Electronic Publishing in Europe : Competitiveness, Employment, and Skills

Electronic Publishing in Europe : Competitiveness, employment and skills

70047 / 01 / LB / GF Laurence BALLA Electronic Publishing in Europe : Competitiveness, employment, and skills

19 September 1997 Gilles FONTAINE

IDATE 2 Electronic Publishing in Europe : Competitiveness, employment, and skills

List of contents

Introduction...... 5

Executive summary...... 6

1. Part 1 : Market Presentation......

1.1 Principal products...... 1.2 General trends......

1.2.1 Off-line versus on-line services...... 1.2.2 For the time being, an exception : electronic games......

1.3 An overview of the current European market situation......

1.3.1 Fast growth in European multimedia equipment...... 1.3.2 Increasing interest in multimedia technologies...... 1.3.3 Installed multimedia equipment in Europe : some data and prospects......

1.4 A gap that remains wide in comparison with the USA......

1.4.1 Household equipment and Internet access...... 1.4.2 Internet connections...... 1.4.3 A European lag which can be explained by differences in investments...... 1.4.4 ...and by higher access costs...... 1.4.5 ...and by less publishing activity...... 1.4.6 Nevertheless, a gap which is narrowing...... 1.4.7 (cont.) Nevertheless, a gap which is decreasing......

1.5 Some European countries with different trends......

1.5.1 Germany : the most dynamic in installed equipment...... 1.5.2 ...and in product sales...... 1.5.3 UK and France still keeping up...... 1.5.4 Better financial prospects for Germany, France, UK, Spain......

1.6 A market apart in electronic publishing : game consoles......

2. Part 2 : Key factors for competitiveness in the electronic publishing market......

2.1 Supply and demand : the gap......

2.1.1 Presentation of main factors......

2.1.2 Factor 1 : Limits of a technology-push model...... 2.1.3 Factor 2 : Actual limits to the general public demand......

2.1.3.1 Consumer needs...... 2.1.3.2 The higher consumption potential of passive applications...... 2.1.3.3 TV advantages......

2.1.4 Factor 3 : Producers’ uncertainties...... 2.1.5 Factor 4 : Added value chain still confused......

2.1.5.1 From input-output relations to a vertical integration context...... 2.1.5.2 Complementarity of large and small firms......

2.2 A production which has to fill new consumption paradigms......

2.2.1 Paradigmatic logic of the electronic publishing market...... 2.2.2 From mass marketing to precision marketing...... 2.2.3 Diversification, but strong economies of scope...... 2.2.4 The management of a surfeit of information...... 2.2.5 Finding a compromise solution between passive and personalised use......

3. Part 3 : Impact on employment and training......

3.1 Positive impact of electronic publishing development on employment......

3.1.1 Consequences of a new « network effect » : lower costs but higher investments...... 3.1.2 Stakes which will stir up international competition...... 3.1.3 ... and encourage employment...... 3.1.4 ... at the risk of a greater degree of precariousness......

3.2 Probable scenarios......

3.2.1 The growth of the electronic publishing market...... 3.2.2 The role of telecommunications deregulation...... 3.2.3 Impact in terms of job creation......

3.3 Professions being developed......

3.3.1 Competencies and professions...... 3.3.2 "Core professions"...... 3.3.3 The jobs which have the highter rate of recruitment......

3.4 Importance of training for European workers......

3.4.1 Training and/or professional experience : it depends the profession...... 3.4.2 Importance of basic training for « core professions »...... 3.4.3 Beyond « pure » multimedia training the role of other kinds of schools......

List of contents : figures and tables

Figure 1 : On-line and off-line electronic publishing...... Figure 2 : European electronic games market trends ($ millions)...... Figure 3 : PCs with CD-ROM drives installed in France, Germany, Spain and UK - (000s)...... Figure 4 : European sales of CD-ROMs (million)...... Figure 5 : Europe : Installed home equipment...... Figure 6 : Household equipment and Internet access...... Figure 7 : Internet connections - (1996 - % by area)...... Figure 8 : Investments in Information Technologies - (% of GNP) - 1996...... Figure 9 : International comparisons of Internet access costs in 1996*...... Figure 10 : CD-ROM and other CD multimedia publishers (1996)...... Figure 11 : PC software unit sales - (index, base 100 in 1992)...... Figure 12 : World : on-line household forecasts...... Figure 13 : PCs with CD-ROM drives installed in homes - (millions) - 1996...... Figure 14 : CD-ROM sales in Europe in 1996 - (% by country)...... Figure 15 : European households on-line at the beginning of 1997 - (000’s)...... Figure 16 : Share of total forecast revenues by European country in 2003 (%)...... Figure 17 : Active installed base of advanced consoles in 1996** - (000s)...... Figure 18 : Price decrease to an acceptable level for consumers...... Figure 19 : Marketing-mix constraints...... Figure 20 : The digital chain of multimedia : function and industries...... Figure 21 : The regulatory "Melting Pot"...... Figure 22 : Management constraints for electronic publishers...... Figure 23 : Reason for PC purchase - (example of UK households)...... Figure 24 : The imperative of diversification...... Figure 25 : The management of a surfeit of information...... Figure 26 : Electronic publishing : sources of added-value...... Figure 27 : Positive and negative aspects of the IT development...... Figure 28 : European SMEs could attain the same rank as their stronger rivals in terms of :...... Figure 29 : Four scenarios for liberalisation implementation and technology diffusion...... Figure 30 : Professions in electronic publishing...... Figure 31 : Competencies of "core professions"...... Figure 32 : Content industries : the most dynamic activities for job creation in the short term*...... Figure 33 : Importance of training for "core professions"...... Figure 34 : Key competencies to develop a project in Electronic publishing......

