A future for the Music industry and all Artists, Smart Content.

New Music Initiative

The  Next  Genera,on  of  Music,  Content  and  Value  

The New Music Initiative is a group of Artists, Technologists, and Creatives that are passionate and driven to improve the experience of listening to making music.

This presentation is designed to inform musicians and their representatives of a monumental change to music that will positively affect the the life of every musician and the value of the music they make. A new music format built on globally patented technology that simplifies how the world engages with content, and how content producers manage the value and access of their content.

If you read on you will discover that Content is DUMB, it cant protect, control or report on the access of the content. You will also see the valuable music artists create is stored inside this content.

“We recognized content is the cause of many issues facing the distribution, monetization and enjoyment content. How did we fix it we built an engine that makes content SMART..” - Finbar O’Hanlon

The New Music Initiative

Smart Content Provides  a  change  where  groundbreaking  technology  brings  forward  a  new  music  format,  the  evolvement  from  the  CD  and  MP3  file.  A  format  that  for  the  first  ,me  :    •  Protects  ar,sts  intellectual  property  from  a  central  loca,on  •  Gives  ar,sts  ul,mate  control  over  every  aspect  of  their  recorded  works  •  Provides  ar,sts  with  transparent  and  accurate  data  as  to  every  play  of  their  content  on  

virtually  any  network  or  device  •  Provide  new  methods  of  mone,za,on  •   Provide  the  ability  to  re  release  en,re  catalogs  of  musical  works    •  Provides  the  next  genera,on  of  listening  experiences  for  consumers.    

 Most  importantly  this  format  that  does  not  threaten  any  exis,ng  rela,onship  with  a  Label,  manager,  publisher,  just  a  format  that  makes  content  smart,  easy    to  deal  with  and  valuable  again.  

Why is this important to Artists? There  are  a  lot  of  people  making  a  lot  of  money  off  of  music  and  their  revenues  are  geLng  bigger  and  bigger.  Here  are  some  of  latest  news.      •  Swedish  Music  Industry  revenue  2013  US$194.2  million  digital  revenue  from  8%  to  70%    

source  IFPI  •  Spo,fy  Paid  US$500  million  in  royal,es  in  2013  source  spo,fyar,sts.com  •  Pirate  sites  ad  revenue  US$227  million  source  IFPI  •  Apple  Beats  acquisi,on  US$3  billion(  Labels,  Universal,  Warner,  Sony  )  no  ar,sts  to  

share  in  revenue  source  digital  music  news    

•  Music  Industry’s  Digital  revenue  US$5.9  Billion  source  IFPI  •  VEVO  projected  revenue  2012  of  US$280    Million  which  was  up    from2011  revenue  US$  

150  must  have  been  further  upped  by  its  current  figures  serving  5.5  Billion  views  per  month  of  music  video.  Up  33%  

•  YouTube  Ad  revenue  5.6  billion  in  2013    a  50%  increase  source  forbes  and  f.com  

There  are  companies  that  make  money  from  selling  data  based  on  how  people  interact  with  digital  content.  Currently  this  market  is  approx  US$  6.6  billion  last  year.  

 How  much  GROWTH  in  money  did  you  the  ar,st  make  last  year?  .  

Smart vs Dumb People  are  “Smart”  They  dynamically  establish  what  they  want  and  how  they  want  it.  People  are  flexible  in  their  consump,on  palerns  and  how  they  choose  to  engage  with  or  consume  content  can  drama,cally  change  the  value  of  that  media.    Technology  is  ”Smart”  Technology  allows  companies  to  evaluate  and  adapt  to  meet  the  shifing  preferences  of  people.  It  can  be  used  to  understand  how  content  is  consumed.  Companies  that  use  technology  for  this  purpose  are  typically  market-­‐leaders  in  their  sectors,  worth  billions  of  dollars.    Content  is  “Dumb”    Content  is  designed  to  just  play.  Content  does  not  protect  an  ar,sts  recorded  works  for  being  illegally  used,  does  not  accurately  report  on  its  usage  and  provides  no  control.  Content  is  inflexible  from  being  mone,zed  in  any  manner,  it  takes  up  space  and  is  not  portable  across  devices.      This  is  NOT  how  it  should  be…  

