Accessover owner-ship- about the trend of wanting access to things instead of owning them

a pocket guide from Media Evolution

This publication is published by the media cluster Me-dia Evolution. We are working to boost growth in the media industries in southern Sweden. One of our key areas is gathering intelligence to monitor what’s going on in the media industries across the globe. We take that information and use it to highlight opportunities and business models that our members, and media in-dustries in general, can exploit and develop.

www.mediaevolution.se

Media Evolution

At Media Evolution we usually say that there are three main factors that af-

fect opportunities for media companies: customer behaviour, available technology and the business model.

People’s change of behaviours doesn’t always begin in the media industries. But they almost always reach us. When they do we need follow them as soon as possi-ble, preferably before it happens, to grasp new opportunities in the market.

In this publication, Lauren Anderson writes about the importance of niches, Lisa Gansky about what business models can look and Kalle Magnusson gives his perspective from the music industry.

INTRO by Media Evolution

4 Owning access – collaborative consumption 6 Services that give us access – from cars to music 8 Create a community to secure supply 10 The inte-rest graph – what’s it to you? 12 Buying and selling longevity 14 Seriously better things, easily shared 16 Mythbusting: “Spotify doesn’t give any money to artists” 18 Are we ready for Collaborative Consump-tion? 20 Power to the people 22 Glossary

”people want to have access to things instead of owning them”

Follow behaviour carefully

Access over ownershipJune 2012

Publisher: Media EvolutionEditors: Caroline Lantau, Sara Ponnert och Martin Thörnkvistmartin@mediaevolution.seDesign: You Us and Them

WHAT by Martin Thörnkvist

Owning access – collaborative consumption

In the last couple of centuries, we have increasingly accu-mulated our own tools, household goods and media in

our homes. Most of us own a drill and, until very recently, we bought music and film pressed on plastic discs.

Something is changing. We humans are changing our be-haviour. Not because we think it is ugly to own things, but because access can give us so much more than ownership. Instead of owning 300 records, we can get access to 15 mil-lion songs.

In area after area, we are abandoning ownership and instead paying for access. At first thought, it feels like a new trend. But thinking about it again we find that it is human behav-iour that is old and a very nice approach to gadgets and media consumption. Before money existed we exchanged things with each other. Before we had money left over each month to consume we borrowed things from each other.

Collaborative consumption The collective English name for the platforms that make up this trend is collaborative consumption. It’s about dif-ferent ways of using the idling capacity of things, of letting your neighbour use something instead of it lying unused on a shelf. The classic example is the average electric drill, which is used 13 minutes in its lifetime.

You can divide collaborative consumption into two rough parts. The first are platforms that help people make their things available, and to tie them together with people who need them, peer-to-peer platforms. The second is when a company buys a stock of things or rights which they then sell access to. (B2C)

”It’s about different ways of using the idling capacity of things.”

Three factors make this old behaviour take on renewed importance for how we do business, technological innova-tion, economic decline and environmental awareness

It is relatively easy to build a platform that creates trust be-tween people who do not know each other using statistics and social graphs. This ensures that there is sufficient sup-ply and demand for the service to be interesting.

The recent economic crisis has also led to people having less money and it makes even more sense to have access to things instead of owning them.

In the media industriesThanks to the Internet, many of us have developed a desire to share things when we surf across something interesting. We share links, and services that bring people together around common interests are growing by the day. Sharing is caring is a comparatively well used phrase that goes well beyond the pirate world. The reinvention of behaviour where people want to have access instead of owning things may have started with apartments and cars, but it won’t stop there. The success of streaming services has resulted in a full-swing shift in the music industry, and similar services for TV programmes are growing in the United States. We have been borrowing books from the library since time immemorial.

The behaviour is not new, but models for how the media industries will do business using it will need to be.

A different era.

Martin Thörnkvist is a media market analyst at Media Evolution and runs the music company Songs I Wish I Had Written.

