Bringing “2.0” to the Digital Bringing “2.0” to the Digital Music / Advertising RelationshipsMusic / Advertising Relationships

Claire LevyClaire LevyFormer Head of Business Development, Last.fmFormer Head of Business Development, Last.fm

May 24May 24th th 20082008

““Web 2.0” websites that we all loveWeb 2.0” websites that we all love““Web 2.0Web 2.0 is a term describing the trend in the use of World Wide Web is a term describing the trend in the use of World Wide Web

technology and web design that aims to enhance creativity, technology and web design that aims to enhance creativity, information sharing, and, most notably, collaboration among users. information sharing, and, most notably, collaboration among users.

These concepts have led to the development and evolution of web-These concepts have led to the development and evolution of web-based communities and hosted services, such as social-based communities and hosted services, such as social-networking sites, wikis, blogs, and folksonomies.”networking sites, wikis, blogs, and folksonomies.”

- Wikipedia, May 18 2008- Wikipedia, May 18 2008

Web 2.0 sites: overview Web 2.0 sites: overview

Very large sites (Myspace 100mm+ unique user / month, Very large sites (Myspace 100mm+ unique user / month, Facebook not too far behind and growing quickly, etc)Facebook not too far behind and growing quickly, etc)

Strong understanding of who their users are and what Strong understanding of who their users are and what they are doing on the sitethey are doing on the site

Emulation: sites / brands that were not designed as Emulation: sites / brands that were not designed as online community tools are adapting their approach (eg, online community tools are adapting their approach (eg, Lego, New York Times, etc.)Lego, New York Times, etc.)

Web 2.0 sites: how does Web 2.0 sites: how does advertising fit in?advertising fit in?

MonetizationMonetization

Web 2.0 sites: how does Web 2.0 sites: how does advertising fit in?advertising fit in?

Need large and active user base in order to:Need large and active user base in order to:– Generate interesting contentGenerate interesting content– Continue on growing (organically or through Continue on growing (organically or through

partnerships – user base key driver for valuation)partnerships – user base key driver for valuation)– Generate revenue Generate revenue

Monetization …butMonetization …but– Do not want to risk losing:Do not want to risk losing:

users (internet users are not a captive audience), users (internet users are not a captive audience), content (UGC content) content (UGC content) and revenues (from future advertising and other revenue and revenues (from future advertising and other revenue streams)streams)

– So must be careful about approach: formats, content, So must be careful about approach: formats, content, brandsbrands

Additional Web 2.0 revenue modelsAdditional Web 2.0 revenue models Example of Last.fm - Ecommerce Example of Last.fm - Ecommerce

Retail remains an Retail remains an important revenue important revenue consideration for music consideration for music websiteswebsites

Sales can be enhanced Sales can be enhanced by promotionsby promotions

Beyond (and ultimately Beyond (and ultimately enhancing) monetization: enhancing) monetization: offers a more complete offers a more complete experience to the userexperience to the user

Additional Web 2.0 revenue modelsAdditional Web 2.0 revenue models Example of Last.fm - Subscriptions Example of Last.fm - Subscriptions

One existing subscription model: GBP1.5 / One existing subscription model: GBP1.5 / month / user for personalized radiomonth / user for personalized radio

A second one that has been announced A second one that has been announced for an on-demand servicefor an on-demand service

Beyond (and ultimately enhancing) Beyond (and ultimately enhancing) monetization: offers a more complete monetization: offers a more complete experience to the userexperience to the user

Additional Web 2.0 revenue modelsAdditional Web 2.0 revenue models Example of Last.fm - Partnerships Example of Last.fm - Partnerships

Partnerships span the globe with Partnerships span the globe with companies such as CBS, Spiegel, companies such as CBS, Spiegel, Livejournal, BBC, Bebo, Netlog, etc.Livejournal, BBC, Bebo, Netlog, etc.

Beyond (and ultimately enhancing) Beyond (and ultimately enhancing) monetization: monetization: – offers a more ubiquitous experience to users offers a more ubiquitous experience to users

of Last.fm and of partnersof Last.fm and of partners– extends the Last.fm brand beyond the siteextends the Last.fm brand beyond the site

Advertising for Web 2.0 sites – Advertising for Web 2.0 sites – Enhancing the user experienceEnhancing the user experience

No need to reinvent the wheel, learn from your No need to reinvent the wheel, learn from your partner what makes their users tickpartner what makes their users tickAn advertising experience seen as relevant An advertising experience seen as relevant added content or functionality is positive added content or functionality is positive – This can be your own content or that of your partner’s This can be your own content or that of your partner’s

Requires more creative resources and upfront Requires more creative resources and upfront commitment to a publishercommitment to a publisher

Relevant content for Last.fm usersRelevant content for Last.fm users- Using the Last.fm recommendation system- Using the Last.fm recommendation system

Relevant content for Last.fm usersRelevant content for Last.fm users- Using the Last.fm radio player- Using the Last.fm radio player

Web 3.0: Thinking aheadWeb 3.0: Thinking ahead

““If I were to guess what Web 3.0 is, I would tell you that it's a If I were to guess what Web 3.0 is, I would tell you that it's a different way of building applications... My prediction would be that different way of building applications... My prediction would be that Web 3.0 will ultimately be seen as applications which are pieced Web 3.0 will ultimately be seen as applications which are pieced togethertogether. There are a number of characteristics: the applications are . There are a number of characteristics: the applications are relatively small, the data is in the cloud, relatively small, the data is in the cloud, the applications can run on the applications can run on any device, PC or mobile phone, the applications are very fast and any device, PC or mobile phone, the applications are very fast and they're very customizablethey're very customizable...”...”- Eric Schmidt, CEO of Google, Seoul Digital Forum, May 2007 - Eric Schmidt, CEO of Google, Seoul Digital Forum, May 2007 (Wikipedia May 18 2008)(Wikipedia May 18 2008)

Emulation: sites / brands that are not “open” may have to rethink Emulation: sites / brands that are not “open” may have to rethink their values (e.g. Apple iPhone)their values (e.g. Apple iPhone)

Back to music: Push towards more Back to music: Push towards more integrated campaigns across platformsintegrated campaigns across platforms

Worldwide Music Spending by Segment 2006-2011 ($ in billion)

Source: eMarketer, 11/07

ReviewReview

Publisher and advertisers must keep the best Publisher and advertisers must keep the best interest of the users in mind in order to deliver interest of the users in mind in order to deliver high performing campaigns:high performing campaigns:– Continually enhance the user experienceContinually enhance the user experience– Leverage the strengths of the website and its core Leverage the strengths of the website and its core

functionalitiesfunctionalities– Capitalize on the knowledge of user tastes by Capitalize on the knowledge of user tastes by

targeting campaigns, adapting content to local targeting campaigns, adapting content to local markets, etc.markets, etc.

– Continually think about how to tie a campaign to the Continually think about how to tie a campaign to the different platforms where the users are found different platforms where the users are found

Questions?Questions?

claire@disconoir.comclaire@disconoir.com