If Content was Smart  If  Content  was  “Smart”    It  would  be  able  to  protect  and  establish  an  ar,sts  value  (recorded  or  produced  works).    It  would  provide  control  in  such  a  manner  that  any  unauthorized  usage  could  be  immediately  stopped  from  occurring.  It  would  also  provide  new  capabili,es  that  fundamentally  shifs  the  control  of  content  back  to  the  ar,st  or  representa,ve  whilst  providing  new  levels  of  innova,on  that  revolu,onize  content  discovery,  filtering,  and  improve  the  listening  experience.    If  content  was  smart  it  could  adapt  to  suit  the  people  that  experienced  it.  When  content  is  relevant  to  the  listener  and  CONTROLLED  BY  THE  ARTIST  a  new  horizon  of  value  is  created.    

Smart Content Is  now  a  reality.      

Welcome  a    

New Music Industry  

How do you make content Smart?

You  first  have  to  understand  what  digital  content  is.        To  do  that  you  have  to  understand  the  structure  of  a  digital  music  and  video  file,  then…      You  build  a  new  format  -­‐  Smart  Content.  

Digital Media (Music and Video) files just contain data. Data is created in music terms when an analog sound is being converted to a digital language made up of ones and zeros. For a digital file to be played back as music the data has to be turned back into an analog source. An example of this is when you play your guitar into your Protools software through an interface. The Guitar creates sound pressure (analog) pickups create the electrical current (analog) goes to a soundcard to be converted to digital (numbers) The soundcard translates the electric current to ones and zero’s (data) and the quality of the soundcard is how good it is at translating the incoming sound to ones and zeros (data). Simply put, people speak languages while computers speak data. Inside Digital Music files (Mp4) there are two areas that you can’t see… One area is where the music is stored (Artist Data) and the other area controls that playback of that music (Format Data). The diagrams on the right show the structure of content. The Format Data is in Red and Green and the Blue area shows the actual valuable music.

Format  Data  

Ar,st  Data  

Making Content Smart The inside of Digital Music  

Analog to Digital  

When you record your works it is typical for your works to be turned into a digital recording. A digital recording is produced by converting the physical properties of the original sound into a sequence of numbers, numbers which can then be stored and read back for reproduction.

Making Content Smart  

Content does not communicate it simply plays, It’s fundamentally DUMB. In order to make content SMART, you need it first to be able to communicate with any party or any platform. To control content you need to remove the valuable artists IP from the file and have it delivered once paid for. Why? Digital content has made it easy to illegally utilize and share the valuable IP because the valuable component that represents the artists works (IP) is included in the file. This flawed framework, coupled with no communication from the file – creates a status quo where there is no accurate way to understand the usage of the content. Smart content files are transparent and provide value to everyone who utilizes its content. The IP is in a format that is unplayable on any device and gets delivered at play request where it is reassembled back to music at the device. When the IP is removed from the content, songs take up no storage, they play across any devices or standards and take up no real space. For the artist the IP comes from a single controlled location.

The New Digital Format

Reinventing the format by which content is delivered marks a sea change in digital media. For the first time, content itself will be as smart as the platforms that deliver it. By providing the power of Big Data to audio and video, the industry can start to control the value derived from content and establish its own set of rules around how content is monetized.

•The Consumer wants to control the engagement and availability of music and content. They want content to be relevant to them and to be able to easily discover new and exciting media.

• The Artist or Rights Manager wants to control their intellectual property or recorded works in order to extract and enforce that value earned is returned to the artist or rights holder. They also want to be able to find and communicate with their fan base and be able to be found by people who engage with their content.

•The Platform (YouTube, Spotify, iTunes) wants control of the users on their platform and the services that they provide, this includes the financial inflows to the business.

• The Network wants utilization of data on their network and wants to control the financial accounts and billing of their subscribers.

The  MX4  model  is  built  from  2  successful  workflows.  Data  and  Virtualiza,on.  Amazon,  IBM,  Oracle,  Google  -­‐-­‐  in  fact  the  enterprise  world  -­‐-­‐  communicates  this  way.  Linius  is  the  first  group  in  the  world  that  has  successfully  managed  to  apply  this  workflow  in  order  to  produce  on  the  fly  content  personaliza,on.    

Linius Process “Smart Content”

Linius Process “Smart Content”

Music Industry

How  do  you  fix  an  industry  that  can’t  be  fixed?    

You  don’t…you  reinvent  it.  

Music Content Today How  do  we  bring  value  back  to  music?  

