Study reveils obstacles to legal distribution of digital entertainment content
Last Friday, the Dutch Ministry of Economic Affairs, Agriculture and Innovation presented a research report ‘Digitale drempels’ (‘Digital Thresholds’) from SEO about the factors that may hinder the supply of and demand for digitally distributed music, audiovisual content, games and books in the Netherlands. The study shows that the four sectors differ substantially in terms of digital distribution.
The music industry offers an extensive catalogue of digital music, both in regards of download and streaming services. According to the researchers, a serious obstacle in the market for digital music is the clearing of copyrights. Yet some (large) digital music distributors have succeeded. In the Netherlands, 40% of the music transactions are digital. However, the revenues from digital music are only 15%. An explanation for this might be that digital music as a product does not offer sufficient advantages for consumers, so they may prefer illegal (free) downloads or physical products.
The study finds that the supply of digital audiovisual content is fragmented and incomplete due to the problem of clearing rights and the industry's 'windowing' strategy. Windowing means that movies are released in some format or place first and in other formats or places later. For instance, movies are first released in the cinema and are available on DVD later. As long as the available digital audiovisual content is relatively incomplete and slow in including new releases, this market is expected to lag behind.
The market for digital games does not meet serious obstacles, the report claims, since the digital market is almost as large as the online market. Remarkably, some games are only available online. Online distribution offers almost no price advantage for consumers.
According to SEO, the main issue in the market for e-books is the lack of titles. New books are increasingly published as e-books, although often with delay compared to their paper equivalents. Also, the availability of older titles that are not being marketed anymore is poor. One reason for this is the difficulty to find the relevant party to clear copyrights for older titles. Another relevant obstacle is the limited size of the Dutch speaking population; the digitalization of an older Dutch novel will be less profitable than the digitization of English or French novels.
The music industry and other industries have been able to overcome issues that were considered as obstacles some years ago, the study concludes. Therefore, digital industries might also be able to resolve the identified issues on their own.
The complete report can be found here.
Read more about digital distribution on FutureOfCopyright.com:
- Digital radio royalties start to make a difference for labels and artists
- Google Books reaches agreement with French publishers
- Warner Music: streaming services generated turnover of $15 million in 2011
Source: Rijksoverheid
Comments(1)
Iolaus
The next study should be about:
1. how the decrease in revenue affects the quality and diversity of the digital content that is being distributed.
2. how digital distribution has made more digital revenue - in relation to both foreign and Dutch content - flow back to the U.S. and other big countries rather than the Netherlands
3. how commercial digital distribution causes instant private digital distribution by consumers themselves at no costs and what the effects of that are to the commercial success of the business model
4. how much of the wish for 'digitization' actually stems from thorough economic strategies, analyses and ambitions rather than the mere notion of 'anything digital is good/better for everyone'
5. how many Dutch distributors will be needed in case of full centralized digital distribution by Big Data? Especially when Big Infrastructure ceases to take into account matters of territoriality (as Big Data has ceased to do before them)
The advantage of a system that uses "windows" is that very costly audiovisual content can be sold at lower and lower prices over time and will eventually be shown on television for free (at least for the consumer). A lack of such a system will make content available for consumers immediately but will also force production costs to be seriously decreased as there are lesser opportunities for monetization.
Another advantage of more monetization options is that the marketing efforts can be of outstanding quality. And the marketing effort is what drives people to the content in the first place. If solid marketing disappears due to lack of funds, it will be more difficult for creators to differentiate themselves in a cloud of data. That too will affect the nature and quality of content.
And finally, the advantage of digital distribution is that both creators and distributors can have a more detailed view of when and where consumers like to play, read, watch or listen to that content. That too can have positive and very negative consequences (to journalism, content diversity et cetera)
Anybody care to invest?
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