remediating the internet…so it charges like a phone service

At our futures forums many have discussed the hunt that’s on to get internet content, like online news and media to pay its way. What some are calling “the second media age” is busily being constructed. The Murdoch press has recently gone public with its intentions to lead the pack here (along with admonishment of public service media that give their content away for free, like the BBC and ABC). This article from Computer World suggests there are powerful deals between search and media companies on the horizon to make user based payments for online content more ubiquitous and a standard feature.

search and micropay

and more,

other publish and pay options

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Digital Europe – Commissioner Reding Outlines Priorities for Next Five Years

Delivering the Lisbon Council’s Ludwig Erhard Lecture in Brussels on 9 July, EU Commissioner for Telecoms and Media, Viviane Reding, outlined the EU’s priorities in its Digital Europe strategy.  The speech is available here as html, and here as pdf.

Some highlights:

We would like to have internet broadband for all Europeans by 2010. And high-speed internet broadband for all Europeans by 2013.The “first movers” in Europe have already started implementing these targets: The French government, with its plan France Numérique 2012, is pursuing the objective to equip all French households with an internet connection of at least 512 Kbit/s by the end of 2012. In the UK, Lord Carter told us, in his ambitious Digital Britain report, that the government sets the objective to serve all British households by broadband networks of at least 2 Mbit/s by the end of 2012, eased by the creation of a Next Generation Fund. In Germany, the federal government, in its Breitbandstrategie, calls for connections of 50 Mbit/s to serve 75% of the population by 2014. Finland has even committed to a universal broadband service at 100 Mbit/s . These are examples of countries who got their priorities right. They all have recognised the need for boosting the digital economy.

To promote competitive infrastructures for a Digital Europe, there are four concrete steps we can and should take in the next months:

  • First of all, we need to bring into force the reform of Europe’s telecoms rules […]
  • Secondly, we should encourage effective competition and sustainable investment in Next Generation Networks – in particular into fibre networks instead of copper ones […]
  • Thirdly, I believe we should make 3G mobile phones services more attractive in Europe and pave the way for LTE, the next generation of mobile services […]
  • Last but not least , I believe the present economic crisis requires us to accelerate the ongoing switchover from analogue to digital TV in Europe . T he switchover will free very valuable radio spectrum, currently used by terrestrial analogue TV, for use by new communications and content services. This process has already been completed in Germany, Finland, Luxembourg, Sweden, the Netherlands, in Flanders here in Belgium as well as in major areas in Austria. The Commission estimates that t he incremental value of this spectrum for wireless broadband across the EU is between €150 and €200 billion. Appropriate European coordination of Member States’ work on the digital dividend would increase the potential economic impact of the digital dividend by an additional 50 billion between now and 2015. Every corner of Europe could reap this “digital dividend”, without it costing the taxpayer a single cent – if all EU governments act now. I recall that the United States as a whole switched to digital TV last month. I call therefore on all EU governments: Don’t wait until 2012, the EU-wide deadline for the final analogue switch-off, to bring these benefits to you businesses and citizens. Act swiftly now. Tomorrow I will present a package of draft measures in order to accelerate Europe’s digital switchover. I hope that these proposals will receive a positive reception in the public consultation and by that contribute to a more positive economic attitude. As Ludwig Erhard always stressed: 50% of macro-economics are psychology.

Digital Priorities for the next five years

1. My first and most important priority for Digital Europe is: To make it easier and more attractive to access digital content, wherever produced in Europe. The availability of attractive content that appeals to European viewers, listeners and readers will be decisive in driving further the take-up of high-speed broadband internet. It is therefore regrettable that we currently have an extremely polarised debate on the matter: While many right holders insist that every unauthorised download from the internet is a violation of intellectual property rights and therefore illegal or even criminal, others stress that access to the internet is a crucial fundamental right. Let me be clear on this: Both sides are right. The drama is that after long and often fruitless battles, both camps have now dug themselves in their positions, without any signs of opening from either side.

In the meantime, internet piracy appears to become more and more “sexy”, in particular for the digital natives already, the young generation of intense internet users between 16 and 24. This generation should become the foundation of our digital economy, of new innovation and new growth opportunities. However, Eurostat figures show that 60% of them have downloaded audiovisual content from the internet in the past months without paying. And 28% state that they would not be willing to pay.