Table 1 : European electronic games market trends ($ millions)...... Table 2 : PCs with CD-ROM drives installed...... Table 3 : European sales of CD-ROMs (million)...... Table 4 : Europe, installed home equipment...... Table 5 : PC software unit sales - (000’s)...... Table 6 : Pcs with CD-ROM drives installed in homes...... Table 7 : Active installed base of advanced consoles in 1996**...... Table 8 : Price decrease to an acceptable level for consumers...... Table 9 : European publishing market segments and their potential for electronic publishing...... Table 10 : Overall European scenarios for impact on employment, 2000 and 2005...... Table 11 : The non-liberalisation scenario “0”......

Introduction

The purpose of this report is to give a flash picture of the electronic publishing sector in Europe, with regard to competitiveness, employment and training and skills needs. This study is mainly based upon the collection of data from existing sources, statistics and studies. It particularly covers four countries, France, Germany, Spain and the United Kingdom, as these four countries are among the top five for the number of employees in the sector of publishing, printing and reproduction of recorded media.

Thoughout this document, electronic publishing is defined as « any non-print media material that is published in digitised form to an identifiable public1 ».

1 Andersen Consulting

Executive summary

Electronic publishing is taking off in Europe:

 While CD-ROM sales continue to rise on a large scale, on-line connections present growth rates of close on 100%.

 This progress is made possible by a fast-developing installed base of multimedia PCs and telecommunications peripherals.

 In consequence, even though there is still a wide gap between the North American and European electronic publishing markets, it is constantly narrowing. Although smaller, the installed equipment base in Europe has the advantage of being more recent and thus providing better overall performance. Now, to further encourage European production, electronic publishers are expecting a rapid decrease in telecommunication charges.

 Among European countries, Germany displays a clear lead over its partners in terms of CD- ROM consumption and the use of on-line services. In electronic games, the UK market stands out prominently, the creation and sale of products profiting largely from the absence of language barriers.

... With a rapidly growing market, industry is playing for high stakes...:

 Market growth is hampered by the still wide gap between supply capacities and demand reality. While technological development permits rapid advances in supplied services, households do not seem ready to integrate this new dimension. The costs of accessing multimedia technologies are considered too high by the general public which, moreover, seems psychologically reluctant to accept new applications (except young people).

 Nevertheless, the major consumption potential lies in private services and the general public constitutes the main target for producers (the professional market is not expected to exhibit any substantial growth over the next few years).

 To increase demand from the general public, electronic publishers are conscious that an important effort has to be made to adapt production to emotional needs and, above all, passive content reception. This calls for serious thinking in terms of marketing-mix because it will be essential to create brand names that stand out in the competition. Furthermore, winning over the general public generates the need for new technological considerations concerning terminals in a situation where the public is far more familiar with television.

...To succeed in increasing demand from the general public, firms will, above all, have to reconsider their supply policies and this will inevitably call for greater mutual co- operation...:

Where the general public is concerned, the supply of contents represents the main stakes, the effect of which will probably be an acceleration of the movement of added-value upstream in the electronic publishing production chain.

 This development will encourage stronger vertical integration, because while large firms will play a decisive role in the development of communication infrastructures on the grounds of their bigger financial resources, small enterprises will be in the front rank in terms of creativity. Input-output relations existing between each kind of player should lead to real operational complementarity. Alliances are expected to favour economies of scale and scope and also lower transaction costs. Eventually, prices will be more attractive for consumers.

 Moreover, co-operation appears indispensable in view of the ever-keener competition in the market.

... However, although future competition cannot permit every firm to succeed in information technology based production, it will have the positive effect of increasing investment and, above all, employment ... :

 Electronic publishing will lead to changes in the organisation of professional or private human activities,. Rationalisation of the production process will probably be accelerated because of the new possibilities offered by information technologies; this will lead to the elimination of jobs, but the strength of competition will also imply the creation of new professions.

 It is still too early to evaluate the final impact of these paradoxical effects. Nevertheless, in view of the very fast growth of production, the consequences in terms of recruitment will probably be advantageous for European economies. The most optimistic forecasts even advance a grand total of 1 400 000 new jobs.

... Nevertheless, although the expansion of the electronic publishing market and the abolition of all time and space frontiers enhance the location of new jobs inside Europe, these jobs will probably be more precarious. This could therefore be a positive point for qualified people who could profit from rich and varied professional experience, but it may also constitute an additional obstacle for less-qualified workers.

