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Introduction.

Convergence was the hype concept, which everyone praised in the late 1990s and became a quasi dirty word with the dot-com crash. However threatened they might have felt at the time by the forthcoming end of the established patterns for production, aggregation and distribution of media content, most media companies did actually resist the trend which led, in some well-known cases, to stringent financial and industrial streamlining.

With hindsight, this rise and fall can now be understood as the product of overly optimistic expectations regarding the speed of the take-off and uptake of new media, fuelled by a disproportionate flow of speculative funds. There were, however, a number of voices at the time insisting that tangible industrial prospects and trends were to be discerned beyond the hype. Those voices nurtured ongoing changes in the patterns of media content production, aggregation and dissemination. These changes include the digitalization of transmission networks, the surge in the number of options for distributing data, sound and pictures to the home, primarily via mobile and DSL networks and the ease with which content can be produced, manipulated and uploaded for widespread distribution thanks to the internet.

When asked to edit the Dossier of this issue of COMMUNICATIONS & STRATEGIES, it seemed to us that the time had come to consider the various issues facing the media industry and its regulators in an environment less burdened by hype yet, in many ways, far more cumbersome than the climate described by yesterday's aspiring gurus. Of course, we are well aware that hype, glitz and glamour are still part of the show. Watching the Consumers Electronic Show earlier this year in Las Vegas, where Tom Hanks and Robin Williams shared the stage with Bill Gates, Larry Page (Google) and Terry Semel (Yahoo) served as a reminder that conduits/devices are nothing without the content and social representations that they help to formulate and deliver. A month later, at the GSM Mobile World Congress in Barcelona, music artists and TV producers attracted the biggest crowds in an industry keen to position itself as a prime network for content delivery. Backstage, media companies, internet players and networks operators are nevertheless busy moulding new business models that should help to define a truly connected world and shape our daily lives to an extent that we are still struggling to assess.

Broadband networks now reach almost 50% of homes in the world's most advanced countries and the stage is set, with the development of 3G/4G (point to point) and broadcast mobile networks, for the reception of video programmes on mobile devices. Video via the internet is the fastest growing segment in terms of both offer and use, with seminal internet players jumping on board to exploit the trend and extend the reach and scope of their portals. Key to the emergence of the somewhat fuzzy concept of internet 2.0, content production is popping up everywhere in the guise of blogs, vlogs, community-driven material and seems to be competing directly with established media companies in the battle for attention and audiences.

For media companies, the time has certainly come to "buy in" to convergence, namely to face up to the disintegration of their traditional approach to content production and distribution, the repositioning of their content production and publishing functions to consider multimedia distribution, and the reality of content "repurposing." That may encourage these companies to redefine their business models traditionally based on direct payment for packaged products, license revenues derived from intellectual property rights and ad-financed schemes, not to mention the license fees enjoyed by public broadcasters relatively safely to-date. More specifically, these companies have to devise a set of new strategies to better combine these various sources of revenue, reflecting the type of product that they create and distribute, their geographic scope and their investment capacity. This is a daunting task, as it requires a wealth of technological know-how, strong brands and, in most cases, an international presence.

Key movements have included strategic acquisitions by media companies in the network field, like BSkyB's purchase of Easynet, the alternate telecommunications provider, in the UK, with the implicit ambition of broadening the scope of services offered as bundles, including video on demand (VOD) and internet access. In most cases though, media companies have opted for partnerships to develop their presence in new media fields. Although established as a standalone initiative with a will to distintermediate that new distribution market, the movie on demand service Movielink, launched by the U.S. studios in 2002, is now available on a variety of broadband platforms. In Europe over 50 VOD services are now available, proposing catalogues of feature films, music videos, documentaries and TV programme archives. Partnership is the way to test products, strike temporary exclusivities and benefit from cross-branding and cross-marketing efforts. Such alliances are volatile, as the balance in the value chain is far from solid. From the media companies' point of view, network economics call for a wide distribution of their key content. However, problems are arising as it becomes increasingly difficult to secure shop space with distributors, making it necessary to establish a direct presence to acquire some negotiation power.

Strategies in this area are multiple: U.S. networks like CBS have launched their own channel (a combination of original and past programming) on the web. In Belgium, Belgacom has acquired the football league rights to position itself as a broadcaster, while the cable operator Unity Media has pursued the same strategy in Germany. BSkyB has developed downloadable software for mobile phones, aimed at bypassing the operators' menu and fostering pure Sky-only sessions. News Corp. has heavily invested in community sites, where it will gradually increase professional content, monetize its audience and set up cross platform deals with advertisers. DVB-H, already tested in Italy and Norway by public broadcasters and supported by some important European pay-TV operators, may also represent a way for broadcasters to provide services directly to mobile receivers without depending on telecommunications operators.

