fans.

Flattened by the Long-Tail ( both content and other business areas)

So in some ways with this total fragmentation it is hard to see where that $8~10 Billion completely migrated to? Direct sales of CD’s was one of the only options besides performances to have a connection with the music and the artist, and the actual CD Jacket was the starting point where Artists shared their culture to communicate with Fans in the 80′s and early 90′s.

Besides the overall business of the Music Industry being hard to grab onto for the labels, management and publishers of the past, what we are seeing is a new revolution of more and more music with more and more talented artists making their debut with hopes of that  chance to make it into the spot-light with their fans.   This opportunity is greater then ever, but much more verticalized and more focused on micro-communities around each artist that support the life-line of that artist through performances and merchandise.

Recently, I saw an Artist called Jerry Cherry, at Rockwood in NYC.  He is a mix of an Iggy Pop and quintessentially New York artist sound. What amazed me was the loyal following that he had at the performance and his dialog and show with the fans- truly entertaining.   It was that tight moment between him and the audience that was an emotional connection that just cemented in my mind that this was the “Soul” of this new music business.  More shows, more engagement with fans  is what an Artist needs to be positive  about as an entertainer  if they are to make a living  in this new era.   He was selling his CD’s at this venue and in fact sold a couple of them.    This is an angle that I see as the growth of this business;   much more long-tail  and concentrated in nitch verticals.  Performances are the fertile ground for artists to create that emotional attachment that can lead to a business strategy that is inexplicably linked back to mobile. Why mobile?  Because we all have it in our pocket, with intelligence to give us more and more.  Today, we can shoot images like a professional photographer, take video like a film maker, create mix-mashes of memories, and access web content when the moment is right during that music experience.

Selling those CD's at the Venue

The Mobile Moment…

I  like the analogy of a digital dessert. Even after a large meal, when the waitress brings around that dessert tray, that  sugary, creamy delight is hard to resist and make that impulsive buy of  several $$$ in that moment.   Like the dessert business is a long-tail, location specific business that bridges that final emotional connection between the chief and the consumer,  The Artist needs to think this way as well with the mobile channel being that waitresses serving tray…  So Jerry Cherry ( no pun intended as it is a dessert sounding name) instead of selling those CD’s can sell that mobile digital dessert.

[ AD] Canadian Music Week- Register Today  March 9~12th Toronto Canadian Music Week 2008- Rebirth of the Music Industry [ Video]

Of course that Mobile Moment is tied to location based services and social media. We all check-in with Foursquare, Facebook places and bring our entire social network into that moment for that instance.   It is the moment when a Butterfly flaps its wings and can create start to a Hurricane in the Gulf.  Artists that give birth to that experience for fans to share that moment is the new paradigm of distribution that can has become of the internet that we live with today.

ButterflyCream

About a year ago I had the epiphany around this concept and have been building a “war chest” of features, concepts, prototypes with my partners over at DiscoverRock , BloomEffect and others.  The goal is about how to make this a reality for artists to make money in this business.  Nothing is formally launched yet, but the seeds of this idea to bring new-revenue streams for artists has been something I have been working on as a hobby in my spare time.  We have started this with several artists and working on this platform ( No launch date to announce yet) but rather a strategy and concept we feel could lead to the next-gen business model for the long-tail of this industry.  The goal would not be to re-invent the wheel or create another mobile app platform, but to bridge all those developers and streams for this kind of  mobile tidal wave this is amongst us.    Please email us at info@butterflycream.com or @BFlyCRM

It was announced earlier this week that Facebook achieved their 500M User base worldwide.  In addition, it has been stated that there is about 100M of those users that are accessing Facebook via their mobile devices ( about 20%).

Moreover, when we look at the opportunity and potential for mobile, the global  market subscriber base has topped 5Billion strong thus indicating that Facebook is still only about 2% of the worlds marketplace for Mobile Social Media (or MoSo).

Repeatedly, Facebook has been one of the most downloaded Applications on the iPhone, Android, and even Blackberry devices with the amazing statistic of over 50% of all usage of content on the mobile tied to social media.   As the mobile experience has also been “coined” to be very location centric, there is another converging category called Mobile Local (or MoLo).   This is tied to Mobile Search and Location Based Services on the go.  As the Geo API has been made available via many application frameworks, it has also been available via certain browsers to bring Location-context to websites and web applications.   Twitter has included a location API recently to  their suite of unique modifiers for Twitter Search and the Geo API has been a strong debate in the developer community surrounding the iPhone in general for location based advertising.