1. Part 1 :

Market Presentation

1.1 Principal products

Electronic publishing is divided mainly into three products :

 Off-line supports which can be read on computers : today, CD-ROMs are the only forms of support in Europe, but the DVD-ROM (introduced in March 1997) is expected to earn market shares over the next few years. (Alternative technologies which have been developed in television, like CD-I, have proved to be unsuccessful.)

 Off-line supports adapted to game consoles.

 On-line services developed with the evolution of telecommunication technologies. These services are mainly used on computers, particularly for Internet connections. The only other example of a terminal is the Minitel in France. On-line services can be split into 2 categories : asynchronous applications (such as e-mail, FTP, News, WAIS and World Wide Web) and synchronous applications (Net-phone and videophony on the Internet)

Telephone services Leased lines ISDN service Wired Packet switching Data communication Frame Relay, etc.

COMMUNICATION Value-added services : SERVICES On-line services

Internet access

Cellular and radio services (telephony, paging) Wireless Over-the-air broadcasting Satellite services (broadcasting, data transmission, telephony)

PACKAGED CONTENT CD-ROMs and other software

Electronic publishing (strict sense) Competitive alternatives Source : IDATE, OECD

1.2 General trends

1.2.1 Off-line versus on-line services

The European market is currently going through a transitional phase, as the use of on-line technologies is going to be greater than that of CD-ROMs :

 A wider use of on-line technologies is encouraged by improved performances resulting from telecommunications developments.

 Since 1996, there has been substantially more progress in on-line connections than in CD- ROM sales. In 1997, on-line connections should rise more than 70 % while CD-ROM sales are expected to increase by about half of this figure.

 This trend is expected to be very marked during the next two years. It will lead to a market configuration in which on-line products will be clearly predominant.

 After the year 2000, most electronic publishing services will be supplied exclusively on-line.

Figure 1 : On-line and off-line electronic publishing

Electronic publishing Users Internet

Source : IDATE

1.2.2 For the time being, an exception :1990 electronic1992 games1994 1996 1998 2000

The growth of the electronic games market, which represents an important part of electronic publishing (above all off-line), will deviate from the general trend: CD-ROM supports will still be dominant until the end of the century:

 Currently, games on CD-ROM are earning greater market shares than console supports, and the CD-ROM is expected to become the leading electronic support by the end of 1997.

 Even if on-line games will make considerably more progress (more than 100 % in value in 1997 and 1998), the CD-ROM will remain the principal electronic games product until the year 2000. This can be explained by the better performances, especially the higher speed, of off-line supports, which is a great advantage for games.

 In the year 2000, CD-ROMs and game consoles are expected to account for between 75% and 80 % of electronic games sales (today, it is close on 100 %).

Figure 2 : European electronic games market trends ($ millions)

Consoles (hardware) Consoles (sof t ware) PC sof ware On-line services

2 0 0 0

1 8 0 0

1 6 0 0

1 4 0 0

1 2 0 0

1 0 0 0

0 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0

Corresponding data :

Table 1 : European electronic games market trends ($ millions) 1996 1997 1998 1999 2000 Consoles (hardware) 782 873 914 968 915 Change n/a 11.6% 4.7% 5.9% -5.5% Consoles (software) 1 023 1 080 1 200 1 130 1 110 Change n/a 5.6% 11.1% -5.8% -1.8% PC’s software 932 1 173 1 413 1 638 1 839 Change n/a 25.9% 20.5% 15.9% 12.3% On-line services 63 135 282 526 903 Change n/a 114.3% 108.9% 86.5% 71.7% Source : Datamonitor

1.3 An overview of the current European market situation

1.3.1 Fast growth in European multimedia equipment

Access to multimedia technologies (CD-ROM drive sales and on-line connections) continue to progress on a large scale in Europe, while the growth rate of data-processing equipment sales continue to decrease. The latest data available for 1996 and 1997 confirms this trend. It shows that users try to improve the capacities of their equipment instead of increasing their investments in new terminals, as seen by the following :

 in 1996 and during the first 6 months of 1997, while the increase in European PC sales was half of that in 1995 (only 16 %)...  ...CD-ROM equipment increased almost threefold...  ...on-line connection markets took off, with a growth rate of nearly 100 %...  ...during the same time, sales of game consoles increased by approximately 35 %.

Figure 3 : PCs with CD-ROM drives installed in France, Germany, Spain and UK - (000s)

0 1992 1993 1994 1995 1996

Table 2 : PCs with CD-ROM drives installed (000s) 1992 1993 1994 1995 1996 France/Germany/Spain/UK 43 189 1 144 4 040 7 260 Increase n/a 339.5% 505.3% 253.1% 79.7% Total Europe 81 407 2 891 10 630 17 830 Increase n/a 401.8% 610.3% 267.7% 67.7% USA 801 4 512 9 230 17 950 28 170 Increase n/a 463.3% 104.6% 94.5% 56.9% Source : Screen Digest

1.3.2 Increasing interest in multimedia technologies

While on-line services today constitute the most dynamic market in electronic publishing with a very high growth rate, CD-ROM sales still ensure the strongest market share in value :

 CD-ROMs’ sales are displaying large-scale growth in Europe. In 1997, they are expected to exceed the 60-million unit mark.

 The progress of CD-ROM drives has had a strong influence on the software market, and so have the proliferation and increasing attraction of new titles.

 Moreover, the appearance on this market of a multitude of new players (such as museums, book publishers, newspapers, etc.) has considerably enhanced the dynamic growth of CD- ROM drives and CD-ROMs sales.

Figure 4 : European sales of CD-ROMs (million)

0 1994 1995 1996 1997*

Table 3 : European sales of CD-ROMs (million) Millions Change 1994 19 n/a 1995 30 62.2% 1996 45 50.0% 1997* 61 35.6% * estimate Source : Datamonitor

1.3.3 Installed multimedia equipment in Europe : some data and prospects

While the installation of PC equipment in European households is expected to grow more than twice by the year 2000, the access to on-line services will increase nearly fivefold :

 In 1996, there were about 18 million personal computers in use in Europe. Around half of them have the potential to be connected on-line. Less than 20 % of home PCs were equipped with a modem.

 In the year 2000, the European market should account for 40 million home PCs and 30 million households with a CD-ROM drive. At the same time, Half of the PC in Europe should be connected on-line, that is 20 million households.

Figure 5 : Europe : Installed home equipment

1996 2000

25 + 122%

15 + 233%

10 + 470% 5

0 PersonalPersonnal computers computers CD-ROMCD-Rom drives drives Modems Source : IDATE

Table 4 : Europe, installed home equipment 1996 2000 Personal computers 18 million 40 million CD-ROM drives 9 million 30 million Modems 3.5 million 20 million Source : IDATE

1.4 A gap that remains wide in comparison with the USA 1.4.1 Household equipment and Internet access

Despite its rapid growth the European electronic publishing market still lags heavily behind the US market :  Computer equipment rates are lower in European countries than in the USA or Japan. In 1996, nearly 40 % of American households had a personal computer. At the same time, the equipment rates did not exceed 18 % in European countries and 14 % in Germany, France and Spain. Britain had the highest equipment rate in Europe, 17.4 %, half that of the Americans, however.

 Nevertheless, the gap between equipment in Europe and America is lessening. In fact, European households have a lower equipment rate, but this equipment, taken as a whole, presents a better quality than in the USA. This can be explained by the delay in Europe : the computer installed base is more recent, so it is more efficient (the American installed base is bigger but also older). As regards the rate of PC households with an Internet connection in the USA and European countries, the gap is narrower.

 Under these conditions, the gap between Europe and America in multimedia technologies will become increasingly narrow. Figure 6 : Household equipment and Internet access

P C e q u i p m e n t r a t e ( % ) P C h o u s e h o l d s w i t h I n t e r n e t a c c e s s ( J u l y 1 9 9 7 - % )

USA 39,0% Japan 18,4%

UK 17,4%

USA 16,0% Germany 13,5%

Germany 11,7% France 13,3%

UK Benelux 12,7% 9,5%

Scandinavia 14,7% France 6,5%

South Europe 7,0% Italy 5,8%

0% 10% 20% 30% 40% 0% 5% 10% 15% 20%

Source : Datamonitor & International Data Corporation

1.4.2 Internet connections

The United States lead on multimedia technologies is clearly visible in the breakdown of the use of Internet. The great majority of sites and users are to be found across the Atlantic :

 Nearly 2/3 of Internet connections are made from USA. The predominant position of the USA can be explained in part by the advance of this country in terms of on-line services and access provision. The activity of access provider has been developed first in America.

 The 15 countries of the European Union represent 25 % of global connections.

 Asian countries account for 13 % of connections, with Japan holding the largest share.

Figure 7 : Internet connections - (1996 - % by area) Others 13%

EU 15 25%

North America 62%

Source : Aftel

1.4.3 A European lag which can be explained by differences in investments...

The gap between European countries and the USA can be explained not only by the advance of American people and enterprises in using electronic services, but also by higher total expenditure on information technologies :

 Investments in information technologies represent 3.3 % of GNP in the USA, while they represent only between 1.8 % and 2.7 % of GNP in France, Germany and the UK.

 The higher investment rate in the USA, although explained by the America ‘s greater awareness of information technologies, is also due to the large number of American firms competing in this sector.

 Moreover, it should be noted that the UK has the highest rate of investment in information technologies among the principal European countries.

Figure 8 : Investments in Information Technologies - (% of GNP) - 1996

4% 3,28% 2,65%

1,72% 1,80%

0% USA UK Germany France

Source : Microsoft

1.4.4 ...and by higher access costs...

The wider use of electronic publishing in the USA is also due to advantages in terms of costs :

 Access provision and phone costs are considerably lower across the Atlantic than in Europe.

 In Canada and the USA, Internet users spend about half as much as users in the main European countries (Spain, France, UK and Germany).

 This cost difference has a very appreciable impact on the growth of the on-line market in North America and Europe. In the coming years, access provision and phone costs in Europe will have to come down rapidly if the market is to expand.

Figure 9 : International comparisons of Internet access costs in 1996*

IDATE 20 Access provider Phone

Canada

Sweden

FRANCE

Netherlands

GERMANY

Austria

0 50 100 150 200

Electronic Publishing in Europe : Competitiveness, employment, and skills

* for 20 hours of connection per month during peak hours ($) Source : OECD

1.4.5 ...and by less publishing activity...

The higher degree of dynamism in American publishing activity is another explanatory factor of this gap :

 The gap between Americans and Europeans in using information technologies appears clearly when comparing the publishing activities in each country. In 1996, the USA boasted 1 326 publishers, which is considerably higher than the 4 principal European countries (UK, Germany France and Spain) taken as a whole (879 publishers).

 If the pre-eminence of the USA is obvious in terms of numbers of publishers, it is also seen in market shares, even in Europe : at present, American products account for the bulk of sales in the principal European countries. A publisher like the American Electronic Arts, which is way above its competitors in Europe, leads in European electronic off-line products sales.

 In Europe, the UK presents the highest number of publishers. The English language is an advantage for these publishers because it gives access to a wider market. For other European publishers, the language difference the principal barrier to improving sales across the borders and to reaching the minimum size for this activity.

Figure 10 : CD-ROM and other CD multimedia publishers (1996)

IDATE 22 1 600 1326 1 400

600 465 400 201 175 124 200

Electronic Publishing in Europe : Competitiveness, employment, and skills 38

IDATE 23 0 UK Germany France Spain USA Japan Electronic Publishing in Europe : Competitiveness, employment, and skills

Source : IDATE, from CD-ROM Facts and Figures 1996, TFPL Multimedia

1.4.6 Nevertheless, a gap which is narrowing

The USA-Europe gap is narrowing. The faster development of PC software in Europe than in America is one of the essential indicators of this trend :

 PC software sales in the USA continue to be higher than in Europe, but European sales are developing on a larger scale, which means that the gap between the USA and Europe is gradually becoming smaller.

 Since 1994, the growth rate of software sales has been considerably higher in Europe, more precisely in the group comprising France, Germany, Spain and the UK.

Figure 11 : PC software unit sales - (index, base 100 in 1992)

France/Germany /Spain/UK USA

50 000

40 000

30 000

20 000

10 000

0 1992 1993 1994 1995 1996

Table 5 : PC software unit sales - (000’s) 1992 1993 1994 1995 1996 France/Germany/Spain/UK 60 346 3 203 14 274 29 293 Increase n/a 481% 827% 346% 105% Total Europe 89 499 4 179 21 771 43 353 Increase n/a 459% 738% 421% 99% USA 801 4 963 13 845 35 900 56 340 Increase n/a 520% 179% 159% 57% Source : first datas : Screen Digest

1.4.7 (cont.) Nevertheless, a gap which is decreasing

In the year 2000, the group of European countries comprising Germany, the UK, Italy and France is expected to represent a larger part in terms of on-line access and use :

 The configuration of world on-line households will display an important change during the two next years. The share held by the USA and Canada will be clearly reduced, on account of Europe.

 The share of the four principal European countries (Germany, UK, Italy & France) is expected to grow to 22 % of total on-line households around the world in the year 2000, while the share of USA and Canada will fall to below the 2/3 mark.

Figure 12 : World : on-line household forecasts

G e r m a n y , A u t r a l a s i a O t h e r 1996 U K , I t a l y , 2 % 1 % F r a n c e 1 4 %

J a p a n 1 2 %

U S A & C a n a d a 7 1 %

A u t r a l a s i a O t h e r 2000 G e r m a n y , 3 % 1 % U K , I t a l y , F r a n c e 2 2 %

J a p a n U S A & 1 2 % C a n a d a 6 2 %

Source : Jupiter Communication

1.5 Some European countries with different trends

1.5.1 Germany : the most dynamic in installed equipment...

Today, Germany is the most dynamic country in Europe in the use and installation of information technology equipment :

 Germany displays an appreciable advance in multimedia equipment. There are close on five millions PCs with a CD-ROM, more than twice the total equipment of the UK, France or other European countries.

 However, up to 1996, other European countries (France, UK, Spain, and Italy, Benelux) enjoyed a higher growth rate in multimedia equipment than Germany.

 As regards this recent trend, the gap between Germany and other European countries is expected to be reduced by the year 2000.

Figure 13 : PCs with CD-ROM drives installed in homes - (millions) - 1996

0 Germany UK France Benelux Italy Spain Rest of Europe

Table 6 : Pcs with CD-ROM drives installed in homes (000s) 1992 1993 1994 1995 1996 Germany 25 127 1 110 3 220 4 810 Increase n/a 408% 774% 190% 49% UK 18 84 509 1 200 2 300 Increase n/a 380% 506% 136% 92% France 4 37 280 1 080 2 120 Increase n/a 957% 657% 286% 96% Italy 14 48 250 1 040 1 640 Increase n/a 243% 421% 316% 58% Benelux 3 32 223 1 180 2 016 Increase n/a 1180% 597% 429% 71% Spain 8 20 105 720 1 200 Increase n/a 150% 425% 586% 67% Rest of Europe 11 59 414 2 190 3 744 Increase n/a 457% 602% 429% 71% Source : Screen Digest

1.5.2 ...and in product sales

The current advance of Germany is also obvious in the breakdown of CD-ROM sales in Europe :  German users bought nearly 45 % of CD-ROMs sold in Europe in 1996.

 UK was in second position with 13 % of the total, followed by France (9%).

 At the same time, the group Germany, UK, France and Spain accounted for more than 70 % of CD-ROM sales in Europe.

Figure 14 : CD-ROM sales in Europe in 1996 - (% by country)

Others 16%

Spain 5%

Germany Italy 43% 6%

Benelux 8%

France 9% UK 13% Source : Screen Digest

1.5.3 UK and France still keeping up

Germany appears also in first place in the use of on-line services. The UK and France are keeping up, but Spain is clearly behind the pack :

 While British households present a higher equipment rate in terms of PC (17.4 % for the UK, against 13.5 % for Germany), Germany has a considerably higher number of on-line households.

 In the beginning of 1997, Germany had more than 1100 000 on-line households, or nearly twice the number in the UK.

 In regard to on-line households in each European country, it is possible to consider 3 kinds of situation : the leading position of Germany, the intermediate level of the UK and France, and a group of countries (including Italy, the Netherlands, Spain and Sweden) far behind with fewer than 160 000 on-line households.

Figure 15 : European households on-line at the beginning of 1997 - (000’s)

1 4 0 0 1 1 0 5 1 2 0 0

1 0 0 0

8 0 0 6 3 5

4 0 0 2 4 6 1 3 1 1 0 2 1 4 4 1 5 9 2 0 0

0 s n y e n K y e c i d l n a d a U n n a t e p a a I r l m r S w r F e e S h G t e N Source : Datamonitor

1.5.4 Better financial prospects for Germany, France, UK, Spain

The development of the multimedia market in Europe will be dominated by three countries, Germany, France and the UK, which account for the main part of supplies and revenues :

 Over the next five years, Germany, France and the UK will continue to receive more than the half of electronic publishing revenues in Europe.

 The Spanish market will still represent a small part of total European revenues, in spite of its substantial growth up to 2003.

Figure 16 : Share of total forecast revenues by European country in 2003 (%)

IDATE 30 Spain/ Port ugal Aust ria/ Swit zerland 6% 6% Germany 23% It aly 7%

Nordic Count ries 10%

UK/ Ireland Benelux 15% 10%

Cent ral/ East ern Europe France 10% 13%

Source : Frost & Sullivan

IDATE 32 6 000

0 UK Germany France Spain Total USA Europe*

1.6 A market apart in electronic publishing : game consoles

The market for advanced consoles in Europe is poorly developed compared with the USA or Japan. In Europe, CD-ROM sales are taking over from consoles software more quickly than in other areas :  There is a wide gap between the number of advanced consoles in use in Europe, on the one hand, and the USA and Japan, on the other.

 The main explanation for this situation is the number of different languages and cultures in Europe which fragment this market. For cost reasons, publishers often limit a great number of titles to the English version, despite incorporating provision for local language versions of their products. (The importance of language also explain the first place occupied by the UK installed base in Europe.)

 In any case, in each area in the world the development of games software is expected to be marked by a considerable increase in CD-ROMs and a constant decrease in console software. Nevertheless, this trend will be more accentuated in Europe (except in the UK where the console market remains very dynamic).

Figure 17 : Active installed base of advanced consoles in 1996** - (000s)

* EU15 **Nintendo 64, Sega Saturn, Sony PlayStation and CD-i Source : Digest Screen

corresponding data :

Table 7 : Active installed base of advanced consoles in 1996** (000s) 1992 1993 1994 1995 1996 Total Europe 33 280 661 1634 3 294 includes : UK 10 75 170 407 1 012 Germany 2 31 95 245 546 France 8 60 126 366 749 Spain 0 21 54 136 284

USA 80 215 550 1 420 5 815 * EU15 **Nintendo 64, Sega Saturn, Sony PlayStation and CD-i Source : Digest Screen

2. Part 2 :

Key factors for competitiveness in the electronic publishing market

2.1 Supply and demand : the gap

2.1.1 Presentation of main factors

The electronic publishing market is in a transition phase because of a gap in supply capacities and demand reality which slows down market growth. While technological development permits a fast progress in supplied services, households do not seem ready to integrate this new dimension. At least four mains factors explain this gap between supply and demand :

1. The technological stakes are much too advanced vis-à-vis household demand.

2. The household demand is hesitant and cannot be specified precisely, and it seems to reflect a psychological reluctance in the face of a too rapid technological supply.

3. Producers are in a state of uncertainty, seeking the most competitive and strategic position to develop their supply. This uncertainty applies particularly to marketing-mix choices.

4. A chain of added-value that is still very confused.

2.1.2 Factor 1 : Limits of a technology-push model

Multimedia technologies are being developed too fast in regard to demand expectations. Future price cuts will lead to easier financial access for households by the year 2000, and are expected to encourage the development of a mass market :

 Electronic publishing is developing on a "technology-push" model : new technologies and services offer more and more sophisticated applications. The most recent, such as phoning on the Internet, electronic commerce or broadcast services are unknown among the general public in Europe. So it is difficult to consider a supply of products even more sophisticated than these before they are introduced into household use.

 A consequent price decrease is the main factor to encourage this introduction. This is the only prerequisite for promoting electronic publishing services from professional applications to general public services.

 Several trends enable a substantial fall in prices to be envisaged aver the next few years : competitive pressure will probably lead a decrease in price of hybrid optical fiber networks and coaxial cable, while production rationalisation and the development of cheaper displays and batteries will enable the costs of services to be reduced. Moreover, the progress of modem networks will make for lower costs in the use of cable network with two-way transmission. ISDN prices will also profit from the keener competition in telecommunications resulting from deregulation.

 These price developments are expected to lead to electronic publishing services available to all households. (And the more people using new information technologies, the greater the decrease in prices). It remains to be seen whether this trend will be sufficient to lead to the development of a mass market for electronic publishing. (cont.) Limits of a technology-push model

Figure 18 : Price decrease to an acceptable level for consumers

IDATE 37 A DSL Internet A dapter to TV Fiber ot the Curb M obile phones with EE

AL Accessible level (AL) 0,0

IDATE 38 1997 1998 1999 2000 2001 Electronic Publishing in Europe : Competitiveness, employment, and skills

Source : Andersen Consulting

Table 8 : Price decrease to an acceptable level for consumers Average price decrease Average price decrease 1990-1999 1999-2003 Fiber to the curb 15 % 15 % ADS 24 % 18 % Modem by cable 23 % 21 % Adapter DVB 19 % 16 % Modem 4 % 5 % ISDN 16 % 19 % Internet adapter to TV 20 % 14 % Internet-ready mobile phone 23 % 28 % Source : Andersen Consulting

2.1.3 Factor 2 : Actual limits to the general public demand

2.1.3.1 Consumer needs

While companies compete to develop more efficient services, the demand of the general public continues to be hesitant and rather unclear :

 The use of electronic publishing is "rational" or "subjective". (In the latter case, the success of recent applications is dependent overall on marketing and advertising methods.) Rational or subjective, users can display an active attitude to electronic publishing services (they search actively for the information they want), or a passive one (which is comparable to passive consumption in front of the TV).

 In considering different demand behaviours, we can identify 4 kinds of user : knowledge workers (professionals in information seeking) ; PC enthusiasts who use information technologies for private and professional interests ; time constrained users such as consultants, lawyers, judges, etc. ; and leisure seekers .Theoretically, for these 4 kinds of user, behaviour vis-à-vis electronic publishing applications can take the form of either active or passive consumption. But today, it is virtually always a case of active use.

Active Information Search

Information consuming needs : Wide array of entertainment Information Consuming Needs : rich information Wide array of special interest Loosely indexed and linked information Like the hunt for information : Quality information that can be browsers, surfers, finders, Rational Needs easily searched seekers Emotional Needs Economic Advantage Chat and discussion Curiosity Information Entertainment Advantage Voyeurism Information consuming needs : Information consuming needs: Playfulness Education and learning Format-intensive Bundled, pre-packaged Entertainment-centric information Looking-driven Filtering and customization Desire a broad variety of information

Passive Content Reception

Source : Arthur Andersen

2.1.3.2 The higher consumption potential of passive applications

While the use of electronic publishing services is essentially active today, the most attractive market is on the side of passive applications :

 Today, 80 % of electronic publishing users have an active behaviour. Most of them are knowledge workers or computer enthusiasts. These groups, which are great seekers of information were the first to adopt electronic publishing technologies.

 Nevertheless, the higher consumption potential concerns passive applications. So, while the active user market is not expected to show any considerable growth over the next few years, most industrial players in electronic publishing are concentrating their efforts on the progress of passive applications.

 The market for passive services largely concerns leisure seekers, that is, a large part of the general public. Time-constrained users are also an important target for passive applications.

Active

1 Knowledge Workers 2 PC-Enthusiasts

40.000.000 Potential Base 30.000.000 25.000.000 30.000.000 Potential Base 20.000.000 20.000.000 15.000.000 Users 10.000.000 Users 10.000.000 5.000.000

0 0 E l 1996 1998 2000 2002 1996 1998 2000 2002 m a o n t o i i o t n a

3 Time Constrained Users 4 Leisure Seekers a R l 25.000.000 250.000.000 20.000.000 200.000.000

15.000.000 Potential Base 150.000.000 Potential Base 10.000.000 100.000.000 5.000.000 Users 50.000.000 Users 0 0 1996 1998 2000 2002 1996 1998 2000 2002

Passive Note: User Groups are not disjunct

2.1.3.3 TV advantages

It appears that the rapid development of passive applications (resembling the TV context) will eventually be the only way to create a mass market. Inevitably, it has to be accompanied by a supply transfer from PC to TV :

 Today, the electronic publishing consumption potential among leisure seekers is nearly 7 times higher than that of current knowledge workers and computer enthusiasts.