These figures reveal the serious deficiencies of the present system. It is necessary to penalise those who are breaking the law. But are there really enough attractive and consumer-friendly legal offers on the market? Does our present legal system for Intellectual Property Rights really live up to the expectations of the internet generation? Have we considered all alternative options to repression? Have we really looked at the issue through the eyes of a 16 year old? Or only from the perspective of law professors who grew up in the Gutenberg Age? In my view, growing internet piracy is a vote of no-confidence in existing business models and legal solutions. It should be a wake-up call for policy-makers.

I f we do not, very quickly, make it easier and more consumer-friendly to access digital content, we could lose a whole generation as supporters of artistic creation and legal use of digital services. Economically, socially, and culturally, this would be a tragedy. It will therefore be my key priority to work, in cooperation with other Commissioners, on a simple, consumer-friendly legal framework for accessing digital content in Europe’s single market, while ensuring at the same time fair remuneration of creators. Digital Europe can only be built with content creators on board; and with the generation of digital natives as interested users and innovative consumers .

I will give you two examples of what Europe could do concretely for this:

  • First of all, we could facilitate the licensing of intellectual property rights for online services covering the territory of all 27 EU Member States . Today, right holders and online service providers need to spend far too much time and money on the administration of rights, instead of investing this money in attractive services. And consumers often cannot access online content if uploaded in another Member State. For online content in a single market of 27 Member States, economies of scale and consumer-friendly solutions will require a much simpler and less fragmented regulatory framework than the one of today. We had a similar problem when commercial satellite TV started more than 30 years ago. As right clearance for this per se cross-border service became increasingly complex, Europe developed the Cable and Satellite Directive and introduced a simplified system of rights clearance for the whole of Europe. I believe it is now time to develop similar solutions for the evolving world of online content.
  • Second example: We should create a modern set of European rules that encourage the digitisation of books . More than 90% of books in Europe’s national libraries are no longer commercially available, because they are either out of print or orphan works (which means that nobody can be identified to give permission to use the work digitally). The creation of a Europe-wide public registry for such works could stimulate private investment in digitisation, while ensuring that authors get fair remuneration also in the digital world. This would also help to end the present, rather ideological debate about “Google books”. I do understand the fears of many publishers and libraries facing the market power of Google. But I also share the frustrations of many internet companies which would like to offer interesting business models in this field, but cannot do so because of the fragmented regulatory system in Europe. I am experiencing myself such frustrations in the context of the development of Europeana, Europe’s digital library. Let us be very clear: if we do not reform our European copyright rules on orphan works and libraries swiftly, digitisation and the development of attractive content offers will not take place in Europe, but on the other side of the Atlantic . Only a modern set of consumer-friendly rules will enable Europe’s content to play a strong part in the digitisation efforts that has already started all around the globe.

2. Priority two on my to-do-list for Digital Europe is: preparing for a safe and consumer-friendly European space for mobile payments. Today, the lack of common EU-wide standards and rules for “m-cash” leaves the great potential of “m-commerce” and the mobile web unexploited. W e have more than 500 million mobile users in Europe. This means that Europe has the economies of scale to offer for an innovation-friendly environment that will allow transforming the mobile phone into an electronic wallet. Very quickly, we could see the mobile phone being used for buying most day-to-day items electronically, such as tickets in a station, sodas from a vending machine or flowers in a shop. This would make life easier for consumers; and open up new business opportunities for European companies.

3. My third priority for boosting the digital economy is: Europe’s digital economy should be opened up to small businesses. In Europe, we have 23 million small and medium sized enterprises (SMEs) which make up 99% of all firms. Accounting for over 100 million jobs, SMEs can be the mainspring of Europe’s economic resurgence. But in the use of productivity-boosting ICT tools, SMEs lag substantially behind big firms: only 9% of SMEs use electronic invoices, and only 11% of them have technology-based human resource management. If SMEs could access computing power over the web, they would no longer need to buy and maintain technologies or IT applications and services. Such web based services – called “cloud computing” – are the medicine needed for our credit squeezed economy: they can make businesses more productive by shifting from fixed costs (i.e. hiring staff or buying PCs) to variable costs (i.e. you only pay for what you use). However, today these new services are nearly all US-owned and US-based. Once again, the US has started to exploit a business model before Europe has managed to do so. We cannot let this continue. In my view, we need a major effort to set up Europe-hosted “clouds” to give European SMEs access to fast, open and productivity enhancing services. A recent study estimated that online business services could add 0.2% to annual GDP growth, create a million new jobs and allow hundreds of thousand of new SMEs to take off in Europe over the next five years. So what are we waiting for?

4. My fourth priority for Digital Europe is: making better use of innovative ICT solutions to meet our objectives of a low-carbon economy . This aspect is still neglected in our ongoing work to prepare with ambition for the Copenhagen Conference at the end of the year. Just consider the following: If businesses in Europe were to replace only 20% of all business trips by video conferencing, we could save more than 22 million tons of CO 2 per year. And cloud computing could, by helping to improve the efficiency of IT solutions, lead to electricity savings in computing activity of up to 80%. Let us also not forget what ICT could do for safer, smarter and greener cars in Europe. I firmly believe that Digital Europe cannot afford to turn a blind eye to its ecological potential, which in turn can open up new business opportunities for European ICT companies. We will therefore have to add some “green” to Ludwig Erhard’s social market economy.

New Report on Online Video in Asia

Mike Walsh, trendspotter, digital futurist and researcher, has just posted on his blog a summary and videos relating to a research project he’s just completed for CASBAA, the Cable and Satellite Broadcasting Association of Asia, on online video in Asia.  It makes fascinating reading (and watching). The emphasis is on the power of audiences; the second video ends with the statement that “Audiences not media moguls will reinvent the experience of television”.

The videos are worth watching, so I’ve embedded them here for ease of access.  Below the videos is Mike’s summary of the highlights of his findings.

My take-aways from this were:

  • much lower % of UGC viewed and created in China, Korea and Japan than in US, Australia, UK
  • free is the norm, but “dealing with free will be the biggest challenge”. Online video sites and content producers getting around this in various ways. Tudou which claims to be the largest video sharing site in China, is ad supported “we introduced our video advertising system in 2007, where we show full screen pre-roll ads while the actual video loads as well as full screen wallpaper ads around the video during playback”, but they are negotiating licences with content producers.
  • average time spent on an online video site is c.1 hour, (according to one of Tudou founders) compared with c.7-12 mins for YouTube.
  • most people (in China) find out about online videos through Instant Messaging from friends (email is much less widely used than in the west)
  • a recent Chinese movie, Red Cliff, was released through all the online video download sites in China on a unique format that forces users to watch ads before the movie. That is, it was ad-supported

Part One

Part Two

Here are a few of the insights from the report:

1. The Internet has become a primary entertainment destination.
For young Asian consumers, the Internet is entertainment – particularly in China. A survey by the China Youth Daily and Sina in January 2008 indicated that more than 80% of young Chinese placed the Web as their primary source of entertainment compared to TV, at 66%.

2. Social discovery drives the popularity of content rather than traditional programming or marketing campaigns.
When it comes to the discovery of content – blogs, referrals through instant messaging clients, BBS boards, and top ten lists on video sharing sites have the most influence. In China, according to the CNNIC 63.7%, of video content is discovered through social connections, 94.1% of this sharing taking pace instant message tools such as QQ and MSN.

3. Long form professional content is the most popular format
Although the West is just now getting a taste of long form video on the web, in Asia it has been the most popular format for a while. 86.3% of the online video watched by Chinese netizens is either studio created films or TV shows. In Korea, 47% of users had illegally downloaded at least 55 movies a year, or more than one a week.

4. Audiences actively participate in content experiences
In Japan, the most popular video sharing site is Nico Nico Douga (Smiley Smiley Video) attracts almost a billion page views a month. The most distinctive feature of the site is an on-screen commenting function, where user messages scroll as commentaries across the video while playing like a form of visual karaoke.

5. Consumption is communal
Asian teenagers enjoy being online together. China has about 113,000 licensed Cyber Cafes, with many more operating illegally while in Korea, despite strong home broadband connections, most youth prefer to socialise in one of the 26,000 PC Baangs.

6. User anonymity is important
One of the major differences between Western and Eastern online users is the importance of privacy and anonymity. Most Japanese online users prefer to use imaginary names and cartoon avatars rather than photos to represent themselves while in China, much of the attraction of bulletin board systems is the ability to post comments without revealing your actual identity. YouTube in Japan after attempting to encourage greater amounts of user generated content is now focused on the more culturally acceptable practice of uploading cute pet videos.

7. Local brands dominate the online video landscape
For both cultural and technical reasons, local video sharing sites in Asia have generally been more successful than foreign players such as YouTube. In Japan, Nico Nico Douga is very popular, in Korea the dominant site is PandoraTV while in China, the top two sites are Youku and Todou.

GFC Bites TV: Canadian regulator considers one-year licence renewals

Canadian sources are reporting that the Canadian broadcasting regulator CRTC is considering issuing short-term one-year licences (rather than usual 7 year terms) when network licences come up for renewal in April. This follows release of CRTC data showing major private sector TV broadcasters profits fell by 93% in 2008. Elsewhere the union that represents many media employees is urging the regulator to protect local programming in smaller markets as broadcasters cut costs. Full story in the ChronicleHerald, with future looking even more dim for Canadian broadcasters:

The drop-off in advertising revenue for conventional broadcasters, including at CBC’s television operations, will likely accelerate due to a general slowdown in the Canadian economy.

At the same time, they face the expense of switching their systems to digital broadcasting by the end of August 2011, following the lead of American broadcasters who are to make the switch by this summer.

There is also concern about rising spend on imported vs. Canadian programming: CRTC data shows

Operating expenses increased to $2.1 billion in 2008, with the acquisition and production of programming representing 71.5% of all expenses. Investments in Canadian programming remained essentially unchanged at $619.6 million, of which $146 million was paid to independent producers. However, private broadcasters spent $775.2 million on foreign programming in 2008, up 7.4% from $721.9 million in 2007.

Canadian programming

Spending on Canadian programming included $88.3 million for drama, $90.4 million for general interest programming, $323 million for news programs, $67.2 million for other information programs, $24.7 million for musical and variety shows, $7.5 million for sports programs, and $16.6 million for game shows.

The CRTC also announced last week that it would reduce the scope of forthcoming public hearings to explore the following key issues:

  • the appropriate contributions to Canadian programming (local, priority and independently-produced programming), given the current economic conditions;
  • the terms of administration and delivery of the LPIF, including the method of establishing the base-level expenditures for the purpose of determining incrementality;
  • whether to impose a 1:1 ratio requirement between Canadian and non-Canadian programming expenditures, both on a trial basis during a short-term licence, and on a longer-term basis; and
  • consideration of the terms for the digital transition by August 2011, in light of an industry working group report being prepared for the current public process.

The one that seems to be garnering most immediate attention is the suggestion that broadcasters may be required to spend the same amount on local programming as they do on imported programming.

The financial difficulties of Canadian broadcasters may have ramifications in Australia.  The Sydney Morning Herald today reports on Channel 10’s efforts to raise $90 million through an institutional placing of 120 million new shares at 75c each. Channel 10 was placed in a trading halt yesterday, with shares trading at 93c at Monday’s close.

The fragile position of the media market and Ten’s specific situation was highlighted by the fact that the fund-raising issue was neither underwritten by a financial institution nor taken up by the Sydney-based broadcaster’s controlling shareholder, the Canadian CanWest Group.

CanWest, which is being squeezed by debt pressures in its domestic media operations and is currently selling TV operations to cut its financial exposure, will see its 56.6 per cent stake drop to around 50 per cent as a result of its decision not to put up more money.

“CanWest is supportive of the proposed capital raising but has elected not to participate,” said the group’s president and chief executive, Leonard Asper.

Sports and the future of (free to air) television

Channel 10 announced yesterday that their HD channel would be a 24 hour sports channel, to be named ONE. Report in The Australian HERE.

It will feature “less advertising” than TEN.

TEN Head of Sport David White said “Live and exclusive will be a hallmark of the channel”.