   You  evolve  the  Music  experience  

mx

Music Content Today

Today,  people  consume  more  content  than  ever  and  ar,sts  are  making  less  money  than  ever.    Control  of  an  ar,sts  revenue  and  therefore  the  value  of  the  recorded  music  works  is  in  the  hands  of  the  person  who  controls  the  data  and  the  consumer  who  dictates  how  they  want  to  use  the  content.    If  the  data  and  end  usage  are  the  key  control  points,  then  the  content  itself  should  report,  not  the  intermediaries.  Smart  Content  changes  the  landscape  and  control.    In  todays  technology  driven  world,  every  single  ,me  the  work  product  of  ar,sts  is  played  on  any  device,  the  ar,st  should  know  about  it,  get  paid  and  be  able  to  control  how  his  or  her  works  are  u,lized.      

Music Content Today

 Todays  technology  can  easily  deliver  this  informa,on,  cellphone  companies  can  report  every  transac,on  down  to  the  second,  where  you  were  located  anywhere  in  the  world  and  where  the  transac,on  originated  from.    How  come  this  doesn’t  happen?    It’s  not  because  of  bad  data!  It  is  because  fundamentally,  the  content  is  “Dumb”.  Content  has  no  method  of  repor,ng  itself.  Even  the  best  data  system  cannot  measure  every  transac,on  across  every  usage  model.  The  method  of  repor,ng  is  lef  to  organiza,ons  who  u,lize  the  content.  These  organiza,ons  ofen  have  to  pay  based  on  the  size  of  the  usage  data.              

The “New Sound”

The  New  Consumer  Format    Smart  content  provides  the  consumer  with  the  next  advancements  in  Audio  Formats.  With  all  the  advancements  in  the  world  today,  technology  that  wins  is  the  technology  that  makes  our  lives  beler.  Why  is  it  that  with  the  advancements  in  technology,  that  the  advancements  in  music  formats  have  go7en  worse.  The  sound  has  go7en  worse.                          Lets  look  at  advancements  in  video  in  comparison      VHS  -­‐>  DVD  -­‐>Blu  Ray  all  offered  new  features  for  a  consumer  and  beler  quality  Visuals  and  sound  with  each  evolvement  in  the  format  From  special  features  to  DTS  sound.  With  Video  the  experience  is  greater  as  technology  evolved    Does  this  make  sense  to  anyone?  “Dumb  content”  cannot  protect,  audit,  or  control  an  ar,sts  intellectual  property  nestled  within  the  Media  format  and  to  top  it  of  the  sound  quality  has  golen  worse.        

The “New Sound”

OK so what is the New sound?

New Sound is a term to describe a new listening experience. From streaming 24 bit audio, which opens a new level of dynamic headroom, to content giving access across devices and networks, to content that can provide feedback so content that the listener will enjoy can find the listener ( discovery) to listeners wanting to EQ or change stems of a mix smart content provides a host of new features that can bring about the change in the listening experience.

Stems do not remove control of how the music is intended to be heard it merely provides the ability for stemmed audio to be treated individually in a manner that the artist or label is happy with . It is controlled from the artist. Either as a special feature or for listening over an entire album the ability for a listener to hear the artists works in a way never before heard is a significant reason to usher in the new format. Whether through a series of Presets, presets which can be shared, provided by band members or even through an interface to be designed by equipment manufacturers tis ability provides a wealth of value for artists, consumers and manufacturers of consumer audio equipment.

Think about this.

As an artist, if you choose the best engineer in the world at the best studio in the world,

Why do people then apply their own EQ. or listen to this production in a poor quality mp3 format?

Why do people buy better speakers, better headphones? Is it for better sound?

Better sound for who? The listener?

People like to consume, they like features. Does every Blu Ray Watcher watch all of the special features, Does everyone use all of their features of their car or device. No, but still if asked people will assign value to these features whether they use them or not.

