Digital content promotion q1 2013

Digital content promotion

POLICY RECOMMENDATION

DIGITAL CONTENT PROMOTION | Public | © Ericsson AB 2012 | 2012-10-30 |

Agenda

›TRANSORMATION

›PUBLIC POLICY ISSUES

›REFORM IMPERATIVES

›CONCLUSIONS


Professional Media Industry- digital transition

Content type

Function

Audiovisual

Audio

Photo

Text

Information Education Entertainment

AcademicJournals

Books

NewspaperConsumerMagazines

Radio RecordedMusic

TV Film

Gaming

Source: The Internet and the Mass Media, Kung, Picard, Towse, 2008

• Digitization• Miniaturization• Screens• Storage• Processing• Networks• Broadband access• Business models• Falling transaction costs• Media Convergence• Online behaviors

Expect continued changes in business conditions


The magic trick – new business conditions

› The business-trick is to control NOT the copies of your work

› but instead a relationship with the customer

› that is what customers ultimately want

› because they see it as an assurance of a continuing supply

› of reliable, user-friendly and timely content


What ever can go digital will go digital


more digital than physical books – highest book growth rates in over 10 years

Source: Amazon, Annual Meeting June 2011, http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-presentations

http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-presentations


The Economist group Experience – digitization not a zero-sum game

Source: The Economist


Going digital: Norwegian Music Industry CASE

› Total annual industry revenues grew from 1.4 BNOK to 1.9 BNOK which is + 36%

› Number of Music artist increased by + 28%

› Per Capita inflation adjusted annual artist income has increased by +66%

Source: The Norwegian Music Industry in Age of Digitalization, Bjerke & Sorbro, BI Norwegian School of Management, Oslo 2010


Digitization is what you make of IT….

Kodak Files for Bankruptcy as Digital Era Spells End to Film (Jan 2012)

› The photography pioneer which traces its roots to 1880 that invented:

– the first hand-held camera, – held a leading position in film for

decades – invented the first digital camera in

1975, which it shelved because it would threaten its lucrative film business

› Their history was so important to them, a rich century-old history that generated a lot of money along the way. Now their history has become their liability.


Agenda

›TRANSORMATION



›CONCLUSIONS


The market supply failure of lawful digital content

Source PWC Global Entertainment Outlook 2012


Content ACCESS BARRIERS – copyright not the only barrier

› Access barriers are barriers to unhindered consumption of content, the presence of which often results in the personal consumption needs of consumers being unmet.

› WIPO identified following access barriers:– Consumer barriers (affordability)

– Content exclusivity and limited competition

– Deliberate non-availability of content (windowing, territoriality)

–Policy and regulatory barriers:

› Content regulation

World Intellectual Property Organization, Twentieth Session, Geneva June 21 to 24 2011, or access: http://www.wipo.int/edocs/mdocs/copyright/en/sccr_20/sccr_20_2_rev.pdf

http://www.wipo.int/edocs/mdocs/copyright/en/sccr_20/sccr_20_2_rev.pdf


We think: root causes to market supply failure

1. Deliberate limited availability of digital content, facilitated by copyright

2. Technology specificity of copyright

3. Unreasonable transaction costs


We think: Key reform objectives

Promote open and competitive markets in licensed digital content that promote service innovation.

With the aim to increase availability of more legitimate digital content at prices which appeal to consumers.

Decrease technology specificity of copyright, e.g. exhaustion, exemptions/fair use, safe harbor*.

Increase efficiency in licensing by decreasing transaction costs e.g. administrative time and complexity.

Reasonable consumer expectations must be met.

* Not an issue in the EU and the US


Agenda

›TRANSORMATION



›CONCLUSIONS


Increase Availability


BASE: Core 7 markets (US, UK, Sweden, Germany, Spain, China and Taiwan) (Showing those who consider the service worth paying for)Source: Ericsson ConsumerLab TV Video Consumer trends 2011, 2012

What should a reform deliver to citizens ?

MORE LAWFUL DIGITAL CHOICE


FIRST RELEASE WINDOW MUST TOO GO DIGITAL

CLOSING THE ANALOGUE CULUTRAL EXCLUSION


EQUIVALENT to the price of TWO CINEMA TICKETS FOR THEATRICAL VOD SERVICE

End User willingness to pay for Theatrical VOD Service

Base: All 3 counties, n ~ 2000 per country, age 15 – 65, men/women 50,2/49,8 Source: http://www.filmthinktank.org/


WHAT COULD MAKE YOU WATCH MORE MOVIES ON TV?

Base: All 3 counties, n ~ 2000 per country, age 15 – 65, men/women 50,2/49,8

~ 70% would consume more film At the level of 2x Single Cinema Ticket price

Source: http://www.filmthinktank.org/


Technology Neutral Copyright


How many years does it take to assemble the rights necessary to launch Online service ?

› A technology specific approach inevitably leads to inconsistencies and uncertainties as formerly distinct classes of works, rights or media types converge.

› The consequences of fragmentation of rights are disturbing in the digital age, as digital technology produces a breakdown and conflation of technology specific works/rights that were meaningful in the analog era.

› The transmission of audiovisual content on the Internet now involves making reproductions and public performances of both the recording and its underlying content.

› Consequently, the same act can be viewed as a reproduction and distribution of copies on the one hand, and a public performance or display of the work on the other. Since these rights are controlled by different parties and agents, the complexity of the system leads to a gridlock of control that may hinder development.

* Source: An Independent Report by Professor Ian Hargreaves, Digital Opportunity, 2011


..and continue to expect payment each time….

› The current technology specific rights clearing needs to be balanced with realities of the demand side of the digital market.

› There is a need to recognize, end users’ actual consumption of content

› .. and avoid the cumulative effect of technology specific rights slicing, doubling or tripling the cost of identical content for an identical user and for unaltered right to use.


Any screen – remuneration in digital world

› Remuneration based on actual, identifiable consumption based on ;

– Download to Own– On-demand (time limited)– One time view

› Irrespective of technology– Transmission Technologies– Delivery Networks– Devices– Screens It is unreasonable to potentially triple

the cost of identical content, over multiple screens for same user


Private Storage of legal content

› The copyright regime and praxis should be applied technology neutrally, e.g. independently of any physical storage, architecture and media format.

› Any storage solution architecture e.g. if the storage function is embedded in a local consumer device or in a network should be able to compete freely.

› Notably, PVR and private cloud have the same functions and should not be discriminated by law or require special consent from rights holders.


DIMENSIONS OF availability

› Territoriality > Timed availability across nations

› Territoriality and place shifting > Follow me › Territoriality and long tail – regional/global

niches› Time and Timing > windowing and exclusive

licensing› Time, place and format shifting – at home and

on the go› Range of choice > depth and width of

catalogue› A’ la carte > Freedom to choose (my content)

and timing (my time) and screen (my screen)

HOW ABOUT AN “AWATAD” RIGHT ?


Ultimately we end up with the question of exhaustion

› “The first sale principle of the original of a work or copies thereof by the right-holder or with his consent in the Community, exhausts the right to control the release in the Community of a work incorporated in a tangible tool”

› The paradox of “tangible” exhaustions ; in a legislative measure such as the EU INFOSOC DIRECTIVE which was devoted to the online context, the only purpose of market integration was confined to the offline context.*

› Creators should be able to freely exercise their right to or not to exhaust – BUT why should digital be discriminated once “analogue” free choice to exhaust has been made?

* Source: EU Study, Legal Analysis of a Single Market for the Information Society October 2009


SIMPLIFY &DECREASE

TRANSACTION COSTS


Transaction costs

› Simplify current state of (indirect) licensing play

› Decrease fragmentation of rights, rights owners and licensing practices with the aim to:

› Increase availability and decrease effort – nationally: One-Stop-Shop, Digital Copyright Exchange, etc

› Decrease effort cross border, simplify cross-border licensing, collective rights management

› Regulate natural and/or legal monopolies > efficient and transparent collective rights-management


REASONABLECONSUMER

EXCEPTIONS

TIMEPLACEDEVICESHIFTING

EX

PE

CT

AT

ION

S

MUST BEMET


we think – reasonable expectations – Must be accommodated

› Lawful content

› Time shifting

› Device shifting

› Place shifting

› Private sphere

In combination with a legal system that

promotes availability of digital

licensed content and efficient

licensing


legal attractive digital services can compete with and Displace “Free”


Displace “free” with lawful digital services !

Base: Spanish on-demand (streaming & downloading content) users (513 users out of 1000)

Base: US on-demand (streaming & downloading content) users (591 users out of 1000)

Spain

US

New & old content Attractive pricing User friendly & simple

BASE: Spain & US [On-demand users that watch streamed or downloaded video content at least several times per month]Source: Ericsson ConsumerLab TV Video Consumer trends 2011 & 2012


enforcement alone is not an adequate response

› Such research as exists indicates that we should be wary of expecting tougher enforcement alone to solve the problem of copyright infringement.

› Instead, Government should respond in four ways:

–by modernizing copyright law;

– through education;

– through enforcement

› and by doing all it can to encourage open and competitive markets in licensed digital content, which will result in more legitimate digital content at prices which appeal to consumers

Source: An Independent Report by Professor Ian Hargreaves, Digital Opportunity, 2011


we agree with - RIAA statement 1 Dec. 2011

“To be clear, no legal efforts are a panacea — compelling legal

consumption options are the most important”

Source: The Tennessean, 1 December 2011, RIAA largely succeeds in goal of bringing piracy under control


Agenda

›TRANSORMATION



›CONCLUSIONS


conclusions

Increasing availability of lawful digital content

Technology neutral copyright

More efficient rights clearing

Reasonable end user expectations must be accommodated

Digital content promotion q1 2013

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