Content: It’s All A Little Bit More Complicated Now

The digital technologies have changed the world of entertainment licensing and its all a little bit more complicated now.

Its often a little bit more complicated...

Last week I was lucky enough to spend an evening being entertained by scientific stats, facts and wonders presented by Professor Brian Cox, Simon Singh and Ben Goldacre on their Uncaged Monkeys Tour. Whilst at times the science both baffled as well as entertained – one particular part of the show struck a chord: that the natural response of a good and rational scientist to people making sweeping statements, should always be along the lines of –  ‘things are a little bit more complicated than that‘.

It’s an amusing expression that can be applied to anything to raise a smile but its a good piece of common sense especially when applied to our own knee jerk instinctive responses at times. When it comes to debates about the rights and wrongs ( and especially the copyrights and the copywrongs) – of media content there are often emotional as well as commercial feelings involved and in reality there is not a simple solution. Its complicated. To some technologists, traditional media ‘just don’t get it’, they’re just the dinosaurs of the digital age, relying on fifty year only copyright law. To some producers and those that invest in creative content the internet has encouraged copyright infringement, whilst making hardware vendors rich. I think its safe to say that for publishers, media producers and technologists – it’s all a little bit more complicated now. That complexity was evident this week when I attended the Digital Entertainment Summit 2011 – an event hosted by the London law firm Wiggin and attended by a hefty selection of UK media owners and managers. The panel featured highly successful entertainment producers and publishers, including Patrick Bradley from Ingenious Media, Stuart Williams of Bauer Media and Tom Thirlwall – CEO of Bigballs Films. They were joined by Ralph Simon – co-founder of Zomba records and recently named one of the top 50 mobile industry executives in the world and controversial media business futurist Gerd Leonhard who delivered the keynote address. Leonhard, who is a prolific blogger and writer on media and technology, is not everyone’s cup of espresso as his message pulls no punches and paints a challenging future for media businesses that cannot adapt to radical and unstoppable change. However, its worth noting that Leonhard is no computer coding monkey who has no appreciation of creative industries: he has a substantial music business pedigree; he attended the prestigous Berklee College of Music, won the Quincy Jones Scholarship and established music licensing businesses in the US. So, he knows and appreciates the value of content and naturally believes composers should be rewarded. However, his take on how copyright, licensing and distribution of music will play out (and pay out) over the coming years often puts him at odds with todays industry.  Leonhard sees much of the music industry model as being outmoded and overtaken by its lack of engagement with the new platforms as it has tried to protect and sell ‘units’ of music; singles, albums, tracks.  The gross revenues for the music business has declined by an estimated 71% over 10 years, through the rise of cheap distribution, file sharing on the internet and the fact that quite simply, users do not – and will not pay to own a piece of content when they can have access to it for free. For the smartest nowadays, downloading is quaint, let alone buying a physical recording. Its a trend that is going to go away and it is a huge tide of technical change within which rights owners now have to swim. Leonhard encourages rights owners to seek new ways to monetise and he says –  ‘you need to sell things that cannot be copied’.  Like Seth Godin and Kevin Kelly, Leonhard describes the inevitable rise of disruptive technologies and trends; subscription models, freemium, games, tribes and the massive influence of Facebook and Twitter. The rise of always on broadband and wi-fi and the march of iOS, Android and Apps – and soon the rise of internet ready TV, does not fit with traditional licensing thinking. Leonhard’s message for content owners is to become a disruptor, or you will be disrupted. The choice is already endless and the content flow unstoppable. Kevin Kelly was right when he said in the 90’s that ‘the only thing in short supply is human attention’. For content owners there is no lack of options when it comes to distribution but there is real short supply of simple revenue models. So, whilst the explosion of social networks, mobile platforms and web channels is great news for consumers, for producers – who still need to nurture and invest in talent and build a sustainable business it is indeed, ‘a little bit more complicated than that’. As with the news delivery business, consumers increasingly seem unwilling to pay for content that can cost a fortune to produce yet is often easy to share and disseminate. News International has developed a paywall around it news content but they are struggling to make anywhere near the fortunes made in traditional press formats.  We live in interesting times and as Patrick Bradley said – ‘then who’s going to pay Gerd?’ Its a simple and obvious enough question that generates an increasingly challenging set of answers. There is not a simple answer. Leonhard offered an interesting example of the kind of business model innovations that rights owners need to consider. Danish telco business TDC gave away music on mobile phone renewals in a licensing deal that cost them around $20M in royalties. The impact? A massively rewarding increase in retention and decrease in churn in a category that is notoriously competitive. The message; that businesses and consumers will pay for content if it is packaged correctly and it has enormous value – but the mechanics of tomorrows deals will be very different. Of course, to return to the title of this post – ‘its a little bit more complicated’. There is clearly frustration from many in the creative industries, as there is within news journalism, that content is continually devalued and sought for free – whilst consumers fork out hundreds of pounds for the latest piece of hardware. Rights owners & producers increasingly need to work with a menu of ever-changing business models from subscriptions to sponsorships, from exclusive limited edition offers to CPA and affiliate deals. And I could empathise as Bradley pointed out that some of the revenue discussions one can have with new platforms that want to use content can at best be confusing and at worst – just poor business. From my perspective, exclusive partnerships, smart alliances and collaborations between channels, content and hardware can open up opportunities that can monetise content and these relationships are complex and need nurturing. An example recently – Seat have partnered with Samsung and Spotify to create a funky Seat Ibiza that includes a six month Spotify subscription. Of course, I am not suggesting such promotions will alone be the saviour of the content  industry – but it shows creative thinking and potential. As we enter the next phase of this digital revolution there will be winners and losers but it will not be confined to traditional media players either. Not every piece of hardware and platform format will be a hit and likewise not every app, magazine, hit single and album deal will make millions. New opportunities will appear but so will the challenges too. For as I learnt last week when trying to understand a few basic puzzles of science –  ‘its a little bit more complicated than that’. For more thoughts on marketing and media partnerships see Benchstone or contact Andrew Armour.

Author: Andrew Armour

Andrew Armour is a marketing and media professional, a specialist in business partnerships and the Founder of the consulting business - Benchstone Limited. His career spans from the UK music industry to the America's Cup, from winning agency pitches to securing key digital content deals. He is married to Viv, lives in Hampshire and works in London.

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