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One of the main reasons why the collaborative con-sumption trend is happening now is the ability and

ease of connecting someone’s assets to someone else’s needs on Internet-based platforms. Instead of being limit-ed to one’s own little network of friends, platforms become well-stocked marketplaces.

Services first grew out of the things we want that are most difficult and expensive for us to obtain. An overnight apartment in New York (Airbnb.com) or a car for weekend excursions (Zipcar.com and Sunfleet.se).

But the number of aggregating services has quickly emerged that aggregate cheaper things, as well as things that we don’t use so often. A circular saw to build a wardrobe (Uniiverse.com) or a bicycle in a city where you don’t live (Spinlister.com).

Time is another asset that we sometimes have lots of, but at other times it’s very scarce, so why not ask others for help to do things on sites like Taskrabbit.com and Hinnerdu.se?

Creating trust between people who don’t know each otherOne of the biggest challenges – and merits – of these sites is to create trust between people who haven’t previously met yet can lend someone their apartment for example.

People do this by the classic internet method of ranking both those who own assets and those who want to access them by measuring history and voting. Several sites use

WHAT by Martin Thörnkvist

Services that give us access – from cars to music

the social graph that Facebook provides which shows whether people are a friend or friend of a friend of the per-son who owns something.

Flexidrive.se and Whipcar.com are services that let peo-ple rent their cars to one another. They have traditional in-surance cover on top of the owner’s regular car insurance so you don’t have to worry about no-claims bonuses, etc.

15 million arguments for access It is not difficult to understand why people like services such as Spotify, Wimp and Rdio. That someone else col-lects all the world’s music and makes it available for a few Euros a month is a pretty unbeatable deal. Owning media on plastic and paper quickly becomes irrational.

The music industry was the first to launch this type of service. But that’s just the beginning for the media in-dustries. In the United States, Hulu.com aggregates TV programmes from a number of companies in a subscrip-tion service, Netflix.com does the same for films and it is rumoured that Amazon.com has plans to do the same for books.

It’s not our behaviour that prevents the existence of sub-scription services for books. Libraries have been places of-fering access to texts and knowledge for centuries.

In the era of service sites, Skillshare.com closes the circle well. The platform can be used by anyone to describe the knowledge they possess and offer local training.

”one of the service’s greatest merit is that they create trust among people who do not know each other”

Companies like Airbnb, TaskRabbit, Whipcar and Skillshare are changing the way we think about the

things we own, whether physical stuff or intangible skills, and how we get access to the things we need.

Two-sided marketplaceDespite the growing popularity and success of Collabora-tive Consumption business models, these marketplaces are not without their challenges, especially early on where decisions around how to launch and scale can make or break the business.

While the idea of a two-sided marketplace is not unique to Collaborative Consumption, it is one of the biggest hurdles to gaining traction in the early days of a business. How can you ensure there is enough (or the right kind of) supply to meet demand? There is nothing worse for a member who visits your Sporting Supplies Rental site looking for a baseball bat, when all you have to offer is tennis racquets. After an unsatisfactory first-time experience, chances are they won’t come back a second time.

Focus on a niche to get the benefits of a communityTo tackle the problem from the outset, it is important to hone in on a niche area to focus your inventory on. Not only will this enable you to market your offering effectively and manage expectations, it will also enable you to attract the right kind of user from the outset. By focusing on a type of product, a specific geographic location or a particular interest category, you can build a strong community base and ensure a higher guarantee of positive experiences.

HOW by Lauren Anderson

Create a community to secure supply

“By focusing on a type of product you can build a strong community base”

GaBoom, a UK-based video game swap site launched by 21-year-old Jess Ratcliffe, initially launched offering three different ways to swap games: Secure Swap, GaBoom Es-crow and Forum Exchange. While a strong community built around the initial site, Ratcliffe realised that the best way to scale was to simplify the offering even further, so in late last year they stripped back to a single direct member-to-member swap method.

Through reducing the complexity in how members use the site, Ratcliffe and the GaBoom team have been able to hone in on the user experience in one single area, giving them a luxury of focus they didn’t previously have.