Too Much Choice For a long period of time listening to music was simple: you had your LPs, Cassettes or CDs. No matter how many of them you had in your collection, it was easy to understand the music you had and the music you didn’t have. Then came the Internet, and all of a sudden there were too many choices. Between the listeners own collection and the music available on different streaming services, there was now too many decisions to make in finding and buying music. Confusion reigned as to why the music I already own wont play on these new internet connected devices. A picture further muddied by why the music I bought or want to buy is free on YouTube or on streaming services. The Internet started an addictive cycle of craving music. The format of digital music allowed the reproduction of the music without any real barrier, causing untold issues to the music industry and those that create in the face of massive piracy. The platforms met this craving by offering music and video content for free. They did this using a reflective business model. The removal of the value of content was the new value in building intelligence. This intelligence is traded at a much higher value than content. The impact of this action was to start to educate consumers that music was now free or had little value. With this model in mind, it’s easier to understand that every time a song is played it has value. The trick is to work out where the value is being attributed and how that value can be understood, tracked and billed and what the value is to the intellectual property owner.

There are a lot of people making money off of the music artists

create, unfortunately the artist is most likely not one of them.

The Reflective Business Model

In understanding where the transactional value is in music and content lets highlight a transactional model we call the Reflective business model. We call it reflective because much like a two way mirror its viewing capabilities are not obvious to the uninitiated. The  data  driven  from  the  consump,on  of  content  is  a  major  financial  driver  for  many  of  the  worlds  largest  organiza,ons  because  this  consump,on  provides  intelligence.  Intelligence  that  helps  drive  adver,sing,  helps  manufacturers  in  the  building  of  new  products,  helps  forecas,ng  sales  based  on  consumer  habits.    So  how  much  money  do  music  arBsts  and  the  industry  gain  from  the  intelligence  gathered  around  the  consumpBon  of  this  media?  A  share  in  the  value  of  the  adverBsing  systems  that  provide  relevance  and  the  data  that  is  traded  based  on  the  content  that  arBsts  provide.  How  is  the  split  determined?  Are  you  happy  with  your  share  of  this  revenue?    When  firms  like  eMarketer  expects  YouTube's  ad  revenue  to  total  $5.6  billion  this  year,  a  51%  increase  from  last  year.  YouTube  a  site  that  provides  content  for  free  to  consumers  and  sites  like  Twiler  founded  just  eight  years  ago,  is  worth  more  than  $18bn  with  revenue  for  the  first  quarter  of  2014  totaled  $250  million,  an  increase  of  119%  compared  to  $114  million  in  the  same  period  last  year,  doesn’t  it  make  you  ask  how  do  these  plasorms  make  money  

Let’s  look  at  how  twiler  makes  money      •  'NaBve'  markeBng  •  Almost  all  of  Twiler's  revenue  -­‐  about  85%  of  it  -­‐  comes  from  adver,sing  on  its  site.  •  There  are  three  main  ways  for  a  company  or  an  individual  to  adver,se  on  Twiler:  by  promo,ng  a  tweet  that  will  appear  in  people's  ,melines,  

promo,ng  a  whole  account,  or  promo,ng  a  trend.  •  Twiler  tends  to  charge  its  adver,sers  according  to  the  amount  of  interac,on  their  content  generates.  •  Anything  that  disrupts  the  user  experience  might  reduce  engagement  from  users,  which  in  turn  can  put  off  adver,sers,  Ms.  O'Reilly  says.  •     •  Using  the  'firehose'  •  Data  licensing  is  Twiler's  second  major  revenue  stream.  •  The  micro-­‐blogger  sells  something  known  as  the  "firehose",  its  public  data,  which  ofen  adds  up  to  about  500  million  tweets  each  day.  •  Companies  can  dive  deep  into  the  data  to  analyze  consumer  trends  and  sell  their  insight  on  to  other  brands  and  companies.  •  With  sophis,cated  analysis  companies  can  learn  detailed  and  specific  informa,on  about  their  users  that,  because  of  the  volume  of  data,  an  

ordinary  user  or  company  would  not  be  able  to  get.  

Invisible Business Model

•  YouTube makes money because they attract around one billion unique visitors every month to view content that artists and other content creators create ( FOR FREE ). Because of this influx of viewers advertisers are willing to pay to get in front of that large, captive audience.

•  YouTube gives advertisers what they want by letting them focus in on a variety of specific demographic markers. For example, advertisers can choose to market to people based on their gender, age, location, and interests. They’ve also smartly developed their website to support and show ads across multiple platforms, including smartphones, tablets, and computers.

•  How much money does YouTube make off its advertising? It’s a hard question to answer. Owned by Google since 2006, YouTube’s financial numbers aren’t publically published, at least as a standalone. But estimates for YouTube’s 2012 gross revenue were at $3.6 billion. And considering that Google made $14 billion in revenue in the second quarter of 2013 alone, YouTube and its ad sales are clearly just one more piece in the very large, very successful Google machine.

