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April 2008 Archives

http://www.theglobeandmail.com/servlet/story/RTGAM.20080425.wr-online26/BNStory/Front/?cid=al_gam_nletter_maropen

 

A bit of Media 2.x progress for Canada.  Unlikely to be offered in the 720p HD format that ABC.com provides, but definitely a step in the right direction.

The Canadian Association of Broadcasters (CAB; ?) has submitted an interesting brief with respect to radio broadcasting to the Canadian House of Commons Standing Committee on Industry, Science and Technology (?). 

[See http://www.cab-acr.ca/english/research/08/sub_apr1808.pdf for the brief]

 

At issue is the question of whether copies that are made of music for the express and singular purpose of facilitating the broadcast of such music should be subject to additional royalty fees beyond those already paid for the right to broadcast the music.  When broadcasting from a CD, no such claims exist.  If broadcasting from a digital copy that has been made of the same track, claims are made that additional fees are due.  This thinking is flawed.  The digital intermediary (to borrow a term from film) has no additional real value and generates no additional revenue -- no additional payment should be due.

I've been worried for a while about this specific case, and the repercussions it has for Media 3.0.   A fundamental premise of Media 3.0 is that value is derived from delivery of content and that appropriate payments should be made that reflect the benefit derived from the delivery of that content.  To facilitate the world of Media 3.0, and fully exploit the potential that future technologies have to offer, it is essential that the reproduction of content that is done for the sole purpose of facilitating the delivery of said content be exempt from pile-on charges.

Optimal and cost-effective delivery of content in a non-broadcast world requires the deployment of content to multiple points (network nodes) in multiple formats for subsequent distribution.  Value is only realized by the distributor when actual distribution takes place.  The creation of distribution copies cause no incremental costs to the content owners and creators.  Imposing fees on all of the copies required to facilitate this delivery in the most efficient manner is punitive, will stifle innovation, and will ultimately undermine the viability of those distributors who are encumbered by such fees.  In a global marketplace, realistic distribution payment regimes will reward those who benefit from them, while unrealistic or misguided fees will put those subject to them out of business.

It's not unreasonable to assume that Canadian content distributors (broadcast and otherwise) are the ones most likely to promote Canadian talent.  Putting these distributors at a competitive disadvantage relative to their global counterparts does a disservice to Canadian talent and is damaging to the entire Canadian media value chain.

In the long run, being flexible and realistic gives the potential for a lot more 'earned' revenue; being rigid and unrealistic will just further harm an already-damaged industry.

 

 

Mathew Ingram has an interesting blog post about a misguided decision at the CW.
An interesting post on boingboing: The Web is the Only Set-Top Box That Matters

In today's Playback Daily (http://www.playbackonline.ca/articles/daily/20080416/tvwars.html; paid subscription required), Etan Vlessing writes that Paul Kemp, president of Stornoway Productions is "keen that Canadians beyond viewers of Stornaway Communications' digital specialty iChannel... see [TV Wars: Media Money and the Battle for Canada's Airwaves,] his behind-the-scenes look at the firece battle for supremeacy betweeen BDUs and broadcasters currently playing out at the CRTC hearings".

To that end, he's offering it "really cheap" to any other broadcaster but doesn't expect that any will take him up on it... underscoring, as Etan Vlessing points out, the problems he's discussing in the documentary.

"It's important to get the message over to Canadians", he says.  Hmmm.... I wonder, Paul, if you've heard of this new thing called the Internet?  If you want to reach the masses with your message about a dysfunctional broadcasting system, why don't you try doing so by distributing your content outside of that troubled system?

"If you want things to stay as they are, things will have to change" -- Giuseppe di Lampedusa

The broadcasters and other participants at the CRTC BDU hearings who are fighting to preserve the status quo had best heed Giuseppe di Lampedusa's words.  And we're not talking little things here.  Major reforms are required to make the system viable -- not just for today but in the future.

The days when TV as we know it will exist as a stand-alone entity are numbered.  Radical changes are required to adapt the medium to be a part of a larger media ecosystem -- the world of Media 3.0.  Let's hope the CRTC looks far enough toward the horizon to see this, even if many of those who are intervening at the on-going hearings aren't.  If the commission and the industry don't adequately prepare for the iminent future, but rather forge ahead with a tweaked version of the status quo beiliving that that will take them where they need to be, they may find, as Gertrude Stein said, that "when you get there, there isn't any there there".