Once a strong following has been developed in this par-ticular niche area, it’s time to consider scaling up to new territories or adding new product offerings – but don’t do everything at once! Use the relationship you have devel-oped with your community to get feedback on what new services they would like to see, or which new location would have the greatest chance of success, given the num-ber of expressions of interest you have received.

By tapping into the people who love your business and seeking their input, you will be able to make well-informed decisions on where to grow next and build an even stron-ger community in the process.

Lauren Anderson is the Community Director for Collabortive Consumption and will speak at The Conference 2012.

Lauren Anderson

To get people engaged on peer to peer market places it’s important, as Lauren Anderson wrote, to harness

their interests by focusing on niche products.

As people are bombarded with more and more information they become more and more fatigued, harder to engage and picky about what they’ll listen to. That re-presents a challenge if you’re a marketer, a product builder or you have anything to sell. The interest graph might be your answer. It is the next step in our human mission to filter, curate and make sense of the information overload.

Last decade marketers learned to use the social graph to establish a closer connec-tion between a person and their message. It’s based in the assumption that if someo-ne you like likes this then you’ll like it too. Sounds silly? It is. Because the fact is that just because you’re connected with random old school friends who you probably haven’t seen for a decade, its very unlikely their taste and preference say anything meaningful about what you’ll like.

Reach your most likely fansThe interest graph begins with who you are, your existing taste and preferences and tries to connect you with only if you fall within the scope of the product. The theory is that you reach less people, but you reach them on a deeper le-vel. It’s simply too hard and too expensive to try to change people’s tastes, so instead you focus on reaching the kind

HOW by Tine Thygesen

The interest graph – what’s it to you?

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“the theory is that you reach less people but you reach them on a deeper level”

of people who are already interested in your kind of pro-duct and create a proper, deep engagement with them.

Personally I am a product builder, and my company Ever-places is built around the interest graph. The keyword for us is relevance. Let me explain; Everplaces’ industry is travel info and recommendations. We want to fix the problem of 90 % of the info in guidebook being irrele-vant to you as an individual, because when services like Tripadvisor tries to serve info that’s a little bit useful for everyone that means it’s perfect for no one. We believe we can offer more relevance by using the interest graph to personalize, in our case on top of the social graph.

Interest is a trendWe’re not the only company to have seen this change as an opportunity. The interest graph creates business opp-ortunities in niches that weren’t financially viable before. This is because services now can become so narrow that they hit a target group perfectly. And that can become big in these days when distribution is digital.

So you can hit a narrow segment in a huge geographical area. Most people think crowd funding like Kickstarter is too risky, but because there’s 1 % who loves it, it’s a great business. The Foodspotting app is the same.

The strength is the narrowness.

Tine Thygesen is the founder and CEO of Everplaces

Recently, I realized I’m increasingly buying longevity. I think it’s so inspiring to see companies who put real

effort into adding long life to what they produce.

For me the trend is clear, companies that know they are creating products with high quality add repair and ser-vice as an integral part of their business. It serves as a proof that their goods have a long life. Proven businessThe automotive industry realised this a long time ago. ”Authorized” and ”original” have a strong link to the warranty, durabi-lity and resale value. It is natural that there is a service book in the glove compartment and the car should be serviced at regular intervals. The State checks that all vehicles on our roads are well taken care of.

The Finnish furniture manufacturer Artek had an interesting project the other year when they repurchased used furniture, gave it some TLC and resold it. Recently the company made the concept permanent by opening a shop for their used furniture.

The Swedish furniture company Norrgavel has a section on its site that is a second-hand market for its furniture. Of course they want to sell new furniture, but by creating a market where they can show that the expensive furniture you buy has value even when you get tired of it, or grow out of it. Other customers see it as great value for a customer when they make an investment.

WHY by Martin Thörnkvist

Buying and selling longevity

Renovated Alvar Aalto stools from Artek.

