Extenuating Circumstances is a weblog by Dan Hon

Digital Britain “Position Paper”

Digital Britain Position Paper

Dan Hon
danhon@gmail.com

A  heartfelt position on the Digital Britain interim report in the style of a blog post. Bluntly: this is quite raw. Stating what I hope to be the obvious: this is the opening of a conversation. Stating what should be obvious: keep comments civil. You have a right to free speech, but on your blog, not on mine.

These are my views.

The overall impression left by Lord Carter’s Digital Britain Interim Report is of something that’s not quite finished. To be fair, this is probably indicative of the report’s interim status, but there remain a number of troubling aspects to the report that leave pause for thought as to whether Lord Carter’s team properly understands what is at stake for the new media landscape.

Let me be clear: I am the co-founder of a young, VC-funded digital media business. We do not have one business model, but several. In fact, we are open with our VC that we need to experiment, innovate and undertake risk in order to understand the right mix of revenue models that will see us navigate successfully through both the media transition we are experiencing as well produce growth on the other side.

We do not know what the business models are. Some of them have yet to be invented. But the report isn’t just about business models.

We Aren’t In Broadcast Any More

Action 17 discusses the Universal Service commitment, support of which has been confirmed by Alistair Darling in this year’s Budget. But the report – though not explicitly – implicitly makes clear that broadband “speeds” are about *delivering* content.

The report has grasped that we are moving away from analogue scarcity – note, here, that the analogue scarcity model applies to television broadcasting, one of, but not the only, form of media that needs dealing with – and joyously envisages a future of ubiquity of delivery of content by “content providers”. But the report does not contemplate the fact that “digital” – whatever “digital” is, is about having a two-way pipe for the first time, a pipe that can connect everyone in both directions.

We talk about plumbing, and perhaps plumbing is the wrong metaphor. There are pipes that deliver our houses with water, and pipes that take sewage away from our houses. With “digital”, it’s one pipe. Fine: with ADSL over our plain old copper network, we’re dealing with *asymmetrical* bandwidth. But that’s not the case when we’re dealing with the prospect of fiber to the home, or fiber to the cabinet.

Digital Britain can – and in my view should – be in part about the leveling of the playing field. To paraphrase the Pixar movie Ratatouille – great content creators may come from anywhere, but not anyone can be a great content creator. We will have a truly participative society, a two-way society, when we realise that media isn’t just broadcast. It’s about being able to have a conversation.

You And Whose Rights Agency?

Action 11 contemplates what Lord Carter has termed the “straw man” of the Digital Rights Agency. There is much to be said here about how, fundamentally, the audience’s behaviour has changed. That behaviour has changed forever: we will not be able, nor should we want to, turn back the clock.

There are a number of strategies that we can employ to deal with the fact that, in a world where effective DRM is a nigh-on mathematical impossibility, content – whatever that content is – can be copied and redistributed essentially for free – once it has been digitised. One of those strategies is blanket licensing, put far more eloquently and cogently by the Electronic Frontier Foundation.

What disturbs me about the concept of a Rights Agency and the terminology involved in the report is that the Rights Agency is to protect the interests – the rights – of “content creators”, “rights-holders” and “distributors”.

Let us be clear: when – not if – access to the internet is ubiquitous and transparent (and, let’s remember – the future is here, it just isn’t evenly distributed), everyone will be a content creator. Everyone will be a rights-holder. Everyone will be a distributor. It seems as if the report contemplates a Rights Agency that protects the rights of certain content creators, rights-holders and distributors over others. Namely, “big media”.

“Big media” – corporations, professional organisations and trade bodies do not need protecting from “consumers”. Instead, at the very least, it is the opposite. No one “content creator” is special. Either we are all content creators, or we may all be content creators and all of our rights are protected. If, for example, a DMCA takedown notice can be issued by a Big Four label against a private individual because that individual has uploaded a music track to YouTube, then a private individual, say, Jamie Ross, should be able to issue a takedown notice to, say, the Scottish Sun, for not respecting his copyright.

The Funding Gap

Actions 10 and 16 contemplate two linked issues: that of ensuring that UK creative ambition is fostered, and “alternative funding models to advertising revenues” and what we do about our second Public Service Broadcaster, whatever that PSB may be.

