A few days ago I wrote a post and linked to an Aspen Institute report titled The Rise of Collective Intelligence – Decentralized Co-Creation of Value as a New Paradigm of Commerce and Culture.

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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Hulu.com is an important experiment for how TV will shift from being available only when the broadcaster schedules it to when we want it – Having it My Way!

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(From the NYT) Hulu is the new-media creation of two old-media rivals, NBC, which is owned by General Electric, and Fox, owned by the News Corporation. Since March, when the broadcasters announced their joint effort to bring free, ad-supported television shows to the Web, critics have pounced, predicting the venture would be doomed by diverging agendas, technical challenges and an all-powerful enemy: YouTube.

Skeptical bloggers even slapped Hulu with a derisive moniker: “Clown Co.”

Now the defense is ready to present its case.

Today, Hulu, now an independent company with more than a hundred employees and its own offices in Los Angeles, will begin privately testing its new service with select users at Hulu.com. It will also begin sending its videos to the sites of five distribution partners, Microsoft, AOL, MySpace, Yahoo and Comcast.

Hulu is presenting select episodes of some 90 television shows, including new and old programs from NBC (“The Office,” “The A-Team”), Fox (“24” and “The Simpsons”) and an assortment of smaller broadcasters like USA Networks. It has also added two new partners, Metro-Goldwyn-Mayer, which distributes programs like “Chapelle’s Show” and “Reno 911,” and Sony Pictures Television, which will make selections in its archives like “I Dream of Jeannie,” available on Hulu.com.

All the shows are viewable inside a Web browser and festooned with advertisements.

However Hulu works out – they are on a track that is clear – people want video as they ant their music:

• Easy to find
• Available in chunks
• Available ON THE WEB – when they want it and usable on a variety of platforms such as an iPod and a 50inch HD LCD screen

Who pays and how will still be settled.

Also what I think Hulu has missed is the value of creating community around a show – this is Hugh’s great insight about Social Objects – it is the Conversation around the object that is more important than the object.

3. The Blue Monster wine is also part of the “Smarter Wine” conversation. The main thesis is that it’s not the wine per se that is interesting, it’s the conversations that happen around the wine that is interesting. And that is true for all social objects. People matter. Objects don’t.

The advertising money is shifting to the web – so will the content – it will go there faster than we imagine. For the laws of exponetial growth are in force. I think that the Tipping point is here:

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I think that Broadcast TV is now in the Titanic Mode – It is large and feels unsinkable – BUT – the ship has grazed the ice – at the moment no one feels anything – but the wound is fatal and it is only a matter of time before the ship sinks.

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The Iceberg is the weight of money that is leaving conventional media and going to the web. My forecast is that 2008 will be the year – 2008 will be the year where the web/digital will become where the ad money will go – the work for all providers of all types of content then will be to reset their universe.

Today most people in TV and radio see the web as a growing and important channel. In 2008, the smart people will see the web as the primary channel and that their old channel is now the supporting channel. Of course most will not see this and they will be lucky to find a life boat.

You think I exaggerate? Here is Chris Anderson on the “Music Industry” I quote him in full:

At a speech last week I was asked a question that has come up every day since the Radiohead (and Madonna, NIN, Prince, etc, etc) announcement: What’s going to happen to the music industry?

To which I answered “Which music industry?” You don’t mean just the one that sells CDs, do you? Because it’s a big mistake to equate the major labels and their plastic disc business with the industry as a whole. Indeed, when you stand back and look at all of music, things don’t look so bad at all.

Indeed, it appears that every single part of the music industry except the sale of compact discs is up.

• Concerts and merchandise: UP (+4%)
• Digital tracks: UP (+46%)
• Ringtones: UP (+86% last year, but probably just single-digit percent this year)
• Licensing for commercials, TV shows, movies and videogames: UP (Warner Music saw licensing grow by about $20 million over the past year)
• Even vinyl singles (think DJs): UP (more than doubled in the UK)
• And, if you include the iPod in the music industry, as I’d argue a fair-minded analysis would: UP, UP, UP! (+31% this year)

Only CDs are down (-18%). They’re around 60% of the industry not including the MP3 players, but just around 25% if you do include them.

