The turkey’s all gone, the bubbly has run dry and the hangover is just about clearing. Hope you had a good holiday and can expect a prosperous 2008. But what does the new year have in store for our digital content industry? Here are a few things we’ll be keeping an eye on over the next 12 months…
– An investment slowdown?: European companies enjoyed receiving plenty of VC cash in 2007. Although the gap in funds received by US and European companies widened, in Web 2.0 specifically, US investments plateaued while those in Europe doubled, research showed. Attracting a whole third of that money, UK companies led the way, and video sites like Dailymotion (£21.6 million) and Joost (£22.6 million) commanded the lion’s share. So far, so good. But what effect might the credit crunch have on the industry? With banks already becoming less inclined to offer mortgages, will they also keep their hands in their pockets when it comes to startup loans? And will private investors be more frugal next year with their wealth? If the growing number of YouTube imitators is anything to go by, perhaps a few less upstarts in the maturing video segment would be no bad thing.
– Advertising: Over the last couple of years, the migration of advertising spend from traditional to online media has been clear. That amount in the first half of 2007 alone was the same spent throughout the previous year. The key benchmark, then, is exponentiality. If online ad spend does not continue to grow at that rate, it may be because ad buyers will hit a natural plateau in the amount of web inventory they can buy. Advertising is the first industry hit by a recession, they say – but the breakthrough contextual matching of search queries to adverts that is the underpinning of this exploding segment offers advertisers so much more certainty and bang for bucks that online may well be the best destination especially in a difficult economic climate.
– Hello, Kangaroo: As iPlayer beds down in ’08, BBC Worldwide, ITV (LSE: ITV) and Channel 4 will launch their own online catch-up TV player. The product of rather unprecedented cooperation amongst UK TV networks, the multi-channel download service will bear the unfortunate side effect of bringing the reality of public service broadcasting in to sharp relief. For Kangaroo is entirely a commercial proposition. Many TV license payers among us may believe we have the right to download and re-consume BBC programmes in perpetuity (after all, we’ve already paid for it once). But the Terms Of Trade deal struck between TV producers and the BBC in 2006 only lets viewers download free versions of shows transmitted in the last week. As online video distribution gets more popular this year, the sight of adverts or fees against BBC programming older than a mere seven days is likely to prove controversial. Not that this is significantly different from the current situation (BBC Worldwide already sells DVDs and shows like Top Gear are already licensed to commercial channels like UK TV). The reality is that the BBC, left without a requested license fee hike, has been forced to seek more income from commercial sources such as Kangaroo. Just don’t expect the Daily Mail (LSE: DMGT) to act with restraint if last fortnight’s episode of Doctor Who starts to come with a price tag.
– The integration dance: 2008 will be the year when newspaper newsroom integration really becomes a reality. After a year of restructuring pain and union negotiation, papers like The Guardian and The Telegraph will get to fully enjoy the multimedia news environment that has been promised for so many years – multi-skilled journalists producing podcasts, vidcasts, pieces to camera, blogs, running copy and daily newspaper articles. In regionals, Johnston Press is due to make some bigger digital investments and will benefit from integration plans it has already been rolling out in its local newsrooms, while Northcliffe is expected to give a much-needed overhaul to its fleet of ThisIs portals. It’s now a time of much diversification from core newsprint functions – as such multi-faceted experiments mature, proprietors later this year will look for some indications as to which of their bets stand the best chance of paying off.
– Music as service: In a fit of irony, given the state of its own business, EMI bust the door open in 2007 through which major labels followed on the road to selling DRM-free digital music. Finally, labels are waking up to the fact consumers want to freedom to play their purchases wherever and however they like. But they’re not going to take the obvious related risk of even more piracy laying down. Not only does the industry, represented by London-based International Federation of the Phonographic Industry, show no sign of slowing its efforts to shut down P2P services in the courts; it is also likely to seek recompense through some more innovative methods. In the same way that services like MusicStation are giving Vodafone (NYSE: VOD) access to unlimited music downloads for a modest – but guaranteed – flat fee, I expect labels to throw their support behind similar efforts, like Playlouder to take the same surety to the desktop. Though digital music sales will grow and grow, something else is needed to bump revenue up to the holy grail of offsetting physical sales’ decline – as consumers show increasing disdain for making one-off purchases, the opportunity to tracks from a pool with no apparent fee may prove attractive to music fans, while labels may be drawn to the opportunity for bankable income to offset the uncertainty of what may lay ahead. That’s not the only way labels will want to work with ISPs – as entertainment industry moves to lobby service providers on filtering P2P traffic, it may become increasingly apparent that cutting off piracy at the choke point, rather than via laborious individual lawsuits, seems a more efficient means of policing.
What are your expectations for the year ahead… ?