Let me make this clear again: we need to experiment. To experiment means to take risk. My company, Six to Start, has been lucky in that we have relationships with two clients – partners, in our view – who have taken risks that in one case have paid off, and in the other, I hope will be validated.

We created, with and for Penguin Books UK, an experiment in online storytelling that strips the nature of Penguin to its core – telling stories. Not printing stories on pieces of paper, binding those pieces together and selling them, either online or in stores. But telling stories. And, in my view, if Penguin concentrates on telling stories – and not so much on a particular format, medium, or delivery method of providing those storytelling experiences, in the long-term, Penguin will do just fine. We Tell Stories, our native online fiction project with Penguin, was a critical and popular success. We brought home – on a trip partly funded by UKTI – both the Experimental and Best of Show awards at this year’s South by SouthWest Interactive. We beat Hulu. A British company, again, punching above its weight internationally.

We could only have done this but for the existence of Pearson’s innovation fund and the passion and foresight of Jeremy Ettinghausen, Penguin’s digital publisher. Jeremy understands the value and critical nature of trying new experiments, of taking the risk to prove new markets and business models. The existence of Pearson’s innovation fund – a fund designed, so I am led to believe, to rapidly allow experiments to be carried out – demonstrates Pearson’s understanding.

A similar situation has happened with our partners at Channel 4 Education, Matt Locke and Alice Taylor, under Janey Walker. A public service broadcaster with a remit to produce educational content and plurality against the BBC for 14-19 year olds, Janey took the step – in the eyes of some radical, and others as prudent – of assessing where her audience was. They are, more than ever before, online, and especially with regard to learning about how to deal with the world that they inhabit. We all are.

To take the risk to say: we will commission content *on the most appropriate platform for that content* is a big validation of what my company is trying to do in creating genuinely native entertainment and media for a connected world.

There are not enough people or organisations doing this.

The BBC should be doing this. From our point of view, and as an independent producer (in the eyes of the BBC) who has already worked with the BBC, it is frustrating to see the BBC – and others – consistently spend significant seven figure sums on content companies who are tied to old models.

In the development of the internet and connected, two-way media, we are at the stage of the invention of the television camera. We are pointing the camera at a theatre stage – iPlayer, Hulu, Spotify – these are all simply the movement of one form of traditonal media defined by delivery method, whether that’s an arbitrary single, album or 30, 42 or 55 minutes of linear video content, to a common distribution platform: the internet.

We have not yet created media or entertainment native to the internet. We will not for a while, it’s going to take us time.

For Britain to remain competitive, we need to be taking those risks in exploring the potential that creating connected media affords us.

Anthony Lilly spoke eloquently at the Digital Britain Summit of needing to encourage and back risk-taking and innovation. In the current economic climate, we need that risk-taking and innovation more than ever before if we are to emerge strongly from this recession.

How Do You Solve A Problem Like Channel 4?

Let me propose a rather radical idea, one that I suspect may not earn me many friends in the broadcast or television industry, nor the public service television industry.

When I say that “we need risk-taking and innovation more than ever before” if we are to emerge strongly, if we are to discover and create the media that we have yet to understand, we are actually dealing with a funding problem that we have been through before, and we’ve done it successfully.

We’ve done it before with Channel 4 in the 1980s.

I want my company, Six to Start, to be as big as Disney, to be the next Disney. Or at the very least to be the next Fremantle, the next Electronic Arts, the next Endemol. Fortunately, we know how we ended up with Endemol and Fremantle, at least in part, and Channel 4 plays a part in those companies’ histories.

Channel 4 funded risky, innovative content. It did it with television. This new PSB “with Channel 4 at its heart” has an opportunity to fund risky, innovative content for the connected media age – for Digital Britain, that, I am confident, will show that Britain will continue to punch above its weight worldwide. We just won’t be doing it with television. We’ll be doing with any and all kinds of content and services that can be delivered over a ubiquitous two-way digital network.

Even more fortunately, Channel 4 has already started down the right path with its experiments in Channel 4 Education – in media and platform agnostic commissioning, the right service and platform for the right subject, whether that’s TV or games or ‘online’ – and in 4iP, a platform that is explicitly tasked with creating and funding innovative public service media that isn’t television.

How do we solve this funding gap and make sure that experiments like Channel 4 Education and 4iP prosper and usher in a new round of Endemols and Fremantles?

