Today I’d like to offer readers an example of new tools and web services operating in social networks that in my opinion make the concepts and observations in the report come alive. The example involves people using search, content, collaboration and sharing, which are all central elements of the ecosystems of commerce and culture in which we will all be living, working and consuming.

There’s a small company up here in Vancouver, British Columbia (the warm and beautiful part of the Great White North of North America) that develops social networking platforms and customized elearning solutions. The Donat Group is also creating a social music initiative (Project Opus), a part of which involves Mixxmaker, a web service that helps music lovers build playlists collaboratively. Building playlists collaboratively creates a "Social Object", offering people a means of co-creating value around music they like and want to share with others they know.

We all know that the music industry is in real turmoil, and is searching frantically for new business logic and new business models. The major participants have all been under pressure from free downloads, and the price of music is under pressure as never before. Where will additional value, and eventually revenue, come from ?

David Gratton is the founder of the Donat Group, Project Opus and Mixxmaker. David recently wrote a post about why the digital packaging around music, especially as a social object, can and will be of value. Mainly, being able to search for, locate, aggregate and acquire various elements about a song or an artist that someone likes will help create meaning and in turn value.

He also wrote about ‘who’ is involved in the co-creation of this new form of value … or in other words how the market for value associated with songs is being broken up and then co-created anew.   Doing this around a playlist that is built in collaboration with others also helps mightily in creating connections and trust, and lays a foundation for putting the dynamics of word-of-mouth marketing into dynamic operation.

It’s important to note here that David and his colleagues at Project Opus and Mixxmaker put a lot of work into staying within the bounds of Fair Use, an all-important consideration when exploring new paradigms for creating (or co-creating in this case) potentially new economic value.

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Once people start building today’s equivalent of albums together with their friends, the changes to the ways music is distributed and acquired will continue to diversify away from purchasing CDs, as David has noted.  But people will still want that unusual album cover from the old vinyl days, or the most recent YouTube video clip of a given band’s performance, or a series of photos from Flickr (carrying the appropriate Creative Commons license, to be sure) to add to their own personal collection of digital artefacts about that kind of music, that band, that group of friends .. and so on.

It’s a pity, really, that this fun and easy-to-use capability exists only as a Facebook application at the moment.  I seem to be observing a rapidly-growing trend of people turning down invitations to add another Facebook application to their Facebook profile (I am one of those people).  While supposedly Mark Zuckerberg is aware of the growing dissatisfaction .. and you’d think the Beacon fiasco was notice enough … it’s hard to shake the sense that Facebook and its partner applications are all really just looking for ways to maximize page views and ad impression. 

That, for me, does not fall into the category of decentralized co-creation of value, no matter how you spin it.

But .. I suspect that in the coming months and years we’ll see many more examples of applications and services like Mixxmaker that let and / or help people co-create online things that they care about and enjoy.

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Tags: Aspen Institute, Decentralized Co-creation of Value, Donat Group, Project Opus, Mixxmaker, Facebook

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Swimming oneself back into shape is not the the same easy glide through the water it was when I was 25, I’ll tell you.

In a recent post on the FASTForward blog I mentioned a growing awareness of the impact of the interconnected digital infrastructure and digital natives on the Enterprise 2.0 market.  The publication of this Aspen Institute report is to me just one more piece of evidence that it’s real and growing … and it’s a credible source (though not quite a tangible case study

David Bollier reports from his OnTheCommons blog about the report titled "The Rise of Collective Intelligence: Decentralized Co-Creation of Value as a New Paradigm in Commerce and Culture” (pdf) published by the Aspen Institute.

It may be that the serious jargon of the term "collective intelligence" will put some (or many) off, but increasingly it seems to be becoming clear that the interactive social construction of knowledge put to use in response to constantly dynamic markets is demanding some new business logic, new points of friction with which to fashion transaction and new ways of designing and managing the work that leads to the creation of economic value.

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The Rise Of Collective Intelligence

Most forwarding-thinking businesses are starting to realize that they need to come to terms with the open Internet environment. This means making some radical changes in how they think about markets, how they structure their own enterprises and how they treat customers.

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On the Internet, people have acquired considerable powers of their own. They have developed their own sustainable micro-cultures. They can create their own commons to carry on conversations among peers and develop new forms of reliable “collective intelligence.”

This bottom-up knowledge empowers ordinary individuals to approach market transactions on a more equal footing with sellers, who have historically had greater market power and knowledge. The commoners are able to capture more of the knowledge they create, and use it to their own advantage. Indeed, the commons can be regarded as a source of cutting-edge R&D for companies, as MIT professor Eric von Hippel has shown in his book, Democratizing Innovation.

The phrase that the conference used to describe this phenomenon is “decentralized co-creation of value.” It means that the market is not the sole source of value-creation; dispersed online communities are now sources of value that businesses must collaborate with in order to generate value.

The commons stands on a more equal footing with the market. Instead of all “value” coming from centralized players like corporations, increasingly, value is coming from the “ends” of the Internet – the periphery, where new ideas and innovations first materialize. Value comes from individuals, and groups of individuals, operating in the free space of the commons, where overhead is low to nonexistent, and creativity is not regimented to service prearranged market niches. Thanks to the Internet, social niches are becoming “staging areas” for viable niche markets, a phenomenon also known as the “Long Tail.”

All of these developments create a real crunch for traditional large corporations because large companies like to have extreme control. That’s how they deliver predictable results to investors and protect their brand reputation. But on the Internet, control and predictability are not viable strategies. In fact, they are counter-productive.

Value is generated by having less control. Customers won’t trust a company that tries to use digital rights management or bullying tactics to assert too much control. In a sense, companies are not just competing against other companies, but against the freedoms of the commons.

The challenge for businesses, then, is to develop new sorts of “open business” models that can respect the social dynamics of the Internet, while still monetizing certain forms of value (e.g., selling advertising to the Web users who like your site). Companies have to realize that brands are forms of socially created value; brands are not simply the result of advertising and image campaigns. Online communities create and promote a brand every bit as much as mass media.

One of the most fascinating parts of the report is about the next generation of computing, often known as “The Cloud.” Bill Coleman, the entrepreneur who started BEA Systems and recently started the Cassatt Corporation, describes the Cloud as the convergence of voice, data and video in a networked system that also combines computing, telecommunications and the Internet. You plug your computing appliance into The Cloud – and all your data and stuff is “there,” not on your personal computer.

Everyone at the conference agreed that the current trends in economics and technology will make The Cloud inevitable. Software and hardware will become commodity products, computing will become a service provided by very large utilities, and a handful of these Cloud providers will eventually put the telephone service industry, the cable industry and Internet service providers out of business.

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I have been for some time been calling the emergent organizing principle that I believe underpins the necessary new business logic and models, derived from social-interaction-driven market niches, "wirearchy" - a dynamic two-way flow of power and authority based on knowledge, trust, credibility and a focus on results, enabled by interconnected people and technology.

I am heartened this report has come out (emerged, let’s say) from a group of bright and aware people at the Aspen Institute.  I suspect that it makes those of us who feel something big and different is going on bit by byte, link by link … a bit less iconoclastic.

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Tags: Collective intelligence, new business logic, new business models, ROII, Return On Investment in Interaction, cloud computing, co-creating value, decentralization, wirearchy, hierarchy

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The life and crimes of the music biz

Simon Napier-Bell

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Yet it’s nothing but a flytrap. Artists go there dreaming of being signed. But out of every 10 signed nine will fail. A contract with a major record company was always a 90 per cent guarantee of failure. In the boardroom the talk was never of music, only of units sold. Artists were never the product; the product was discs - 10 cents’ worth of vinyl selling for $10 - 10,000 per cent profit - the highest mark-up in all of retail marketing. Artists were simply an ingredient, without even the basic rights of employees.

Imagine the outcry if people working in a factory were told that the cost of the products they were making would be deducted from their wages, which anyway would only be paid if the company managed to sell the products. Or that they would have to work for the company for a minimum of 10 years and, at the company’s discretion, could be transferred to any other company at any time.

Recently, the Wall Street Journal investigated the industry and concluded that ‘for all the 21st-century glitz that surrounds it, the popular music business is distinctly medieval in character: the last form of indentured servitude.’

As long as the major record companies controlled the industry, artists had to accept these conditions. But the majors’ grip on things has almost gone. For years they saw it coming but did little to change things. Now each week brings them more gloom. CD sales are down on last year, which were down on the year before, and the year before that. Sony and BMG amalgamated, but brought themselves little benefit in doing so. EMI and Warners tried to go the same route, but failed. So EMI was taken over by someone with no knowledge of the record industry. Guy Hands of Terra Firma fame promised to reinvent the whole business plan; he started by parting company with Radiohead.

But outside of the industry, who cares? Pop music has never sounded better or more vibrant, never been more easily available to the listener.

The only people who are suffering are the people who brought it on themselves. The major record companies.

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The picture story The Rule of Law From the Shahidul News newsletter

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Biking along the footpath, not strictly legal, was slowed by the vending stalls and bus ticket counters that had sprung up. Legality was not such a big thing here. Last night, the guards had caught a guy stealing copper cabling. The thief was a "heroinchi". They had roughed him up and let him go. Taking the guy to the police wouldn’t have helped. The police would have got richer and the guy would be out stealing again. People take law into their own hands. Bribes are common-place, violence is normalised, nepotism is ripe. Despite the rhetoric at the top, abuse of power is the order of the day.

But there is a sub-text.

It was wrong of the heroinchi to have stolen the cable, for me to have used the footpath, for the vendors to have taken over public pathways, for the policeman to have taken bribes. Except in my case, there were mitigating circumstances that made all of the other acts less of a crime. The heroinchi had his addiction to blame. The vendors had no other place to go, police salaries were impossible to live on. They might have found other solutions, but they broke the law instead.

Unlawful, but not sinister.

I saw other things along the way. The policeman in Gulistan Mor puncturing the tyre of a rickshaw walla caught on a road reserved for cars. A policeman on Nawabpur Road, punching a rickshaw walla for some other reason. True, rickshaw wallas don’t always obey the law. But no policeman would have punctured the wheel of a car. No drug baron would ever be roughed up, no hotel owner would ever be shooed off his establishment. Few police cars would ever pass a fitness test. The more swank olive green cars, parked illegally, would never be challenged.

When power is flouted with such abandon, corruption seeps to all levels. Ordinary people are simply too small to challenge the system. The rule of law must apply to all if it is to work. When the ruling party cannot be challenged, when a military rank gives total authority, when being in power means laws no longer apply, the law of the streets becomes the law of the land.

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To convict and then provide presidential pardon, is an act of self-deification by the government. Those with less clout will continue to languish in jail. A dark and violent jail they should never have entered. If the judiciary be truly independent, then it should call to the docks those who ordered a military occupation of our university. It should bring to trial those who use emergency rule to torture our citizens and muzzle the media. It should penalise those who judge others without subjecting themselves to scrutiny.

The rule of law is essential for society to live without fear. For it to apply, it must start at the top.

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First off, it has been my birthday all day.

(cross-posted to the FastForward Enterprise 2.0 blog)

Gary Hamel has called for fundamental management innovation in his recently-published book The Future of Management.

I went to the theatre tonight to take in this delicious and moving film, directed by the reknowned American artist Julian Schnabel.

Suffice it to say that there are very few movies I want to watch more than once.