D-Media Network, Communications Review Response

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175-185 Grays Inn RoadLondon

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Department for Culture, Media and Sport2-4 Cockspur Street

London SW1Y 5DH

30th June 2011

Dear Sirs,

Response to the open letter -A Communications Review for the Digital Age

The D-Media Network is a global network of digital media professionals who are serious

about business growth and who value collaboration. Members of our network are largelycontent creators and solution providers.

Having the right regulatory framework is fundamental to the success of small andmedium sized content creators, but it is a challenge for those developing legislation or

government policy to make sure that the needs and views of small and medium sized

enterprises are made known and are taken into account and so are the focus of thisresponse.

D-Media wants to ensure that small and medium sized content creators are sufficiently

engaged in the process of considering the regulatory regime so as to allow them to makea meaningful contribution to that process, and for this response has consulted within the

membership and beyond.

Within this context, D-Media welcomes the opportunity to respond to the open letter -A

Communications Review for the Digital Age and to contribute further in order to support

the interests of small and medium sized content creators in the UK. Our relatively briefresponse is focused on those questions in the open letter that are of most relevance to our

members.

Q10. Are there disproportionate regulatory barriers to investment in content? If so,

what are they and how can increased investment in UK content production be

encouraged?

D-Media believes that the following issues need to be addressed in order to encourage a

thriving content production sector in the UK:

Data: an ongoing relationship with the audience is crucial for games or apps

D-Media Network Ltd. Registered address:Camburgh House, 27 New Dover Road, Canterbury, Kent, United Kingdom CT1 3DN

Company Registration number 7335385. VAT No: 105831536


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developers. Anything that stands in the way of this relationship affects detrimentallythe creation of further innovative content. At the moment broadcasters and publishers

collect data about the use of the content but are unwilling to share that data with

content creators. Therefore, measures should be introduced which encourage thesharing of data with content creators.

Price capping: companies such as Apple and Facebook regularly look to take as

much as 30% of revenues. A cap of 10% would help to encourage investment incontent creation companies and further stimulate growth.

Intellectual Property: D-Media supports the creation of the Digital CopyrightExchange proposed in the Hargreaves Report, but the effectiveness of that Exchange,

will be very much dependent on this initiative being extend to other European

Countries and beyond. Therefore, it is imperative that the UK Government promotesthe establishment of the Digital Copyright Exchange as quickly as possible and

advocates its adoption on an international basis.

Moreover, D-Media supports the recommendations of the Hargreaves Report in the

area of orphan works and believes that the UK should advocate their adoption on an

international basis.

However, an innovative content industry will only be stimulated in the UK if the

intellectual property rights are retained by the content creators and can be further

exploited by them. If the person commissioning the content owns the intellectualproperty rights, pays the content creator only for providing a service, and is not

interested in exploiting the IP rights or allowing the creator to exploit them online and

on mobile platforms, the investment in content production will continue to be limited.

Microtransactions: compliance withthe regulations on returns and the

administration involved in processing small payments for low value content are

disproportionate issues for small companies, and limit their ability to generate

revenues from such transactions. Therefore, consideration should be given tomeasures that alleviate these disproportionate burdens.

State aid: the European Commission is consulting on state aid for audiovisual works

and D-Media believes that the UK government should advocate that state aid should

be permissible for cross media or new media projects. Currently, an audiovisual




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work for the purposes of the Cinema Communication is limited to films and TVproduction. This provision should be extended.

The BBC: the BBC has an excellent business model for producing online content.

The BBCs six public purposes include "stimulating creativity and cultural

excellence and delivering to the public the benefit of emerging communicationstechnologies and services.

However, a review of awards for "online innovation" confirm that the BBC is simply

not stimulating creativity or promoting innovation in the online and mobile arena. Bycontrast, the National Film Board of Canada - with a budget that is a small fraction of

the BBC's - is doing an excellent job of helping to create innovative content

specifically for the Internet, and creating a national centre of excellence (seehttp://www.nfb.ca/interactive). This is an example of a publicly funded body

genuinely stimulating creativity and promoting innovation online.

Therefore, increased investment in UK online content production could be

encouraged by insisting that the BBC fulfill its charter obligation to "stimulate

creativity and deliver to the public the benefit of emerging communicationstechnologies and services"; to insist that the board of the BBC Trust sees that this is

done - and perhaps to help them to do so by bolstering their numbers with board

members who have significant experience of new media.

Q11. Should the core focus of public service broadcasting be on original UK

content?

D-Media believes that the core focus of public service broadcasting should be on

developing original UK content.

But there are concerns among D-Medias membership that both the BBC and Channel 4

use online and mobile platforms to market their traditional broadcast content, and do not

commission original online or mobile content except for that purpose.