By realising that broadcast mass media is over. Channel 4, the television arm, should be commercialised. Let it make and show Big Brother. Let it make and show Hollyoaks and Skins and, bluntly, whatever will bring in the advertising revenue. But take that advertising revenue and invest it – wholly, completely – in funding the risky, innovative content that Channel 4 was known for in the 80s – content for the connected, Digital Britain age.

If we do that, we will be all right.

We’ve done it before.

Disclosures

Six to Start has been commissioned by Channel 4 Education, 4iP, has projects in development with various departments of the BBC and projects in co-development with Fremantle.

Great post, Dan.

On this:

The BBC should be doing this. From our point of view, and as an independent producer (in the eyes of the BBC) who has already worked with the BBC, it is frustrating to see the BBC – and others – consistently spend significant seven figure sums on content companies who are tied to old models.

I think there’s a greater danger than this. In a lot of cases, there’s nothing wrong with old media. Going to the movies or to a gig are experiences that are likely to keep their charm for a long time to come.

But I’d say the greater risk is timidity and a lack of willingness to take risks. Worse than spending money on old standards is not spending money on new opportunities, even if they are risky. In a lot of cases, the kind of resource commitment you refer to above simply isn’t happening. And that’s even worse.

This timidity comes from a production culture grounded in television, where development times stretch into months and years, and failure is unthinkable. A project is finessed and re-finessed until it is ‘perfect’ and incapable of failure. Quite a far cry from fail-early-fail-often, open beta culture.

As you’ve intimated in this post, this kind of production culture is fast becoming obsolete. Let us hope its death is quick.

Lastly, a question – if all of Channel 4′s advertising revenues should go into funding risky, innovative new content, what money will fund producing/buying Hollyoaks and Skins etc?

Great post, and great analysis of the some of the key problems.

I think the key to the issues you raise were encapsulated on the day by the contrast between the panel in which you spoke, directly followed by Sly Baileys presentation which essentially bemoaned the development of the internet.

The point you make about risks and innovation is completely on the money (no pun intended), media/broadcast organisations (for want of a better phrase) need to momentarily set aside short term profits on every project and take risks on projects that are experimental, on the most appropriate platform for that content and, more importantly, interesting and valuable.

As you state, given the huge changes that We-Aren’t-In Broadcast-Any-More and You-And-Whose-Rights-Agency? are having to the ‘media landscape’ the new business models are not known. Only by playing with new ideas can new revenue streams be created or new revenue models appear that from the outset might not have been foreseen.

I would rather see these currently large organisations investing in new ideas and projects and supporting companies like Six to Start than investing in protecting there current business models that are evidently based on a pre-internet era.

@Trippenbach, I agree that given the current model still works and as yet the new models don’t show obvious large revenue streams they will continue to invest in “old media”. But by doing this are they not just managing themselves onto the rocks? Continually iterating towards ever decreasing advertising incomes, convincing themselves that the old business models have a future. At some point a realisation needs to happen that the trajectory is downwards and risk needs to be taken. Rather do it now while the profit margins are big enough to fail on a few project than later when risks can’t be afforded.

@ Eliot: I totally agree with you. It seems I slightly mis-constructed my argument.

I actually don’t think the old business model works particularly well. The evidence is everywhere. See the widespread failure of newspapers in the US, for instance, or the Pirate Bay trials, which are set against the continued torrent of file-sharing pulsing around the world. The old business models have been hit by the digital express – they’re lying by the side of the track, bleeding out. If we really try, we might be able to keep them on life support for a while.

But I agree with Dan and with you, Eliot: life support for a dying business model isn’t worth it, in the long run. Far better to invest in something new now, while we can. Timidity and insufficient willingness to take risks is the greatest threat now.

My other point was a footnote, though I think an important one: I just thought it worth mentioning that while we swell with schadenfreude, let’s not conflate Old Media with old media. The business modes that supported Old Media may be broken, but the media that establishment produced – books, linear video, etc. – have value, so let’s not forget that. In our rush to create the next wave of experiences and content, it is important to draw on the strengths of the past, where they can be applied. A good story will always be a good story. A good game will always be a good game.

Having said that, that’s not to say that producers should focus on old media and old media production modes and revenue models! Dan is right in his post to say that digital distribution changes everything – and this is where the business and production models must evolve. Evidence shows us that any organization that doesn’t evolve will get eaten alive. Current carrion: IFPI, the MPAA, and the US newspapers, to name a few. The evidence is all around us. On that topic, I’d say Dan’s analysis asks all the right questions.

