The rapid proliferation of smartphones, newer and faster networks, changing patterns of media consumption are tilting the consumers towards the digital medium. In the period 2008 to 2013 the digital share of total media spending rose from 25.1 % to 40.1 % (Mckinsey Report). The report added that the percentage of digital spending in overall media spending will continue to increase and will amount to 50.3 percent by the end of 2018.
What is driving the shift to digital consumption?
- This shift towards digital is possible only because of the rapid proliferation of mobile phones. Half the world’s population has a mobile phone – up from 2 in 10 ten years ago. GSMA forecasts an additional one billion new subscribers by 2020 taking the global penetration up to 60%
- Increasing mobile broadband connection – forecasted to rise to 70% of the global base by 2020 up from 40% in 2014 (GSMA)
- Operators enabling networks by increasing their CAPEX spending on improving mobile broadband deployment. CAPEX is forecasted to increase to US $1.4 trillion by 2020, with 3G coverage set to reach 86% of the population(GSMA)
What are the trends?
- There is a tilt towards access of digital assets rather than its ownership. Consumers are demanding instant, real time access that too across multiple platforms and devices. Streaming services are becoming popular as 3G/4G networks develop further and smartphones become cheaper with Moore’s law (doubling of chips on microprocessors every two years) coming into effect.
- Rise of new revenue models are catering to every customer segment: feature rich paid services model accessible across multiple devices and platforms; free advertisement supported services; freemium – free basic services and opt-in for feature rich services.
- Increase in consumption of digital content on mobile platforms especially with mobile based apps.
Challenges in the digital ecosystem
But it is far from a perfect system. Challenges do exist. There is the question of artist monetization. Advertising supported streaming services are especially harsh on the artist as many of them are left out of the lurch. Also, mobile penetration may be near pervasive in many developed countries but it is still to catch fire in many of the poorer countries (Half of the world’s population has mobile connection GSMA). But the biggest problem is the one of PIRACY. According to ComScore/Nielsen data, 20 percent of the world’s fixed internet users regularly use unlicensed services. If one factors in mobile devices into this equation the percentage would definitely be higher.
Why has it arisen?
Outdated copyright laws (unfit for the digital age), obscurity provided by the internet and the growing demand for new releases are spurring copyright violations worldwide.
- Outdated copyright laws: A good example of the old and archaic copyright laws unfit for the digital age is the Digital Millennium Copyright Act, 1996 which says that online platforms are not responsible for posted content – but they do have to take the content down once it is requested by the content owner. This may be useful for taking down websites that support downloaded content but hardly relevant for apps that support live streaming – like Periscope.
- Obscurity provided by the internet: Unlike earlier, when the entire SWAT team would swoop down on torrent owners literally smoking them to oblivion, today’s online pirates are more difficult to track because of the anonymity provided by the internet. Closing these websites is like cutting down a hydra headed monster – cut one down, another will grow quickly in its place
- Unlike the perception that people use pirated stuff because it costs nothing, the truth is very different. People go to websites that provide pirated content because it is available earlier than the local release date.
How are these sites making money?
Advertisers pay for impressions per mile (CPM) also called click per mile (1000). The way it works is that the links are submitted to a hosting site (who have some kind of an affiliate program with the advertiser) and money is paid at the rate of $2 – $5 for every 1000 clicks. The advertisement are of three types: pre-roll (advertisement played out at the beginning), mid roll and post roll.
What are the risks?
The risks are many – and almost everybody is affected: artists, the user downloading or streaming the content and even the advertiser. The artist loses out on royalties. The user compromises security by downloading malware masquerading as a security patches or video plugins.. Advertisers lose out on reputation by associating their brand with an illegal streaming website.
Why isn’t anybody stopping them?
The dynamic nature of the internet makes it very difficult for law enforcement agencies to crackdown on websites peddling pirated content. That said, the war on piracy is being waged on two fronts –
Lawsuits: Too expensive and website can change domains easily (owner cannot be tracked down as many times they are operating from a different country with indifferent copyright laws)
Legal recourse: SOPA, PIPA, Indian Copyright Act 1957, Website blocking by the Court of Justice, European Union (March 2014) – ruling that copyright is a fundamental right requiring protection. However, these laws were not built keeping in mind the digital age…benefits are short term, with website mushrooming elsewhere
What can be done?
- Google acting tough on websites receiving several takedown orders
- Legal recourse against advertisers wilfully advertising on such websites as well as a crackdown on payment processors on these websites
The third option – creating alternative legitimate offers: Content platforms that bring together artists, producers, content producers, app providers, with integrated content discovery and loyalty payments.