BiBC Talkback

Partnering is the way forward

We have been working in the business of digital licensing for video and audio catalogue now for some years and whilst the barriers to entry for content are now dropping, the expectations on businesses wishing to exploit materials over IP are still a little on the high side. It is those expectations that can seriously stop an industry and new revenue stream before it even starts. Our experience is that the terms range enormously in terms of guarantees with some meaning we would require 250k subscribers on day one just for the owner’s catalogue to break even. The maths don’t add up and there needs to be a reality check somewhere.

The cost for bandwidth for distributing digitally is not insignificant. If each user takes somewhere in the region of 50 hours of content a month, on demand, this equates to 400 terabytes of data travelling over the network for a couple of hundred thousand users, every month. The investment for businesses in this kind of distribution channel is pretty large and just like any other business has to provide a return. The time has maybe arrived where the content owners and digital distributors collaborate and work out how, between us, we can make best use of new network technology and distribute content on-demand at a much lower cost per unit than DVD or even broadcast.

Whatever you want to call it IPTV, VoD, SVoD, streaming, download etc the fact remains that in the future this IS going to be the way in which we supplement our viewing either Satellite or DTT, and it is in everyone’s interest to make sure that we bear the following in mind:

1. No one is going to get rich quick, this is a longer term play

2. Physical and traditional channels will die away. It may be a slow death, but it will happen

3. Consumers are becoming more tech savvy and understand the benefits

4. Work in partnership to create something, this is not a land grab

5. Hardware in support of IP is appearing

With regards to the last point, we work with the CE manufacturers and next year will be the year that hybrid devices with hard drives DTT and IP capability will be on the market. There is a huge opportunity here, the industry should be working together to help make it a reality not fighting for the largest percentage of what is still a small pot.

UNhealthy Competition

For years I have been mulling over the issues associated with nationalised companies being sold off and going into public hands but with none of the publicly generated income being removed. Likewise organisations that use a dominant position, read monopoly, to dive into other areas and stifle competition.

Two big names spring to mind BT and SKY

BT for years has been living on the fact that it has historical, and not inconsequential, revenues from me and you, either directly or indirectly. The line rental etc you pay goes directly to BT and they use it for......not sure what for really because nobody tells us - just that they have it because they do. Nice business if you can get it. It’s not particularly this I have a major issue with, although being Yorkshire born and bred, I can see that it is not exactly value for money for the consumer. It’s when a huge organisation, such as BT, then uses this to compete in markets it was never supposed to enter, and even worse, using my money to compete against......me!! Has nobody recognised this yet?

BT is competing in a number of different areas against small businesses and individuals who directly fund them to do so because of the monopoly position they have.  Take BT Vision, is this not publicly funded broadcasting but in disguise? Do we not pay the BBC through our license fees to provide us with a national broadcast network? Is it fair that BT, funded by me and you, uses this to then compete against the BBC et al. Not that I have a great deal of sympathy with BBC as freefall blunders appear to be the name of the game at the moment, but to allow an essentially publicly funded company such as BT to do this seems ludicrous. From BT Vision to DABS to a whole host of other markets, there are organisations that use their dominant position to compete in otherwise ‘open’ markets. My point is, if BT want or need to do this then I suggest they remove the comfort blanket of the ‘line rental’ revenue and go fly free in the open markets as everyone else has to. Personally I think using our money to build infrastructure is fine but to then use that infrastructure as a way of competing in other areas such as Vision, and only allowing consumers who have BT ‘lines’ to use it is wrong!!

Then we have SKY who took on a part funded company BSKYB and turned it into a monopoly for Satellite TV. They have been allowed to buy their market through sports coverage and now is offering broadband and telephony if you subscribe etc. Ok, again no problem with healthy competition but I do think that allowing organisations as big as NewsCorp to continually diversify, we run the risk of there only ever being 2 or 3 big companies and the rest of us should just pack up and go home. I really believe that someone, somewhere, should look at where all this is going and protect the public from being manipulated and monopolised in the media the way they are. There are small organisations throughout the UK trying to survive against a wave of corporate expansion and diversification that makes it increasingly difficult to do anything and does nothing to promote creativity and innovation. To top all this off the regulator has allowed SKY to buy part of ITV!!! Granted there are some big tracks being left as the decision is reversed but it should never have been allowed in the first place.