( Picture and Statistics from Hitwise)

So with 98% of the Global Market in the Mobile Social Space and the amazing growth of Mobile Location Based Services, it is apparent that there is a new opportunity for the next Billion Dollar Company in this combined MoSo or MoLo…… or should we say MoSoLo.   The quiet battle ensues between the several mobile location based social networks such as Foursquare, Gowalla, Loopt, Brightkite, Socialight,  and a variety of others, but they are still all less then 10M users, thus validating it is early days for MoSoLo.

Creating a compelling experience for end-user’s to “share their location”  for not only their friends but for a unique engagement with brands is now at a very interesting crossroads of growth and evolution to the next killer app ( or massive money making app- mmm ) .   Companies like Nokia, Google, Microsoft, AOL and Yahoo have all been putting up billions of  dollars  into this new contest for the next holy grail of advertising and social media, but it seems like  this MoSoLo end-user mind share is with  these new nimble start-ups at this time

Skyhook wireless, a company that has been strong in providing location information as an API for developers,  handset manufactures and Operators had recently released this “heat map” of  real time location interactions.  It will not be long before the heat map itself may be sliced and diced into different behavioral segments for real-time viewing.

Imagine seeing clusters about town of where people that tend to like the same interests or are connected to you are gathering around town at a certain point in time.

So by 2012, I would not be surprised to see a new player, jump out of the blue and take this next wave of MoSoLo or will Facebook be able to take a big chunk of this remaining 98% of the  pie?

I have been watching the trends of Twitter Applications, Browsers and Platforms over the last couple of months and this type of segmentation and convergence had emerged.

First of all, what has excited me and what I have been waiting for over the last year has been an application that handles automatic translation.

Given the fact that I speak both Japanese and English and have business in both Asia and here in North America, I have wanted to build a consistent cross-border  following on twitter.  I found that with the existing Twitter platform, the only way to do this is with two-accounts.  With my existing account, when I tweet in Japanese, I loose followers.  When I tweet in English, I have a hard time growing Japanese followers.

I mentioned this concept to the Digital Garage folks last February when I was in Japan, but they all laughed.  About a year ago during a Breakfast in Vancouver, Jeff Pulver ( Founder of 140conf.com, serial entrepreneur and VOIP visionary)  and I had a lot of fun with this by cutting segments from Google translate into twitter to go back and forth between English and Twitter.  Even when Jeff started to Tweet in Hebrew, he saw how this took conversations to the next level and really touched individuals on the other end.  I can not stop thinking of the smile on his face when he said ” This is amazing”. So this is really the state of now when we see the auto-translation of different languages for different countries or multi-lingual translations.

When I saw the announcement in April by Hootsuite I felt like they were really listening to the customer; as there must had been lots others like me with the same predicament.  In my mind this is a big move by the Hootsuite folks in their attempt  at this and even though we have not yet seen this capability on Facebook,  MARK MY WORDS….. This is going to be one of the most important features for them with their 500M users in the coming months.  If they do not buy Hootsuite, then they will do this timeselves by the end of the year.

Given the fact I would like to Tweet in both English and Japanese simultaneously,  I really thought this would be a feature that Twitter would release to the market.  Given that Google is so strong in language tools, and Google has a terrific product ( Google Translate), I was pretty sure we would see this from our friends at Google first. Even thought this would get quickly integrated into Google Buzz so that it scaled.   English language schools  have grown from the cottage industry base to a core part of  Japanese society.  With the growth of iPhone and Android devices cross-border,  I am sure this type of feature is going to be more and more important.

What we have seen is that our friends in Vancouver ( Hootsuite) have really looked to market differentiation with these translation tools.  It only makes sense as Vancouver is one of those multilingual communities, and even here in Canada most people have adopted the two-language way ( English, French).

This is what the Hootsuite folks have to say:

Need more ways to socialize? Seeking zen-like efficiency? Start by updating HootSuite for iPhone to clear your mind and make your social media experience more enjoyable. This update adds full localization in four languages to go along with the recently-released translation tools. Both are designed to help marketers, socializers, and internationalists understand the vibe about their brand, industry, and interests from all over the globe. Additionally, the release includes a kit full of new tools to help you stay on top of multiple social streams — and share the best parts with remarkable efficiency.  All the features are available in both the Lite (no-cost) and Full ($2.99 USD) versions of HootSuite for iPhone.

This may be a risky strategy for Hootsuite as unless they can get clients on both sides of the pond ( meaning that in order to really use the multilingual features, but send and received need a Hootsuite client) Twitter will just copy and improve on this. When Twitter does release its interfaces to support multilingual capabilities, where will this leave Hootsuite?

