The Digital Creative Economy - five suggestions for Vince Cable & Jeremy Hunt

Written by Nic Wistreich on . Posted in Studio 2.0

While there is some hint that the new British coalition government will follow through on the Lib Dem policy of rescinding the rushed and hated Digital Economy Bill to let it get full and appropriate scrutiny, I would imagine that many new cabinet members are grateful to Ben Bradshaw and Lord Mandelson for pushing through an unpopular piece of legislation as a parting gift and saving them from having to implement it themselves.

However the expected consequences of the Act on the healthy and profitable parts of the digital economy (from coffee shops with wifi to iPhone developers), essential for any kind of economic recovery or new growth, means the new government should at the very least reconsider the last government's approach to the problems of piracy and the promise of the digital economy. It may be that the OFCOM guidelines currently being discussed can exempt public wifi, scrap website blocking and push the three strikes option further into the future. But it may end up being smoother to introduce a new Act in 'DEAct's place, closer to Lord Carter's original recommendations before Mandy yachted with David Geffen and amended the public consultation. For what it's worth, I outline below five points that I think should be held in mind when shaping policy or campaigning in this area.

1. The Sky is not Falling

DVD and Music revenues are currently rising (DVD up 31% Q1, UK music sales up in 09,  digital royalties rise outstrips CD fall). Indeed, file-sharers using the Pirate Bay apparently spend 75% more each year on music and film than non-filesharers (£77 as opposed to £44 pa). 

2. Hollywood is stalling on providing legal alternatives

There are very few legitimate, comprehensive and competitive film streaming or download services: iTunes has less films than Tescos and getting your film on there is very hard (plus it costs more than my video shop, which makes little sense). Penalising consumers before the content industry has offered proper download solutions de-incentivises the studios to collaborate on these solutions - indeed shortly after the Bill went through, dropped plans to launch in the UK. Currently there is a lot of delay from the studios over technology as all of them want to control it. Piracy may be the most effective motivator to get them to release a legitimate alternative - ie. without filesharing we probably would never have had music industry agreement on Spotify.

3. The Digital Economy is not the Information Economy

Facebook, Google, Flickr, Twitter, etc (ie the centre of the Digital Economy) build their businesses around the intellectual property of their users; they depend on people sharing their own IP, without limit or compensation, to sell adverts against. They see little or no difference between a content producer who tweets, blogs, shares a link, mashups, photoshops, comments or makes an album or feature film as they're all advert opportunities, and there's nothing to presume that the quality of the content equates to the demographic value of the viewer to advertisers. Few professional web-native content creators - if any - would risk the backlash from trying to sue one of their fans (just as Oasis wouldn't sue someone who jumped the fence at Glastonbury for lost ticket sales).

4. Legitimate free content is just as much a threat to producers

Content creators distributing online must compete with a near-infinite amount of free and legitimate video, growing at an exponential rate. While Hollywood has committed itself to prosecuting and criminalising its potential audience, the British film and video industry may not have the luxury of being able to alienate potential cinema-goers and DVD-buyers. It is unlikely that the competition for attention online will be won by those companies that display the most bullying and aggressive behaviour (unless they have the new Batman or James Cameron film) and the British industry would be sage to study how the Pay-What-You-Want experiments of Radiohead (3 million sales of In Rainbows, avg £4 price) and the Humble Indie Game Bundle (which has just taken over $1m in one week) have done so well from of the 'Buskers Hat' model. 

5. Even if piracy stopped, lots of people will lose their jobs (and need to retrain)

Part of the root of Hollywood's panic is the threat - not from pirates or even free legit content - but of technology replacing the bulk of their jobs. Social media makes marketing departments redundant, getting a trailer cut is less of a priority when dozens of YouTube fans will make one themselves, digital distribution replaces not only buyers and planners, but video rental shops and DVD designers. Filmmaking still needs a large team, but sales, marketing and distribution needs a smaller, more savvy breed of wired, serial networkers fluent in all digital media forms. Avoiding job losses is as unlikely as YouTube videomakers paying union rates. Much of the attitude from legacy Hollywood and the unions is that 'if we get governments to legislate hard enough, the realities of doing business on the Internet in the 21st Century will go away'. While ridiculous, this is an opportunity for British companies to make a head-start in building the future infrastructure and services that support the Digital world we're approaching. One where attention is such a scarcity that few, if any, artists would add barriers such as payment or court summons to stop people 'spending' their time on their work, and instead will build their business models around the slipstream of such activity, once the user is engaged.

I hold little hope that our new government will listen to this and similar arguments from those across Britain's digital economy; personal contact with my local MP, the House of Lords enquiry, lobbyists, a union head and Digital Minister Stephen Timms amounted to nothing during the last parliament. That said, the Liberal Democrats did vote against the Bill, while Tory MPs such as Bill Cash and John Redward were highly critical of it (and surprisingly well informed). If we simply implement it as it is, the new global digital economy will continue to be driven by Sweden and California, unlikely to get similar legislation soon, with the UK - behind only two of the 250 most popular websites in the world - becoming a 'quaint' and frustrated digital backwater.