What’s wrong with this picture? Where are you?. Under Creators it states You Tubers, Brands Agencies, Networks. Is that you? If an artists works is valuable in the harvesting of this data what would happen to the Value of companies such as Google (YouTube), Spotify and others if “Officially Licensed Music “ came into play. An initiative where every avenue of exploited value attributed to an artists works is evaluated and an artist or label is rewarded? What would happen if an artist removed content from sites that make them no money and devalue their works, then sends cease and desist letters to companies stopping them from finding and serving content for free, content that is monetized elsewhere, then to top it off places advertisements in major publications around the world stating that these platforms are now not the place to find everything. What do you think this would do to these companies often huge multi billion dollar market valuations?

Big Data

Big  Data  is  a  word  used  to  technologies  designed  to  extract  value  from  very  large  volumes  of  a  wide  variety  of  data.    Companies  like  Facebook,  twiler,  and  Google  specialize  in  the  harves,ng  of  this  informa,on  to  build  more  relevant  services  to  its  consumers  and  to  provision  this  data  to  a  hungry  world  all  looking  to  understand  palerns  that  demonstrate  how  these  people  will  consume  informa,on,  and  how  products  can  be  improved.  On  the  earlier  slides  we  talked  about  how  some  of  the  worlds  leading  companies  leverage  media  content  as  a  tool  to  acquire  data,  data  that  can  be  used  to  generate  revenue  or  build  products  and  services  that  enable  relevance  in  adver,sing  back  on  their  plasorms.    •  In  some  case  there  are  some  real  challenges  in  alaining  this  data.  Ofen  data  is  in  different  silos,  on  different  networks  and  because  

people  switch  networks  and  plasorms  when  the  are  consuming    media  a  plasorm  is  limited  by  the  consumers  life  of  the  plasorm.  

•  Smart  content  allows  for  Big  Data  to  be  embedded  inside  every  piece  of  content,  With  the  new  format  a  new  file  wrapper  is  constructed  every  ,me  someone  hits  play.  

•  This  would  mean  that  digital  content  can  be  a  Big  Data  Agent  and  this  Big  Data  agent  could  carry  and  deliver  informa,on  from  the  media  itself.  A  centralized  set  of  data  every  ,me  the  content  is  used  and  the  data  could  be  as  rich  as  available  from  the  device  where  the  content  is  played.  

•  Based  on  the  requirements,  a  live  stream  of  data  from  a  consumer  in  a  central  loca,on  would  provide  incredible  value  to  this  community,  a  community  you  can  see  has  immense  value  built  off  data.  

 The  market  for  tradi,onal  business  analy,cs  sofware  is  large  and  well  established,  IDC  es,mates  an  aggregate  spending  of  $35.1  billion  in  2012  in  this  worldwide  market  sector.  The  internet,  of  course,  is  comprised  of  data  —  all  kinds  of  data.  However,  the  vast  majority  of  new  data  being  generated  is  unstructured.  This  means  that  more  ofen  than  not,  we  know  lille  about  the  data,  

Centralized Big Data Agent

Smart  Content  brings  an  amazing  opportunity  to  the  music  industry  to  control  and  harvest  Big  data  from  within  smart  content.  An  opportunity  to  hold  the  keys  to  the  value  of  content  when  it  comes  to  business  intelligence.    To  be  able  to  understand  and  parse  Data  from  within  media  at  this  level  is  something  only  possible  with  Smart  Content.    According  to  Gartner,  Inc.,  organiza,ons  are  expected  to  spend  $81.0  billion  on  business  analy,cs  and  related  services  in  2014.    If  the  music  industry  and  the  ar,sts  can  capture  and  provision  big  data  from  within  smart  content  then  the  en,re  industry  has  a  new  business  model.  Intelligence.    Smart content has to be driven as an industry initiative. The platforms that currently have control wont promote smart content, as they are focused on tools that give them control and keep people at their platform    

Data and Transaction flows

New Music Initiative

For more information Contact Finbar O’Hanlon 917 828 1962 [email protected] Dave Weiderman 818 288 6588 [email protected] Patent # 12/670430 United States 2008288676 Australia 159164 Singapore 200880110364.8 China 08782938.8 Europe