Select Committee on Culture, Media and Sport Written Evidence

Memorandum submitted by South East Media Network



  The South East Media Network is a business-led consortium providing strategic leadership for the region's digital content sector, it exists to enable the South East of England's digital content businesses increase their share of the global market.

  SEMN provides two way communications between businesses, policy makers and support organisations. It informs local, regional and national strategies and drives improvement in business performance. SEMN engages with organisations and key stake holders from across the supply chain to ensure that support for digital content businesses is integrated and easy to access. SEMN is backed by the South East of England's Development Agency.


  SEMN welcomes the opportunity to respond to the committee's inquiry into new media and the creative industries. This response is drawn from the results of an SEMN conference held to discuss the issues of convergence and digital content industries along with consultation with the SEMN council (comprising regional networks and national trade associations in contact with over 5,000 regional companies), and specific input from the board of SEMN, all of whom represent this sector in the South East of England.

1.  The impact upon creative industries of recent and future developments in digital convergence and media technology

  From our own consultation, the recent PricewaterhouseCooper LLP report "The Rise of Lifestyle Media" and the work that Intellect have been doing on convergence it is clear that the time of change has arrived.

    "Broadband access and the Internet Protocol (IP) are the technology enablers that have made a new breed of consumer possible. They will be the foundation through which the consumers organise their productive/work, leisure, and social time—and they are the solvent that is penetrating the walls previously separating the video content, communications and advertising industries. The rules are radically changing for all value chain participants now that video content is no longer bound to a specific access network or device."65[65]

  This is dramatically expanding the range of potential customers for creative AV content. For example, traditional publishers moving their products online are adding audio, video and even games to their traditional print content. But also there is a growing wave of new, pure online businesses, often with new business models, who are either potential customers for creative AV content or are a potential new channel to market for creative content providers. For some creative content producers, digital convergence offers an opportunity to bypass the traditional distribution infrastructure (film studios, record labels, TV/Radio broadcasters etc) and sell access to their content directly to consumers—we're already seeing this with music.

Issues to be explored:

Citizen Producer/Distributor

    —  Growth of consumer created content on an international platform, how will that affect legislation? Will there be a need for a special category of consumer-publisher? Freedom of speech or defamation?

    —  Growth of virtual communities.

Content Producers

    —  Cheaper means of production.

    —  Re-purposing content for different platforms and formats.

    —  Content creators lagging behind technology developments.

    —  The development of a significantly broader & integrated "brand" offer—the movie, the game, the merchandise (physical & digital). The song, the Album, the videos, the ringtone, the syncro, the webcast live performance.

    —  New revenue models—share at retail, from associated advertising, customer acquisition, click through, reduction in up front payments, more based on results.

Content Distributors

    —  Significant increases to speed to market.

    —  Multiple points of access.

    —  Instant global distribution.

    —  How to find the consumer? Perhaps there will be too much content available so the issue will be—how to make "noise" in a deafening market.

    —  Growth of platform specialists.

    —  Changes in the gatekeepers from film distributors, major studios and broadcasters to some global multimedia controllers such as Google, Murdoch, Microsoft, AOL, Verizon etc.

2.  The effects upon the various creative industries of unauthorised reproduction and dissemination of creative content, particularly using new technology; and what steps can or should be taken—using new technology, statutory protection or other means—to protect creators

  The management of intellectual property, allowing proper access and supporting fair usage whilst providing appropriate protection for rights holders.

  There is a balance to find between the need to protect and encourage content creators and the need to nurture new, online business models that are sometimes stifled by the existing IP protection infrastructure (copyright/patent). Rather than simply tightening up and enforcing creators rights, part of the solution must be to promote technology that encourages fair use of content, by making it easier and cheaper to stay inside the law—for example, micropayments technology that enables content creators to make money via a large number of small payments from individual consumers (similar to the iTunes model for buying individual music tracks).

  Piracy can be seen as Peer-to-Peer marketing through "tastemakers". Genuine loss of legitimate sales due to unauthorized distribution is, often, the result of incorrect pricing, difficulty in accessing the content legitimately, easily and through the consumers choice of medium, especially if the consumer can see no reason for the unavailability of legitimate product (why should we wait for the DVD of a film that is at theatre?).

  However clear, unambiguous statutory protection should be in place as a tool for the rights owner to make use of as required.

  Greatest steps must be made in restricting the activity of the "industrial/professional" copiers & distributors.

  Effort must be taken to extend the principles of Copyright to countries where they are not currently recognized.

  In a world full of unauthorized copies help should be given to content creators, rights owners and content distributors to devise new revenue models. Consider: rental; free to view/pay to own; subsidy from subscription that is a levy from ISP subscription; linear revenue models as opposed to "silo" revenue centers where the total revenue is shared between all the contributors.

3.  The extent to which a regulatory environment should be applied to creative content accessed using non-traditional media platforms

  The consensus of opinion is that right now this market is experiencing an accelerating rate of change and should be free from regulatory constraints to be able to establish a viable framework. However if/when this fails, regulation should be considered, looking out for cartel trading and restrictive or uncompetitive markets, for example taking into consideration the power of the new multimedia players to control access to content.

  There is a general concern about the European Commission's "Television Without Frontiers" directive. If broadcast style regulations are imposed on all digital content then Europe products will be disadvantaged by comparison with other freer markets, in particular with North American content.

  One issue here is the impact of existing laws such as those covering defamation on new online services based on user-generated content, made possible by the democratising nature of the Internet. If, as at present, the providers of these services are treated as conventional publishers, completely responsible for the content they carry, then the legal risk will make many of these services impractical. This could put the UK at a disadvantage to the US, where defamation laws are typically less restrictive.

4.  Where the balance should lie between the rights of creators and the expectations of consumers in the context of the BBC's Creative Archive and other developments

  When the BBC originally commissioned large parts of its content there was no understanding of these new potential means of exploiting content, so no sense of the value of archive. At the time they paid a fair price for transmission and received value for money when the content was transmitted, maybe including a few repeats. They did not pay significantly more or less than other broadcasters. They have not been charged with ensuring a thriving independent sector so have assumed that any further value extracted should be returned to the public or to the BBC. This is very different to the French broadcasters who take the minimum use of the material enabling the creatives to benefit from further revenues so stimulating a sustainable creative sector without ongoing direct subsidy.

  There should be a "use it or lose it" attitude towards any archive material commissioned by a publicly funded body such as the BBC. That is if the BBC is not prepared to bring archive product back to the market, then the creator should have some right to do it themselves. This should take place before it is all offered for free to the consumer.

  Starting from now the contracts negotiated with creators that include clauses for free public access where required, and the creatives should be paid appropriately. We should not raise false expectations. Maybe pay the creators additional revenue depending on use rather than an initial buy-out fee dependant on the cost of production.

16 November 2005

65   65 PricewaterhouseCooper LLP "The Rise of Lifestyle Media". Back

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Prepared 16 May 2007