Tuesday, March 18, 2008

Convergence, competition and innovation

Peter BazalgetteAn interesting seminar this morning at the government's Convergence Think Tank. This is a joint BERR-DCMS group set up "to examine the implications of technological development for the media and communications industries, and the consequences for both markets and consumers." Today's event was on content and services.

Former Endemol UK chairman Peter Bazalgette stole the show with his presentation on opportunities for the UK creative industries. His view was that most TV networks around the world are now extremely wary of taking risks with new programme formats, but that the UK and US are highly successful at launching new shows. The UK also has an extremely strong advertising market, with 40% of total European online spend. The government should therefore be focussed on supporting this risk-taking environment with continued investment in public sector broadcasting, deregulation of the advertising market (particularly rules on product placement) and fast roll-out of high-speed broadband networks. Bazalgette also said that the writers and directors of tomorrow are already advertising their talent through content on sites like YouTube; it is up to production companies to seek out the best of them and commercialise their product.

After this tour de force it was difficult for the panel discussion to add a great deal. The only notable suggestion was from Dawn Airey, ITV's MD of Global Content, that search engines be forced to promote content from terrestrial broadcasters. It was unclear why this would be a good idea, or how it could work in practice. As Peter Bazalgette added, the Internet has decisively disintermediated TV networks and big music labels alike; intermediaries can only be successful in future by finding new ways to add value.

The panel seemed to agree that the music industry needs to follow the TV world in focussing on getting their product out to the maximum number of listeners, and that we are now living in a "post-DRM world" where teenagers will not accept restrictions on their use of content. Bazelgette was scathing about the idea of government regulating Internet Service Providers in an attempt to reduce copyright infringement.

There was some discussion of "two-sided markets" or, in plain English, content providers and access networks developing joint products and sharing revenues. Andrew Budd from mBlox said that the greatest challenge to the mobile content market was per-megabyte charging by carriers, which makes video content extremely expensive. While Budd thought network neutrality requirements were an imposition too far for ISPs, he seemed to think government should intervene to require flat-rate pricing of mobile data access, or that mobile providers should offer a "sender-pays" model. Yahoo's Emma Ascroft replied that full user transparency and choice over costs would be preferable.

The one subject that could have done with more discussion was privacy. Several panelists claimed that advertisers need to know much more about Internet users in order to display more "contextual" adverts. While they seemed to think industry self-regulation is sufficient to protect user privacy, they may be unpleasantly surprised by the arrival of the EU's data protection regulators in this debate. Current controversy over the scanning of Web sessions by Phorm gives a taste of how customers might react to a wholesale invasion of their online privacy.

No comments: