The future – into the digital age

1.11 The future – into the digital age

Most commentators would agree that profound changes have taken place in the communications industry, of which the media and, more specifically, the audiovisual industry is a part. In the first few weeks of the twenty-first century, Time Warner (a content owner) merged with AOL (a provider and carrier) along with EMI (more content, especially popular music). By doing so, they have ensured that they will be able to reach the audience/customer by whichever electronic channel is being used. The three factors that have been pivotal to this change have been ownership, globalisation and technology. As shown in Figure 1.1, these three seem set to continue to drive the audiovisual industry for the immediate future.

Bandwidth and broadband services are the current mantra of the communications industry. Digital technology has delivered the possibility of the uniform data stream decoded by the user’s device appropriate to the product’s interface. The personal computer (PC) presents the web page with television inserts, the linear TV programme will be enhanced by text and graphics, and the WAP phone will present just the text highlights. The revolution in computing systems and local networks of the past 20 years has yet to be matched by the telecommunications systems. Whilst fibre optics and satellite systems offer narrow cast and broadcast bandwidth, a fully integrated infrastructure has yet to emerge. The amount of traffic carried over the Internet is said to be doubling every 100 days. In the near future,

Managing in the Media

The drivers of change: government policy, technical systems, external environment

Legislation and regulation have allowed great concentration of

Ownership

Leading to greater control of media through

Globalisation

Enabled by convergence to

Digital Technology Figure 1.1 The condensing media model

the data stream volume will exceed that of voice on a system that, for the domestic subscriber, was designed to carry low bandwidth continuous analogue signals. Ideally, digital data can be sent in short bursts of broadband signal.

The media industry is driven by new technology. Three themes emerge in digital media:

1 Convergence

2 Compression

3 Interactivity. The convergence to a transferable digital format offers many opportunities

and many concerns. In the audiovisual industry, digital technology is almost universally accepted as the means for the reproduction, storage and transmission of information in all media. All content, sound, vision, text and data have become independent of the medium. This has contributed to the erosion between telecommunications and broadcasting companies. This data stream will become complete as digital television makes an impact on the domestic market. This, coupled with the Internet, is now blurring the boundaries between the models of distribution. For example, while working on-line and connected via the web to a radio station, its current programme output or even archive material can be listened to whilst using the computer. The single portal to communication channels has arrived.

The media industry – into the millennium

This proliferation of digital channels gives rise to the concern by content owners regarding how their intellectual property rights (IPR) might be protected. The risk of piracy and misuse will increase. The music industry has already witnessed the use of sampled material from existing works. On-line digital still image libraries are now commonplace. CD-ROM production music will be replaced by searchable on-line database systems with keyword searches for the style, era, format etc. Key frame library footage and degraded inspection copies will allow content owners to re-sell their material to a global market. Each one of these, and other ideas yet to come, will help reduce production costs and research time. It is now accepted practice that research starts on the Internet. For each of these potential benefits, there are enormous problems in the management and reuse of assets. Control of brand and product identity has become more complex and, in a market place in which time to market is measured in months, legal wrangling over the minutiae of the contract could fatally delay speedy exploitation of rights.

The impact of compression of this data stream is twofold. First, the distinction between on-line (connected and live) and download (stored and time-shifted) has to date been about quality – on-line is degraded and download is full bandwidth. As access to digital systems inproves through fibre optics and digital modems the distinction will be eroded; the only reason to store data will be to listen or view when off-line. Digital home juke boxes that can digitally store the equivalent of hundreds of audio CDs and many tens of full feature films are being market tested. Will this be the final demise of the album cover?

Secondly, new business models will emerge. Will the consumer buy the individual programme direct from the production company, or still subscribe to the channel? What rights will content providers have to share in the new revenue streams? The supply chain will become more complex and fragmented. Any government’s regulatory system also faces new challenges as delivery systems converge. The same piece of content could be subject to excessive and/or inconsistent regulation from different regulatory bodies. The risk for the audiovisual industry, as for content providers, is that opportunities may be ‘jeopardised by (government) regulatory overlaps and

anomalies’ 20 . Within the first few months of taking up his post as Director General of the

BBC, Greg Dyke spoke on the importance of education. The Internet started as a common platform for data delivery, became a communication tool, expanded to a business medium, and is now becoming an education

Managing in the Media

medium. Each of these stages has required a higher degree of interactivity. It has been predicted that the revenue generated by educational materials on the web will eclipse all other markets. Education on the web will require the most sophisticated user interface to provide a challenging learning environment. Yet content remains king – as with old computers and new systems, ‘garbage in, garbage out’. The content must be good; programmes have to be engaging. It has got to be appropriate and useful, and remain informative, educational and entertaining.

This chapter has sought to introduce some of the complexities of the audiovisual industrial environment. The debate will continue between policies that ring-fence audiovisual products, or leaving the free global market to find its own stability. This clearly will not happen with so many commercial and national interests at stake. We have also tried to indicate how ‘players’ in the industry seek to control their external environment and limit the impact of new entrants. We now see some of these behaviours manifesting themselves in the rush to be part of the Internet by merger and acquisition.