If nothing else, at the very least, the industry and the commission should follow the advice of the inimitable Yogi Beara: "when you come to a fork in the road, take it".

 

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In his opening remarks for the BDU (Broadcast Distribution Undertaking: i.e. cable, satellite operators,etc.) hearings, CRTC (?) chair Konrad von Finckenstein (?) reiterated the five key issues for this review:

  1. What should be the size of the basic package?
  2. Should there be guaranteed access for certain Canadian specialty and pay services? Which ones and on what terms?
  3. Should there be any type of genre protection for guaranteed services? If so, should they be protected from other Canadian services, or only from foreign services?
  4. Should there be a fee-for-carriage for over-the-air broadcasters? If so, how much and on what terms?
  5. Should BDUs have access to advertising revenues from on-demand services or from local avails?

 The first four issue all involve tweaking the existing (traditional) system and, while there's much I could say about these issues, they really have little to do with the changing face of television.

It's the last issue -- "Should BDUs have access to advertising revenues from on-demand services or from local avails?" -- that I'll discuss here.

First of all, there really are two issues here: the use of local avails, and advertising within on-demand services (specifically, cable/telco-IPTV VOD services and, perhaps, DTH pseudo-VOD services).  The use of local avails is, like issues 1 through 4, a matter of tweaking the current system and, likewise, is not relevant to the new landscape of TV 3.0.

What is of interest from a TV 3.0 perspective is BDU VOD.   The question framed by the commission, though, is, I think, too limiting.  Whether the BDUs have access to ad revenue for VOD services isn't really the main issue.  It's more fundamental than that -- the CRTC currently restricts advertising on VOD services in such a way that there's little incentive for BDUs or anyone else (networks, content producers or advertisers) to embrace (or invest in) this technology.  And that's a big problem because VOD has the potential to revitalize a flagging technology (traditional TV).  And it's only as an on-demand technology that traditional TV has a future in the world of TV 3.0. 

The question shouldn't be targeted specifically at whether BDUs can monetize VOD offerings via advertising, the question should be whether the commission should relax the rules on VOD advertising that, today, are so restrictive that VOD is going nowhere.

In order to compete with the onslaught of alternative delivery channels for TV content, we need access to robust VOD offerings in Canada.  To me, implementing well-conceived advertising policies that foster the growth of VOD in Canada is the single most important thing the CRTC can do as a result of these hearings -- and failure to do so would be the single most flawed decision they could make.

At the end of the day (or at the end of three weeks of hearings) the future of TV doesn't depend on tweaks here and there that slightly alter the status quo... the future depends on radically altering the TV model such that it can remain competitive with other content delivery options.  ONLY conventional TV operates on a linear programming model.  Every alternative delivery option is primarilly based on on-demand content.

A myopic focus on the status quo (modified or otherwise) that doesn't address the need for a sustainable on-demand element will have viewers changing channels indeed -- and increasingly not coming back.

A print reporter asked me some questions about the upcoming CRTC hearings on BDUs (cable TV, satellite and telco-IPTV providers), leading me to write the following diatribe (I have not proof-read this rant, I must confess).



When it comes to television, the CRTC has a two-fold responsibility: it must ensure that Canadians are well-served both by the provisions of the telecommunications act (distribution) and the broadcasting act (content). Historically, these two were inextricably intertwined, making it easier to define regulatory policies that balanced the disparate interests of the distributors and the broadcasters while simultaneously promoting and protecting Canadian content and culture. Twentieth-century distribution channels had limited capacity and there was clear and reasonable justification for prioritizing and protecting Canadian players and content in that environment. Changes in technology, however, have created a distinct separation between the medium (distribution) and the message (content). Alternative (and unregulated) distribution channels exist today that can offer an infinite range of content, and even within the regulated BDU distribution environment, technology is eliminating the scarcity of spectrum that has been an overwhelming factor in determining what content should be made available. Accordingly, policies based solely on a scarcity that no longer exists need to be reconsidered. However, that being said, we need to transition toward an unregulated (or less regulated) environment gradually lest our entire system crumble as younger viewers increasingly tune out from traditional TV delivery channels.