The Age of Bad Products

I have been in the technology industry now for over 20 years and over the last 5 there has been an interesting pattern in terms of 'new' technology. It would appear that journalists now manage to get themselves caught up in the hype and personality around technology products, avoiding at all costs the reality of what is likely to happen.

In the Sunday papers today 2 spring out as prime examples one is We7 the 'new' venture backed by Peter Gabriel and the other 'new' technology is Joost. Both of these it would appear are just a stones throw away from changing the way we live. They have been labelled as having that all important genre that all 'new' technology needs.....they are disruptive!!

I think someone should start with the basics so lets look at the Joost proposition.

Any delivery of files be they music or video over a network can only get there as quickly as the network will allow, it's physics really, they can't get there any quicker no matter what  technologists will have you believe. So when we take that as the context the idea that you will be able to watch broadcast quality television over the public internet, with the way the networks are currently is utter nonsense. Plain and simple you won't be able to do that.

Joost is a peer to peer technology so it is said it will be much quicker, sorry no it won't, because of the simple fact that I have mentioned in a previous blog, there is no quality of service on the network. This basically means I cannot guarantee that the data will get there in a timely fashion, the public internet does not have this facility, and it is this that will enable Joost not P2P. So the user experience is likely to be awful, small screen, slightly blurred at times and with jitter i.e it will keep stopping and starting. This service will be free!!! I'm sure it will, the reason is? They know perfectly well that no one in the right mind would pay for it. So it is now sold as free TV because they have advertisers queuing up.

Sell them the hype and I'm sure you can convince organisations with no idea about technology to buy just about anything.

Then we come onto We7 who are now going to sell you the idea that your music will be free as long as you listen to the 10 second advert at the start. Is it me!!

The free music thing that has been getting so much airtime, is about kids downloading because they have no money and now they will target this very demographic with adverts. Why, they can't spend anything anyway! Ofcom etc are already looking at internet adverts targeted at minors, this is just going one step further. How are you going to police the fact that junk food and soft drink manufacturers are advertising to under 16's. I'm sure you aren't going to see too many adverts for Ford cars in there. The majority of people with expendable income are perfectly happy to pay for a quality product. I personally don't want to have to listen to adverts for Coke, MacDonald’s or anything else when I'm trying to chill out and listen to some decent music....do you?

It seems to me that if you have a product that very few people will pay for then all you do is wrap it up with advertising and call it a new business model. The fundamental issue here is that the product you have is either not very good or is in a saturated market and no matter what you do, advertising will not change that.

I am,personally, happy to watch TV on demand on a big screen in my living room and also listen to music that is mine and uninterrupted. Maybe i'm old fashioned that way

Comments welcome ;-)

The Price is Right

Having been at a loose end on Sunday evening, I thought would venture into buying a film from Sky BoxOffice. Flicked through the films available, not that many, and then start times, not really on demand yet, found a film and then proceeded to purchase. So leaving the customer service aspect to one side, as I had no phone connection to the box, we get to the price for this 'one shot' viewing of the film.

The price for this 2 hour viewing was £3.95 plus a £1 booking fee over the phone so £4.95 in total, that's a whisker off $10. We have had so many discussions internally and externally with content owners about pricing and how consumers might be put off paying high prices, but it comes down to simple supply and demand, if you have a product I want then I will pay for it. For some reason we don't appear to be capable of applying the same logic to delivery over the internet, or network, and I don't just mean a PC, but to next generation TV's etc. Why do we find it so difficult to accept that Satellite and cable are so different, it's just another network, where the same financial policies apply, if you have something I want, then, I will pay for it.

Our minds are probably attuned to the fact that digital goods on the net are free, we access them through a browser on the computer, therefore, free applies. This is just not the case for the next explosion of 'connected' living room devices. The browser is not apparent and the internet connection is way behind the scenes. So there is a new paradigm here where we can get the price right. We have thrown off the chains of complicated browsers and PC's that crash and moved into the world of using the internet as a delivery mechanism, so why shouldn't content be priced the same as cable etc. The issue here is one of price point as for any retailer, and they will tell you reducing prices is easy, but raising them again, almost impossible.

So let's think out of the box a little and understand the world has changed and so has the way in which we consume media. As providers it's important to remember that digital products have just the same right to have a value as physical products, they are just consumed differently. So would I pay £4.95 for a film to watch once? Well i did so I must have thought that fair value. If I compare this, downloading and owning, would I pay a bit more, well yes I probably would because I am now comparing it with a cost justification from Sky, not free internet news sites.

Comments always welcome ;-)