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"Content providers haven't traditionally embraced start-ups. The presumption, betrayed time and again on panels and in articles planted in the national press, has been that entrepreneurs are the root of if not all, then at least a sizeable chunk of, evil, innovating solutions to content distribution that often fall foul of copyright law."
"But that hostility is subsiding as rights holders and distributors become increasingly anxious about their future and conscious of the fact that, absent the necessary in-house innovation and will, their only realistic hope is to acquire talent from a burgeoning pool of talented young British developers. These are uncomfortable truths, but truths that the providers must embrace if they are to survive."
UK content providers have been more worried about cannabalisation than anything, having witnessed the frightening rises of America's Netflix and Hulu (Spotify for music in Europe) which essentially have turned traditional revenue dollars into dimes. Having said that, the rise of the Connected TV, a living room version of the iPhone with apps and direct access to VOD and other services is expected to create disruption on an unparalleled scale for content providers in terms of route to consumer, value chain and profit margins. And there's no turning back. The fact is, in-house innovation can never compete with opening up to external resources in the development community. Ever. Take IE Explorer versus Firefox, take Windows Server versus Linux, take Apple iPhone, take Google Android, take Facebook models with Open Apis and SDKs... open models checkmate every time.
Yiannopoloulos is right, content providers do need to embrace if they want to survive. And it looks like they are:
"...And, better yet, forward-thinking content companies like Sony and Getty are now aggressively exploring ways to reach out to the entrepreneurial community. One such initiative is the forthcoming "IC tomorrow", a programme overseen by the Technology Strategy Board. It's a £200,000 consumer trials scheme for UK-based digital entrepreneurs that offers access to a trial community and, crucially, premium content."
From Friday this week, entrepreneurs will be able to apply to the programme, which will invest in up to twenty consumer trials across music, television, cinema and publishing. Nick Appleyard, Head of Digital at the Technology Strategy Board, describes IC tomorrow as "an unrivalled opportunity to trial consumer applications and business models."
"We’re now looking for the brightest digital entrepreneurs and organisations to submit their applications," he said yesterday. "By breaking down the challenges associated with delivering content rich applications to the market, IC tomorrow hopes to ensure the UK continues to be a leader in technology innovation.”
The panel roster, a copy of which has been seen by The Telegraph, includes Rob Moffat from Balderton Capital, who, among others familiar with the technology start-up ecosystem, lends significant entrepreneurial credibility to the process. This is an encouraging development for tech and media start-ups and we should welcome it. The labels, rights holders and distributors, for their part, will be hoping to find that one bright spark out there. Because out there, somewhere, he must be.
Interestingly, the talk from content providers at FT Digital Media and Broadcasting Conference in London last week was more about divvying up the split controversy with new channel partners rather than opening up to developers. With rather unconvincing rhetoric, broadcasters and studios were adamant that having to revenue share at 30 percent with Apple was unacceptable. Well what is acceptable when you no longer have full control of the value chain and customer eyeballs? Whether than be through iPhones or iPads - Steve Jobs owns the eyeballs - or for TV - Samsung, Sony Bravia, LG, Philips, Sharp, Loewe, Toshiba and every other CE manufacturer building TV Apps into their TVs are going to charge you the same thing. Get used to it! Apps are the new filters of the Net. Digital feeds on innovation.
Giving up 30 percent of new revenue is better than making nothing to cut a deal. Particularly since the entire industry is about to be rocked by disruption not unlike the music industry has seen. One to Many is about to be changed into Many to Many.