The creation of Channel 4 resulted from recognition that there was a need to support

independent production and stimulate a plurality of voices in the broadcast arena. In the

1980s it helped to stimulate and grow an independent sector of broadcast contentcreators. However, today there is no comparable support for fledgling businesses in the

internet/mobile arena and consequently there is a lack of any recognised or established


http://www.linkedin.com/redirect?url=http%3A%2F%2Fwww.nfb.ca%2Finteractive&urlhash=FN9D&_t=tracking_dischttp://www.linkedin.com/redirect?url=http%3A%2F%2Fwww.nfb.ca%2Finteractive&urlhash=FN9D&_t=tracking_disc


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route to market for content. There is a role for a new type of approach which is fit forpurpose to support new business models and commercially viable independent production

companies.

Moreover, as previously mentioned, the BBCs six public purposes include "stimulating

creativity and cultural excellence and delivering to the public the benefit of emerging

communications technologies and services. Within this context the BBC needs to play amuch more prominent role in the development of creative content creation online, at least

matching what is produced by the organisation for TV, Radio & Film.

Q12. What barriers are there to innovation in new digital media sectors, including

video games, telemedicine, local television and education?

D-Media believes that, while there has been support for technically innovative platformsthere has been a lack of support for content innovation, but it is often the content, which

makes the technology a viable business proposition. Innovation has been seen as the

perogative of science and technology with support from organisations such as the BBC,NESTA, TSB and Channel 4. There is an assumption that content will be developed

without similar support for its creation, even though consumers are reluctant to pay for

online content. For example, where there has been support for content through measures

such as tax credits for film, it has not been extended into other relevant content areas suchas innovative marketing, distribution content solutions (including local television content)

or video games.

D-Media believes that it is a barrier to innovation that sectors such as video games are not

provided with suitable tax breaks. Were such measures to be introduced investment in

the UK would increase, the talent drain would and video games would be properlyrecognised for what they are - an essential part of the UK entertainment industry.

Q13. Where has self- and co-regulation worked successfully and what can be learnt

from specific approaches? Where specific approaches havent worked, how can the

framework of content regulation be made sufficiently coherent and not create

barriers to growth, but at the same time protect citizens and enable consumer

confidence?

D-Media believes that regulatory convergence would need to incorporate both broadband

and mobile in order to cover content on both platforms. However, any extension ofbroadcast regulation to cover the Internet should be considered both unwelcome and




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unenforceable. Instead, significant efforts need to be made on behalf of Government toengage with ISPs and content creators in a dialogue to develop and achieve a shared

agenda of interests.

Within this content, D-Media believes that lessons could be learned from approaches

adopted from the following nation states:

Canada: invests heavily in its content industry with a dedicated fund for innovativecontent. Although there has been concern that this approach could lead to a subsidy

culture rather than a thriving independent industry, there is evidence that the

Canadian tax regime has been successful in attracting talent from the UK.

France: the state broadcaster is held responsible for stimulating a sustainable

independent sector. Under this approach, ownership rights remain with theproduction company that, in exchange for the production budget, licenses it to the

broadcaster for a limited number of transmissions/screenings. In a similar vein the

film sector with avance sur recettes enables the CNC to collect revenues on behalfof the film producers future projects, thereby using their power to support smaller

independent content creation.

Although many innovative digital services covering film, music and television already

operate in the UK, there are still significant opportunities for investment, innovation and

growth. To this end, D-Media believes that the UK Government must do all it can tosupport companies as they explore new business models and consumer offerings. These

are undoubtedly challenging times, however D-Media believes that if the UK economy is

to enjoy a strong recovery then we must continue to encourage innovation and creativity.

Therefore, D-Media will continue to work with its members and all relevant stakeholders

in taking forward the approaches outlined in this response and looks forward to workingwith the DCMS as the work onA Communications Review for the Digital Ageprogresses.

If you have any queries or require any further information please contact: Gina.Fegan@d-

media-network.com

Yours faithfully,


mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Gina Fegan, Chief Executive Officer, D-MediaRichard Ayers, Head of Digital atManchester City Football Club, (previously portal

director Tiscali)

Ian Baverstock, Partner Tenshi Ventures (previously CEO Kuju Entertainment & ChairTIGA)

Frank Boyd, Creative Director Crossover Lab, Director Unexpected Media

Jason DaPonte, Managing Director, The Swarm (previously Managing Editor BBCMobile)

John Dower, Director of Video Games, New Media, Film & TV

Kathryn Corrick, Digital Media Consultant & Trainer

Nigel Hartnell, Chairman, South East Media Network, Director FfastFillLinda James, Producer, Sly Fox Films (previously Manager Wales Creative IP Fund)

Nick Kalisperas, Policy advisor, D-Media (previously Director for External Stakeholders

at BusinessLink.gov.uk)Martin Percy, Interactive Film Director

Christine Reid, Solicitor, Northwood Reid


http://www.linkedin.com/company/manchester-city-football-club?trk=ppro_cprofhttp://www.linkedin.com/company/manchester-city-football-club?trk=ppro_cprof

D-Media Network, Communications Review Response

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