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In the media industriesThis long-term approach is also becoming relevant for the media industries. As we move from a structure of owning media, that is to say that we buy copies of a book, a movie, a game or a music album, to buying access to a platform that owns the distribution rights to stream media content, the time perspective for earning revenues for media pro-ducers is also changing.

We are moving away from an era of strong hit culture. One where backup from a strong marketing machine invested everything to focus attention on a release date, knowing that you have just a few months to recoup production costs and make profit on it.

With platforms that sell access to media, media producers earn money when customers use the product. There isn’t one purchasing instance, there are lots of user instances where people listen, read and watch.

Payment per usage is naturally significantly lower than what people received per purchase. So, to reach reasonable levels of payment you need volumes. Large volumes. So much volume that you need time and a constantly growing media catalogue.

Suddenly, it is important that media producers create con-tent that is relevant for a long period.

I am convinced that this creates a good basis to work with exciting, niched productions. A lot like most media indu-stries worked from the beginning.

”There isn’t one pur-chasing opportunity, there are lots of user opportunities.”

Most companies have stubbornly stuck to various twists on a single tried-and- true formula: Create a

product or service, sell it, and collect money. Just sell the guy a dishwasher, and watch him walk out the door. Few businesspeople, including most entrepreneurs and in-vestors, have imagined creating wealth or customers any other way. Though they may use social media to market their products, their minds are still stuck in a 2-D buyer/seller/own-it world.

Yet around this entrenched way of thinking, a new model is thriving, one that I call “the Mesh.” Enter the Mesh. That’s what I call the rapidly growing network of sharing-based goods and services. The Mesh is based on having conve-nient access to what you need and want, without the ex-pense and hassles of owning more stuff.

Network-enable sharingFundamentally, the Mesh is based on network-enabled sha-ring—on access rather than ownership. Mesh businesses understand and cleverly exploit the perfect storm of mobile, location-based capabilities and social network growth to give us convenient access to what we want and need, just when we want or need it. In my view, a major theme of the Share Economy is ‘unused value = waste’.

In a nutshell, we, as a global community have a lot of excess capacity: cars and bicycles sitting around, offices, factories and tools idle and, of course, talent. As access continues to triumph over ownership, we will continue to identify and make available ‘unused value’ as a major fuel for our local and global economies. This shift to the Mesh is rapidly chan-ging the way business is done, and it’s picking up speed.

WHY by Lisa Gansky

Seriously better things, easily shared

“In a nutshell, we, as a global community have a lot of excess capacity.”

Why is the Mesh growing so fast? There are a few significant reasons: population growth, the recession and that we are living in a time when anyone, almost anywhere, can reach a person, company or market faster, with far less capital required.

We now have an enhanced ability not only to leverage exis-ting platforms, but also to refine and test our offering more quickly and inexpensively than ever before through social media networks, popup shops and galleries and apps.

Some of these Mesh businesses are international enterpri-ses (Like ZipCar.com and LoveFilm.com). These services own the inventory of products or facility which they then make available to their customers via a ‘share’ or member-ship model. Many other Mesh companies are two sided marketplaces which are peer-to-peer or community based. In other words, marketplaces which allow us to borrow, swap and rent things from one another. These businesses take advantage of local peer-to-peer (P2P) platforms like Facebook and Foursquare, which make it easy to be con-nected while mobile.

There are now over 6,500 share-based companies in the Mesh community directory at Meshing.it. The competi-tive advantages for Mesh companies are so enormous that the new model has become the major driver for businesses old and new.

“There are now over 6,500 share-based companies”

Lisa Gansky is the author of The Mesh - Why the Future of Busi-ness is Sharing

CASE by Kalle Magnusson

”Spotify doesn’t give money to artists!” I do not know how many times I’ve heard it. And yes, running record labels or

music companies in the 2000s has its problems. But if people only knew what Spotify’s latest six months has meant for Swe-dish musicians and music companies they’d be surprised.