For media companies, particularly those involved in content aggregation, the drive towards convergence does not stop on the doorstep of households. A lot is at stake for players in the consumer electronics and computer industries, pay-TV providers and network operators when it comes to gaining a leading edge in setting-up home networks, which may be used in the future to store, exchange and view all content using a wide variety of devices located in different rooms. As a growing number of options for receiving broadband and digital TV services become available, at least in cities in developed countries, and as unbundling regulation opens the local loop in most countries, the battle for control over that new gateway is shifting to the home; and it may not be merely gimmicky to use the name Media Centre to summarize this shift. The evolution obviously raises a large number of economic, social, cultural and regulatory issues, which go far beyond the strategy analysis we have briefly described above. Some of these issues are addressed in the papers collected for the dossier.

While convergence--along with related tools and services--is often summarized as the trend of accessing content any time, anywhere and on any device, this definition in turn begs the key questions of what type of content is available, at what direct/indirect price and by whom is this accessed?

Information is, or should be, in the famous words of Arthur Sulzberger: "All the news that's fit to print". In the electronic world, there is still place for editorial judgment and some form content regulation, but exercising it has become a very difficult challenge. Information, in a world where search engines play a growing role in the way internet users access content on the web, is apparently everywhere, but lacks the contextualising framework that most media users, for better or for worse, rely upon. Convenience, ease of access and blogging may not necessarily go hand in hand with the "vibrant market of ideas" that is recognized as a necessity in modern democracies. The ongoing debate in the scientific and cultural communities about the value of Wikipedia shows there might be a price to pay for such convenience, which cannot yet be determined.

In this respect, it is worth noting that some public broadcasters, endowed with specific objectives in the field of creation and culture in its widest sense, have actively developed their presence and offering in the field of emerging media. The BBC has certainly made its mark and remains a pioneer. It has established a massive presence on the web, with thousands of general interest and niche sites. The UK public broadcaster has also created new channels in the digital world, distributed on all platforms, and should be a leading player in the on-demand programming universe when it launches its "catch-up" service in the near future, enabling viewers to watch TV programmes they may have missed. Such development drives are not only dominated by big broadcasters, as shown in the paper by Emili PRADO and David FERNANDEZ. After identifying the new functions that a public broadcaster must deal with when considering the transformations linked to technological advances and the globalisation of the media space, the authors show how the regional broadcaster Televisio de Catalunya has embraced these challenges. Their analysis is a convincing example of how a small public broadcaster with a mix of political determination, financial commitment and innovative drive can rise to the challenge of competition, without neglecting its primary mission of serving the public interest.

However, moving into new digital services can jeopardise the financial health of public broadcasters, as the examples of not only Televisio de Catalunya, but also the BBC, tend to illustrate.

This general interest principle is clearly at stake when addressing the issue of the affordability of access to content and networks. Convergence brings, in essence, more options to those who already tend to enjoy the widest potential access to content and delivery capacity, namely urban dwellers. As the information society spreads its wings, it is also giving birth not just to one, but to a variety of "digital divides," which governments are proving increasingly keen to address with specific policies, either industrial or social.

This may put governments at odds with regulatory authorities, as indicated in the contribution by Martin CAVE. This paper, which addresses the issue of spectrum management in relation to broadcasting in the United Kingdom, shows that spectrum allocation issues that have been dealt with relatively smoothly in national regulation and international coordination summits to-date, are now bound to generate conflicts. Mobile operators are seeking to get part of the UHF spectrum to broadcast TV once this is no longer used by traditional broadcasters for analogue distribution. The paper analyses the implications of the digital switchover for all the parties and the ways in which this spectrum might be allocated, noting that Ofcom's view may clash with the position adopted by broadcasters in that respect.

The "net neutrality" debate, currently very hot in the USA, is another illustration of the new regulatory issues that may arise with the development of the market and opportunities for segmentation according to prices and expectations. Balancing industrial innovation and equality of access is never an easy act, as economic externalities are difficult to quantify. It is therefore not surprising that the construction of new infrastructures, (such as the optical FTTH networks, currently pitched by Deutsche Telekom in Germany and supported by the government) or the rapid dissemination of video content on the web, challenges the existing regulatory schemes.

More than ever before regulation is a shaky political exercise where a balance struck at any time between content providers and network operators, between infrastructure and service, between suppliers and consumers, can be rapidly threatened by the next disruptive technology. Personal Video Recorders may seem a natural improvement on the classic VCR, but this does not prevent advertising-supported channels from considering these devices as the most dangerous innovation to hit the market for years. The same goes for the seemingly inexorable, internet-driven end to an era of production, distribution and use of content organized by the Intellectual Property Rights doctrine.