Sadly, Canadian broadcasters have, on the whole, been very slow to embrace alternative distribution channels -- in large part because they have little incentive to do so in the profitable, protected world in which they live today. The reality is, though, that the audience is on the move, ad dollars will follow, and there's little chance that the CRTC will attempt to regulate content on the Internet. Here, too, the broadcasters are benefiting from an artificially defined eco-system. Geo-blocking is being used by media companies in both Canada and the United States to create artificial boundaries on the Internet. This is done in large part to respect the profitable relationships that exist for conventional TV distribution rights. The result, though, is that American producers aren't reaching as large an audience as they can with their content -- and money is being left on the table. How long they'll continue to tolerate that is anyone's guess but I think it's safe to say that unless the Canadian broadcasters step up to the plate they will be by-passed sooner or later.

The tragic part of the story today is that while some nameless Canadian broadcasters blame their lack of activity in alternative distribution on the challenges of clearing rights for the content, these same broadcasters often demand that Canadian producers give sign away all new media rights to them -- and then proceed to do nothing with them, preventing the producers from benefiting from other opportunities that exist by way of alternative distribution channels.

The best thing the CRTC can do at this critical juncture, where we find ourselves somewhere between a tipping point and a breaking point, is to send a clear message to the industry that while the status quo will be preserved, more or less, for a little while, today's unsustainable protectionist system will be dismantled gradually over the next few years. There's really no choice -- dismantle it gently or watch it come crashing down -- and the sooner the industry realizes that the better it will be for all concerned.


Genre exclusivity (or genre protection): should preserve genre protection only where clearly warranted. That is, where a service exists that is of distinctly Canadian value that could not otherwise survive in the face of foreign competition, genre protection should be provided in the interim -- but those benefiting from it must be made acutely aware of the realities of the future world where we will inevitably move to a world of multiple distribution channels that won't offer the same protection.

As the various distribution channels will increasingly vie for consumer attention, dollars, and advertising revenue, a level playing field is inevitable at some future point. Today, though, while traditional TV distribution remains the dominant format, and continues to garner the lion's share of consumer dollars and ad spending, we're likely to see little emerge in the course of this review that will rock the boat. And that's both good and bad. We'll likely see the commission make efforts to balance the conflicting interests of the various corporate constituents and to, more or less, preserve the status quo for the time being. But that's not going to sustain our artificial ecosystem for long in the face of overwhelming challenges from unregulated content sources. Perpetuating a system that is already highly artificial and increasingly misaligned with emerging consumers does nothing to address chronic problems.

The fee-for-carriage issue? It's a band-aid that won't serve any long-term purpose. If the commission does yield to this recurring demand, it should insist that a large part of the funds received must be spent on the further development of alternative delivery channels. It's not a question of whether these channels will one day dominate, it's merely a question of when will they come to dominate?

Market forces are at odds with CanCon as we know it. In an environment of scarcity (i.e. traditional TV distribution) it's easy to protect and promote Canadian content. However, as we increasingly move to a world where scarcity isn't an issue, opening the traditional TV market too quickly to foreign competition will kill CanCon and do irreparable damage to the domestic production industry. That being said, foreign competition through alternative (and often unregulated) channels is inevitable -- and is already occurring. The sooner Canadian broadcasters ramp up alternative content distribution approaches the stronger their chance of survival. Failure to do so, individually or collectively, will lead to their demise.

Technology is available to shift the balance of power to the BDUs, away from the broadcasters, by way of video on demand (VOD) offerings but current CRTC-imposed constraints on BDU advertising are inhibiting the deployment of significant VOD offerings. For now, this protects the broadcasters, but we have to question whether it's right to put the broadcasters ahead of the consumer -- and that's what we're doing today.

This week saw the introduction of a limited HBO -branded service on Bell Mobility -- and that's just the tip of the iceberg. The commission will spend the next three weeks grappling with its role in the conflicting world of TV 2.0... but TV 3.0 is on the horizon already and that will change everything.

The Canadian media industry can have a strong a prosperous presence in the future, but we must start taking steps today to adapt to the change that is all around us and we can't depend on twentieth-century approaches to preserve an artificial and unsustainable ecosystem that isn't viable in the twenty-first century world.

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