Hybris was founded in 2004. Music file sharing was really popular by then. The CD grave had already been dug. We had no money and no contacts. What we did have howe-ver was good music and great ideas about how to spread things on the Internet. Our idea is to work as hard as we can to get as many people as possible to like our music.

We quickly became an established pop label, but it took until the autumn of 2011 before there was a revenue model that suited the way we work with music.

Music out 2005, money in 2012Vapnet’s 2005 debut single ”Kalla mig” is a prime example of the fantastic development in the music industry in re-cent years.

When we released the single we printed 1,000 CDs and encouraged fans to spread the music. A few months later, ”Kalla mig” became a summer hit. When people summed up 2005 ”Kalla mig” was one of the top ten most played songs on the popular Swedish radio programme P3 that year - and the band has tens of thousands of fans. But not surprisingly, sales did not materialize.

As of spring 2012, Vapnet has not released an album for 4 years. ”Kalla mig” hasn’t received a big boost, hasn’t been part of an ad campaign or used in an awesome TV show.

Mythbusting: “Spotify doesn’t give any money to artists”

”Almost 80% of our revenue comes from Spotify.”

Vapnet 2005.

But it’s still a good song, and people have continued to lis-ten to it and it’s attracted new listeners. If it weren’t for Spotify starting to flourish, we would not have noticed anything. Nowadays, 4 out of 5 people using Spotify in Sweden pay to use the service, which means that payment to artists and companies is higher than if they only listened to the advertising-based service. Revenue per play has nearly tripled for us in the last 12 months.

For ”Kalla mig” it means that we get more revenue per quarter from Spotify today than the single sold in its entire first successful year.

Many loyal fans make a differenceToday, a huge fan base and lots of attention mean lots of plays on Spotify. And lots of plays on Spotify means a good income. These are exciting times for Hybris and our artists. We will soon have 500 songs in our catalogue, and Spotify has become by far the most profitable stream for us - almost 80% of our revenue comes from Spotify. And payments are increasing all the time.

We’re not back in the 90s yet, but if you hear someone complaining that streaming services don’t work, that they don’t replace the artists or companies, that accessibility is not the model - ask them to contact us. We can show them that the trend is very positive, and that we mainly have Spotify to thank for it.

Kalle Magnusson runs the music label Hybris that released the debut albums of artists such as Jonathan Johansson, Familjen, El Perro del Mar, Vapnet and Korallreven.

”We can show them that the trend is very positive, and that we mainly have Spotify to thank for it.”

Our service HinnerDu.se works better in cities than in rural areas. Maybe it’s because you don’t need In-

ternet to connect people in the countryside. That’s despite the fact that neighbours are geographically further away, the obstacles for asking for help feel less than in the city.

This anonymity in cities and on the web is also our grea-test challenge. How do you create the same trust between people who only met online as among people in rural areas. How do we get these people to feel that getting help from a private person rather than an established company works equally well, perhaps even better?

To build confidence in private people let’s highlight Jonas, father of two, who enjoys DIY, and has put together a lot of IKEA fur-niture, and 25-year-old Cecilia who’s stud-ying to be a landscape architect and gladly helps with weeding or chopping wood.

Asking for help from a private person rather than a companyA few weeks ago it dawned on me how much more con-fident you spontaneously feel when you use a large com-pany. I needed to find someone who could go to IKEA in Copenhagen and buy, deliver and install a green Billy ca-binet that was sold-out in Sweden. I took the opportunity to try one of the larger online quotation services. I put up my ad and thought I would be flooded with calls from different companies who wanted to help me.

After three days and I still hadn’t heard anything, I asked

CASE by Sara Ohlsson

Are we ready for Collaborative Consumption?

the same question on HinnerDu.se. It took just an hour or two and I had a reply from Fredrik who really wanted to help me. On his profile page I could see that he carried out lots of tasks in the past and his reviews were excellent. We agreed on a price and time and everything went very smoothly.