Secondly, when it comes to integration we are seeing many companies bring in all the different feeds into there Applications. Fring just announced with much success their Video-Call capability for mobile, Seesmic continues to be “Switzerland” with all of the different Feed integrations.  I have just been waiting for them to make the product opensource or open API’s… as we have started to see more of with Tweetdeck and the Buzz API.

So where does this leave us?  As Twitter sits in the middle of it all, it makes me wonder if Twitter has just become a proprietary TCP/IP-like bit pipe?   They made the move to build there user experiences by buying the Application company Atebits most recently, but they are in a  good position being in the middle.

The wildcard in this evolution in my mind is now the Browser.   So lastly, I must say that the convergence that starts to get interesting is now what Plug-ins and what enablers we start to see in the browser as it also has become a standalone application in its own right. Opera released its application for the iPhone and in weeks we have seen Millions of downloads.  They have developed a widget framework that has been adapted by several of the carriers now to promote services, application and advertising revenue from the Widgets.  JIL ( Joint Innovation Lab – Softbank, Verizon, China Mobile and Vodafone) have actively been starting to promote the cross border opportunities with widgets through there entire network of devices as a core driver for developers, but the fact still remains that over 50% of developers are now focued on iPhone Applications.

Opera has positioned themselves very nicely in this Application game and it is going to be interesting what the next big moves are?  Will Opera be aquired as part of the JV of JIL? Will Facebook buy Opera? or will we see the integration of Twitter and all these applications into Opera?  or will we see Opera buy Hootsuite?

The fact remains that in the Application space there is a lot of convergence going on.  What we have not heard much of these days for advanced integrated apps is Google.  They did have their flagship Google I/O conference several weeks back and it is exciting to see that they are really driving HTML5.  As HTML5 expands this gets very interesting from the standpoint of Application convergence.  Where will this all go with HTML5 ( See my next post)

Some thoughts of key trends and areas of growth for 2010.

1) Facebook will move from the major online social media player to a very focused mobile application and developer platform.

Facebook Connect will take on new meanings.  Mobile Advertising will become the a key social media/ direct marketing/ brand monetization player in the mobile industry. Maybe even stronger then Google/Admob?

2) Smart Phone Critical Mass. Smart phone penetration will continue to accelerate with Apple again surprising us amongst the massive competitive releases from Google, Nokia, RIM and Palm.  2010 will leave us with >20% ( maybe >30% US)  of all devices in the market to become Smart Phones.  In 2009, about 17% of the US market had smart phones.  It has been predicted by Strategic Analytics and others that 50% of the market will be using smart phones by 2013.  So 2010 is the  turning point year in the industry as the massive transition will start as iPhone/ Android- Nexus One/ RIM/ Palm and Nokia devices compete like crazy that drives user adaption very quickly over the course of the year.

3) Mobile Ad Server and Mobile Ad Network convergence with Online will follow streamlining in the Agency and Marketing world. Mobile as a stand-alone media strategy and channel only will be less and less apparent… AdMob/ Quattro were the first to go, but the other mobile ad networks will be part of the continued M&A frenzy of the Online players looking to cross-over to mobile.

4) Cross-Border innovation and Cooperation will take a new form in the mobile space.  A spree of unexpected M&A from Asia to the US, and visa versa will solidify the need for operational interdependence in the mobile space. Regional Carriers and cross-boarder alliances…. I particularly feel this to be the case with  Korea, Japan and Taiwan first over China which will  happen a bit later.

5) Social Brand Marketing Innovation will continue to occur around the unique engagement and real-time platforms of Twitter, Google Wave and Bing, thus solidifying a more established budgeting process for brand marketers in digital with social media, search.  This could be the year of media buy transition from Traditional to Social. The rise of the social media agency and more association of engagement to pricing models… Intuition models? WOM models?

6) The innovation focus on Applications ( iPhone)  will continue, but there will be several new devices in the market that will begin to challenge this with the pure Web experience! Namely Nokia/ Android….HTML5? Flash light 3.1?  The App store frenzy will continue.

7) Real-time search will continue be a major topic and key to the “mobile moment”. We will see a unique convergence with entertainment and maybe event the music space.

8) Live streaming! We started the trend in 2009 with the U2 event and a variety of others, but live streaming now will ins 2010 become a basic requirement and model for events. Enabling increased revenue opportinities for the “mobile moment”.

9) Location will be a key factor in direct marketing performance pricing, and new innovative inventory opportunities will become mainstream.  Augmented Reality, Navigation Advertising,  Social Location….. map integration in media properties and publications will be standard.  It will take time for this to really evolve and fill as a true inventory source, but the critical foundation will be set it 2010.

10) User-Generated Content portals and Mash-ups will continue and verticalize.  There will be some big surprising new UGC solution portals for sale in 2010.