Networks and services need content, content needs to be monetised and monetization depends on terms of use, which are defined by rights owners. As Olivier BOMSEL and Anne-Gaelle GEFFROY remind us in their paper on Digital Rights Management systems, this empirical framework has more or less secured the efficiency of the market for cultural goods and stimulated creation to-date. Copyright is no more, but no less than the definition of a particular property right, namely to define the principles of exploitation and reproduction (in particular) of cultural contents. In this sense, Digital Rights Management systems seem a benign tool for enforcing that claim in a digital world, where everyone can be seen, from the copyright owner's point of view, as an agent of an illicit reproduction and retransmission. Bomsel and Geoffroy argue that DRMs are, as software applications, cultural creations. They are therefore protected legally but bear, for their owners' benefit, the outstanding power to define the nature of relations within the vertical distribution chain, to-date protected from real public scrutiny. As seen in France during the discussion on the transposition of the European Directive on copyright, this is an issue that certainly merits debate.

Alexander SCHEUER's paper on the European Commission's policy in the field of audiovisual services is a useful reminder on the series of reflections in Brussels leading to the Directives on Television Without Frontiers (TWF), on E-Commerce, which covered interactive video services such as VOD, and the famous 2002 Telecom package. It usefully reminds us of the Green Paper on convergence dating from 1997 and the various options it listed to deal with the issue, including the gradual build-up of a comprehensive regulatory framework for existing and new services. Key principles are now well established: the principle of separation between content and transport regulation, technological neutrality as regards content regulation and the distinction between linear and non-linear services. A new proposal for the revision of the TWF directive is now on the table which is indeed, as Scheuer points out, a piece of "convergent regulation" largely drawn up to address the development of non-linear services and video content on the web. Most European countries and the UK see to have adopted divergent positions on this proposal, as the latter considers many protections built-into the proposal (such as the vigilant protection of minors and the prohibition of surreptitious advertising) to be fully inapplicable in the on-demand, decentralized internet world. It is obvious that the Commission is showing no inclination to strengthen its content policy scheme and it has proposed a lighter set of rules for non-linear services. However, compared to traditional broadcast services, the resources and associated costs needed to effectively "control" internet and mobile video content are deemed excessive by operators and service providers, when other legal tools are already applicable. Moreover, given that the Commission has reaffirmed its commitment to the principle of the "country of origin", some countries may want to secure the maximum flexibility to attract service providers and associated jobs as seen in the audiovisual field,.

The interview with Evelyne LENTZEN, President of the Conseil Superieur de l'Audiovisuel de la Communaute Francaise de Belgique, clearly illustrates the complexity of the regulators' task in the audiovisual industry today. Regulators have a varied set of goals encompassing cultural issues, pluralism, diversity, original creation, not to mention questions of taste and decency. They must take into account the social fabric of the nation, and at the same time cannot ignore the dynamics of convergence, internationalization and content dissemination. Lentzen is prompt to identify the keys pillars and priorities of the regulator's mission and to discard the temptation to micro-manage the sector, particularly when she talks of the allocation of production grants. Lentzen also recognizes that the current regulatory frameworks suffers from a serious hole, insofar as it does not deal with the distributors and aggregators; which now play a central role in the service selection, the choice offered to consumers and the development of home networks.

Along with media companies, network operators, governments and regulatory agencies, there is one player, who can give a thumbs up or down to the whole process of content distribution over a wide variety of networks: the consumer. Expectations of consumers are high, but there have been very few studies, apart from glowing accounts of market tests and some visionary tech-oriented fairy tales, of consumers'/viewers' preferences, their patterns of use and the consequences of these patterns at a macroeconomic level. Laurence MEYER tackles these issues in her paper, the substance of which comes from an extensive prospective study on the future of television recently written by the author. Thanks to the scenarios she draws for the deployment of the wide array of new services we are promised, she vividly demonstrates that convergence really means something to the media!

Bernard GUILLOU

MediaWise+, Paris

Andre LANGE

Observatoire europeen de l'Audiovisuel, Strasbourg

Remy LE CHAMPION

Universite de Paris II
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Title Annotation:Media industry facing convergence
Author:Guillou, Bernard; Lange, Andre; Le Champion, Remy
Publication:Communications & Strategies
Date:Apr 1, 2006
Words:2833
Previous Article:Foreword.
Next Article:Spectrum management and broadcasting: current issues.

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