Sports on the anti-siphoning list can only be shown on ONE AFTER or SIMULTANEOUSLY with broadcast on TEN

Ten owns rights to swimming, netball, Indian Premier League (20/20) cricket, and jointly owns AFL and Commonwealth Games. ABC reports TEN also owns rights to US NBA basketball and major league baseball matches, the US Open golf and tennis championships, the US Masters golf, and Formula One and Nascar motor racing.

Rivals are keen to say they are not concerned. John Porter (Austar) told analysts and journalists yesterday (reported in The West Australian HERE):

“I don’t consider the Ten sports initiative to have any impact on our commercial business, nor on our core business,” Mr Porter said during a telephone briefing with analysts and journalists.

“It in no way approximates the sports offering that Fox Sports delivers and ESPN, Setanta Sports and Fox Sports News – the six or seven sports channels that we offer.”

Little bit of a worry that he doesn’t know exactly how many sports channels Austar offers…

Fox Sports chief operating officer Jon Marquand was dismissive, quoted in Australian article as saying “I don’t think there’s much new there if you look at the content”. This is slightly disingenuous, given that a large proportion of the ONE content will be live or recorded live (and therefore ‘new’ in the sense of not having happened yet and never seen before).

We can expect to see a lot (more) sport on television as HD comes in.

There are currently 11 sports channels available on subscription television (Fox Sports 1,2,3 and Fox Sports News, ESPN, TVN, Sky Racing, FUEL TV, Setanta, Eurosports, National Geographic Adventure). ABC2 has started broadcasting WNBL matches live on Friday nights. ABC1 screens bowls, the WNBL and the W-League (Women’s football). On Sunday last, various kinds of motor sport were on channels 7, 10 and SBS simultaneously. Sunday afternoons on SBS is motor sport and football (the round ball game).

Given the popularity of their paralympics coverage, it wouldn’t be a surprise to see the ABC cover sports like wheelchair rugby and wheelchair basketball.

Sports are critical programming for the commercial free to air television broadcasters, one of the few guaranteed ‘audience massers’. And if stats from the AFC are anything to go by, this importance has only increased in the last five years:

(All references to FTA)

  • In 2007, the top 6 programs for the year were all sports, 13 of the top 20, and 8 of the 11 drawing over 2 million viewers
  • In 2006, 4 of the top 5 (including no.1), 7 of the top 10, 13 of the top 20
  • In 2005, the top 9 programs for the year were all sports, 11 of the top 20
  • In 2004, highest rating sports program was no.3 for the year, 3 of top 10, 4 of top 20
  • In 2003, 5 of the top 10 (including no.1), 5 of the top 10, 5 of the top 20
  • In 2002, highest rating sports program was no.2, 4 of top 10, 6 of top 20

Public Service Broadcasting commitments on Commercial TV

Like the Australian system, in the UK the Commercial Free to Air ITV has a s et of Public Service Commitments which they are now cosidering jettisioning.   Media Guardian has published a couple of eye-opening articles based on a speech made by Michael Grade the MD of ITV.    The first outlines the potential, the second outlines the potential cost.   Both have real relevance to our Quadrants 2-4.

Scuttling Regional Television Content

We have frequently discussed the potential for Australian commercial television broadcasters to seek to reduce their Public Service content responsibilities in the face of new media incursions.    This is exactly what is now happening in the UK.

ITV should be allowed to drop some regional news bulletins, reduce regional programming by 50% and cut back on some current affairs programmes, according to media regulator Ofcom, which has forecast that up to £235m per year will be needed by 2012 to maintain public service content on commercial TV.”   That is the opening paragraph in a Media Guardian article of 25/9/08 which reveals the arguments that Ofcom accepts for ITV to reduce its regional responsibilities.

Just as here, the original ITV licence-holders and their successors were granted their licences in return for some solid public service content.   Just like here the responsibilities  were part of the fabric of British television.   Just like here, the responsibilities have given birth to some magnificent programming and significant local and regional production opportunities.

Now they are to be whittled away in the face of real competition.

Givent that the UK TV system has always been far more rigorous about local content than has the Australian system, it will be interesting to see how quicky these arguments now appear here.