Some lessons learnedThe most common requests are quite traditional. It has been shown that many people need help with walking the dog and the dog-sitting category is now our largest cate-gory. Craftsmen are most in demand on our sister site in Denmark, DenLilleTjeneste.dk. That’s possibly due to that fact that there is no tax deduction for craftsmen in Den-mark (as they do in Sweden and Finland) which makes it very expensive to hire a craftsman in the traditional way. Mind you, people are not as careful in making sure the dog to get its daily dose of exercise.

What we see is that you mainly get help with things you can’t do yourself. You can’t be a dog-sitter for your own dog, you need help. It’s less common to ask for help becau-se you feel you can’t do something yourself or want to buy your free time. Maybe it’s because it’s still seen as a bit of a “no-no” Sweden if you don’t do everything yourself. Unfor-tunately, asking for help is something we are bad at, which is a shame because we see that people who do the job do it to feel needed, to be helpful and to make new contacts. Gi-ving another person an opportunity to help and also make a small income is something that should be encouraged.

Sara Ohlsson is CEO and founder of the HinnerDu.se platform

“to give another person the opportu-nity to help another should be called”

We have built a platform where music fans can influ-ence and develop the offering of live music, con-

certs, shows and clubs. By fans suggesting concerts with artists on dates when venues are not booked for a function, we can match the desire for more gigs from artists with the spare capacity of venues, that is to say the evenings when venues are not booked. The service is built as a crowd funding model, if a proposed concert has sold the minimum number of tickets within a given time, the concert will go ahead.

It gives fans the opportunity to influence which artists have the chance to play, gi-ves artists more gigs, and at the same time reduces the financial risks that concerts today put on venues. If the concert doesn’t happen, everyone gets their money back directly.

The challenge of changing behaviourWe work in close relationship with music venues, artists, agents and consumers to design and develop the service. We are currently operating in Sweden and Denmark. Our challenge lies in changing behaviour in the music indu-stry, and for the people who want to experience music. One reaction I often come across is ”Can my friends and I really book a concert?”

But we see that fans throughout the world are not content to just consume. We want to be more involved than that. Creative people are posting projects on platforms like Kickstarter that become reality because there are people

CASE by Markus Wiklander

Power to the people

The fans have the power

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“Concerts are booked where the audience is!”

who are interested in contributing money and commit-ment in the early stages. That’s just how Emues works, ex-cept it’s for concerts and tours. Just like Lauren Anderson writes, we believe that the music niche raises commitment even more.

At the same time we see a great need from the industry for more live gigs. As music sales fall, the need for artists to get income from live shows has increased. Fees have not risen for most artists, instead they simply need to perform at more concerts.

Breathing life into the music industryWith the pressure we are seeing from artists and audienc-es nationally and internationally to participate in and influ-ence on more concerts, I see no reason why music venues and arenas have to be empty one single day in a week.

To get concerts in more alternative environments, and even in faster, more flash mob-like ways, we are working with music venues such as public environments, industrial buildings and apartments.

With Emues we want to create new, open attitudes and ex-citing solutions within the music industry and boost crea-tivity. Concerts are booked where the audience is! Our goal is to provide well-established artists with the opportunity to secure longer periods of more gigs globally. That up-coming artists can reach and play to their right audiences much more quickly. And that all of us who want to watch and experience music are able to influence who will play.

Markus Wiklander is founder and CEO of Emues.com.

CONTEMPORARY BuzzWORdS by Media Evolution

Glossary

Collaborative consumptionThe collective name for the rapid explosion of platforms for lending, the exchange of goods or services, or access to media. It can be peer-to-peer marketplaces or business to consumer services.

Idling capacity”Idling capacity” is the English term for the assets we own when they are not being used. For example, when a car is parked outside work for eight hours, or CDs sits unused on the shelf.

This publication comprises texts previously published at www.mediaevolution.se. The idea is to repackage our regular analysis as focused in-depth looks at areas that we think the media industries need to understand a little bit better.

We release four publications annually. At our web site you can download or order mail copies of previous and future editions.

Access over ownership is published under the Creative Commons licence by-nc-sa. Read more at creativecommons.se

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