We may not have all the answers yet, as far as new business models go, but I’ll tell you one thing for sure – whoever comes up with an answer that works is going to have a tough decision to make:

“Shall I buy a customized Airbus, or a private island?”

Thanks for such a comprehensive and thought-provoking post Dan. I wholeheartedly agree that the report reflects a dangerous gap in understanding – it misses the point that anyone and everyone can be a media owner today. And I find the idea of a Digital Rights Agency a little bit ridiculous… In terms of funding, it’s pretty clear that there *is no choice* but to experiment with “alternative funding models to advertising revenues” because the ad-funded model is fairly broken at the moment. The long-term trends that were already threatening old media have been massively accelerated by the recession: switched from ‘mild’ to ‘severe’ almost overnight some time around the end of 2008. I totally welcome this creative destruction – it’s long overdue – but only if we can simultaneously agree on/develop a new vision, and most importantly we need to answer the question that Trippenbach asks: “How are we going to pay for producing/buying high quality content?”. It ain’t all going to come from users and it’s not free. What a great debate to start though – and your post reminds me of very similar open conversations going on in the world of advertising and marketing communications at blogs like http://bbh-labs.com and http://wearesocial.net, and my own company http://www.madebymany.co.uk. Quite frankly, although we’re competitors (just like the planners and ad creatives contemplating radical change within their industries at the sites above) these are really important things for us to work out together. It’s clear that the generation above us still can’t quite grasp it – we’re just not getting the leadership you might expect from senior media people or the government – so we’d better try and sort it ourselves.

@Trippenbach – Agreed about the Schadenfreude, I worry that we (the “tech” industry) are more easily ignored as we seem to revel in the failures, I also agree re: not casting aside non-digital / “old media” (or whatever it is we call it) – sticking to the C4 mantra of building with *the most appropriate platform for that content* as Dan states is the key to this not doing “new things” for the sake of “new things”.

@Tim Its great to see the advertising industry experimenting as well, though how long it can continue to push corporate messages in a culture of openness and honestly will be an interesting one to watch. But i wonder about one point you make…

“but only if we can simultaneously agree on/develop a new vision, and most importantly we need to answer the question that Trippenbach asks: “How are we going to pay for producing/buying high quality content?”. It ain’t all going to come from users and it’s not free.”

I wonder if it valuable always asking this question upfront, as by doing so it makes investors risk averse. They will always be looking for the money first, interestingness/experimentalness second. Also an aside it assumes that expensive = high quality – I think *more* pots of *less* money is the way to go.

In terms of where the risk lies for making money, risk is on *you* as the content producer to put your product out there and if you make money that’s great, but you don’t have the *right* to, the “big media” companies have had a cash cows for so long that having to think about how to make money is scary. In advertising, the risk is on you as a product owner to put your message out there and your product better stand up to the message you are trying to portray. For so long the “consumer” never had a voice that now “brand owners” not controlling the messages is scaring them.

Lots of talk about business models is great but surely it can be more simplistic than that, make good things (because your good at it and love doing it), and secondly, see if you can make money from it/sustain yourself as you love doing it. Alas, i think i may have over simplified things, but its a great debate nonetheless.

Excellent, excellent post. One quick comment from me, although I’ll be chewing this over. It’s blindingly obvious that the experimentation we need is best facilitated and brokered through a relationship with an enlightened individual in the partner organisation. That’s clearly happened for STS with Jeremy at Penguin, natch the C4 gang, and my own past experience for Coney with Hodder and the NT backs that up. That relationship comes first and then the work follows – do you think? Or is this just the lesson for the early stages?

Excellent, thought provoking piece. I was also hoping for moer forward thinking from the Digital Britain report, but the thinking remains rooted in the old broadcast media model. My interest is in community media, particularly community internet TV. I found it galling that there is no Government thinking – let alone funding – in this area. The BBC governors recently approved a £30 million overspend on the BBC website. That buys a lot of community produced content ( or would do with a little joined up thinking at Westminster).

Great blog post Dan! I particularly liked your piece on bandwidth speeds and a two-way pipe – i’ve been banging on about this for ages as have most people.