So the problem with the music labels is not that music is an industry in decline, but that they have a too-narrow view of what business they’re in. Madonna’s switch from a label to a concert promoter should be a clue. This quote from an excellent article (it’s worth reading it all) in Entertainment Weekly says it all:

”Soon a lot of these companies won’t define themselves as record companies,” says Steve Greenberg, the former head of Columbia Records who now runs the independent record company S-Curve. ”They’ll define themselves as artist development companies. If you’re involved in an entire career with an artist, then everyone’s interests can be aligned.”

I think most music will soon be free, as artists give away the product as marketing for their performances and licensing, and as a celebrity accelerant that creates more opportunities to make money than just from the sale of a record.

And for those who say that this avenue is only available to artists at the head of the curve, such as Madonna and Radiohead, I’d point out that the other group poorly served by the labels are those at the bottom of the curve, the many thousands of bands who fall below the radar of the hit-driven majors. I’d argue that they, too, have nothing to lose by letting their music go free, nothing to lose but the prospect of becoming indentured to companies stuck in last century’s model of monetizing music.

Most people see TV and Radio like the people who make CD’s. All the forces that are turning the music industry upside down are coming to TV and Radio – for after all – a video and an audio file are the same as music – they are in reality all digital now.

One memory of FASTforward07, was the confidence/credibility Ray Lane instilled when he spoke of his belief that Oracle and SAP are positioned survive the challenges of 2.0 because of their investments in R&D.

In comments to a recent post of mine, Atul Rai drew attention to a post of his own about SAP and Oracle’s foray into 2.0 space.

It would seem that SAP is dedicated to more than the “lipstick on a pig” routine (as has been witnessed elsewhere). They’ve ripped a page from Disney’s playbook by creating their own Imagineering group, yet add a specific goal for differentiation: “Incorporate new ways of using emerging Web 2.0 technologies to harness the power of its customer relationship management (CRM) and enterprise resource planning (ERP) software into tools that are easy to use, engaging and eminently attractive to an increasingly younger and tech-savvy mix of employees and customers.”

I can’t figure out the trend of justifying these investments based on satisfying demanding youth: “We’re focused on bridging the generation gap and figuring out the best ways to engage this new generation of digital natives who are ADD — and have their IM and their iPods and multiple other things going all at once — to find out how they will work in the enterprise of the future.” I’ve been screaming about the issues these approaches solve since I was their age, way before we knew that we too were AD/HD (the more appropriate term in formal circles).

The challenge still remains to see how well the work of a ‘spinoff’ can be integrated back to the mother ship. Of course, if they do so in true 2.0 style, it won’t matter, because they’ll leapfrog the mother ship (culture and all).

I was shocked once again this past week as a colleague pooh-poohed the messages of another FASTforward07 speaker, Chris Anderson. He seems to get no respect for his model of untapped potential. Enterprise Solutions are classic embodiments of Chris’s model, only the potential is even greater. The opportunity is to flatten the high end and move it to the right. Enterprise solutions embody two fundamental design flaws: 1) they embrace “a” business model – making them inherently wrong for EVERY business model and 2) they’re designed for “a” person, making them ill-suited to EVERYONE. The beauty of the fundamentals of The Long Tail, is that the model (esp. “shortening the distance”) reinforces the value of solutions designed to address individual needs (including optimized interfaces for different accessibility needs). There is huge untapped potential in these specialized interfaces and functions – potential that will unseat massive, endless designs positioned for the elusive EVERYONE.

Even Microsoft seems to understand the value of this approach by its commitment to the Expressions collection (I’m checking out Blend as a mechanism for presentations/prototypes). These offerings will gain tremendous potential when .net extensions are supported. Effectively, those of us who design front-ends can design them just the way we want them to look/behave and developers don’t have to (get to) touch them at all.

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One of the barriers for a 2.0 world in any established organization is the IT department. With some justification, they feel that they cannot allow any risk to core systems such as payroll, CRM etc. So they keep the 2.0 world out of the organization.

Chris Anderson Editor of Wired magazine has found an elegant solution. He has set up two Lans at Wired. The Tight Corporate one and the open 2.0 one. Feels like a good work around.  Here is his excellent short post on the topic