 Leisure seekers, who represent the major part of the general public interested in media technologies, are driven by entertainment, curiosity and playfulness. Today, they constitute the principal gateway to the development of a mass market. To encourage these users to increase their consumption of electronic publishing, providers of multimedia services have to supply cheap and very user-friendly applications. They also have to be very shrewd in terms of marketing.

 The targeted public for the electronic publishing mass market comprise current « TV fanatics » who spend 4 hours a day on average in front of the television. So, to ensure greater use of electronic publishing by the general public, companies will inevitably have to transfer their supply from the PC to the TV set. At present, the TV presents considerable advantages over the computer : easier to use, people are all in the habit of using this terminal (familiarity with TV should prevent psychological reluctance), and, above all, there is already a wider installed base.

 Moreover, the history of information technologies should make companies remember that the success of mass market development generally depends on the size of the initial installed base.

Principal advantages of TV for mass market development

 easier use

 A wide installed base

 familiarity with TV then limits psychological reluctance

2.1.4 Factor 3 : Producers’ uncertainties

Faced with a hesitant demand and a poor knowledge of potential users’ needs, companies have to make important choices in terms of marketing positions in a very vague future :

 Consumption growth is characterised by several paradoxical trends which have to be taken into consideration by multimedia producers : individualisation but globalisation of production and consumption standards ; impoverishment of affective life and growing desire for emotions... nomadic and sedentary behaviour at one and in the same time.

 Producers therefore have to direct their supply along different paths : very attractive and user- friendly services but also very targeted and personalised ; multisensorial but easy to use services ; access to an abundance of quick-to-find information...

 For companies, the greatest difficulty will be to combine the management of an ever-more efficient technological supply with the management of emotional values. In this situation, choices in terms of marketing-mix are particularly delicate .

Figure 19 : Marketing-mix constraints

Rational choice Emotive targets (Producers) (General public) Attractivity and curiosity Product positioning Familiarity with terminal access Communication Price levels Strong emotions Secure and reassuring nomadism Distribution methods Speed No time constraints Source : IDATE

2.1.5 Factor 4 : Added value chain still confused

2.1.5.1 From input-output relations to a vertical integration context

The industrial organisation of electronic publishing is moving towards vertical integration. An increasing variety of players are attracted by this recent market, but only few will be winners in the strong competition. Now, it is still too early to know exactly what the future configuration of this production will be :

 As traditional publishers have to incorporate an electronic supply to stay competitive, they have to face up to a new array of competitors from the communications, IT and financial services sectors.

 Thus, while the use of electronic publishing is being developed on a large scale, the industrial organisation of the supply is taking shape. Companies with different activities and especially of different sizes, which are now in mutual competition, often have strong input-output relations with each other (cf. presentation below). Differences in size and in economic power could profit a few major players (as telecommunications operators, for example) and provoke a multitude of buy-outs.

 Finally, the industrial organisation of electronic publishing supply will evolve on the basis of a vertical integration. Firms presenting the best marketing and technological skills, a large scale supply of services and a strong experience in strategic competition will be in the best position to win huge market shares.

Figure 20 : The digital chain of multimedia : function and industries 1 - Content 2 - Packaging 3 - Servers • Movies, TV, Music studios • TV-radio broadcasters • Computer manufacturers • Multimedia software • Publishers, editors • Content & Distribution • Books, newspapers, etc • Electronic info, services management softwares

6 - Terminals 5 - Telecom equipment 4 - Distribution services • Electronic business consumer • Private & public telecom • Fixed, mobile & satellite & PC manufacturers equipment manufacturers telecom network operators • OS & navigation software • Datacom manufacturers • Cable-TV operators

Source : OECD, The economics of the information society, 1997

2.1.5.2 Complementarity of large and small firms

Nevertheless, while large firms will have a decisive role in the development of the electronic publishing market because of their bigger financial means, small companies will be in the front rank in terms of creativity :

 Electronic publishing is a capital-intensive activity. Investments in new products are ever higher because of technological progress and the fast development of standards. Moreover, the strong competition leads to increasingly high minimum investments. Electronic publishing is thus an activity with great financial risks. (It is the same economic model as traditional publishing, but requiring higher investments for production.)

 To meet competition, companies have to be of a sufficient "critical size", to be able to spread their costs by achieving important economies of scale.

 Nevertheless, as in traditional publishing, large firms have to work with smaller subcontractors to supply a very large range of products and to ensure a greater success potential. Furthermore, a multitude of subcontractors gives large firms a higher degree of adaptability and flexibility.

 These subcontractors are small enterprises with a great deal of creative activity but without sufficient financial resources to develop and distribute their own products to the end user. The support of larger firms is indispensable for them.

 So, as an atomisation of creations appears absolutely necessary to encourage the development of new products, the financial commitments of large firms is essential. In these conditions, close-cooperation will be developed between majors and the most creative of small enterprises. This co-operation will enable transaction costs in electronic publishing production to be considerably reduced, each players concentrating on his own skills and using his partners’ know-how to exploit his production.

 The more the electronic publishing market develops, the more the added-value will move from infrastructure and services operators to content players (cf. diagram below). This added-value swing from the downstream of production chain to upstream will be the factor structuring future relations between big and small firms.

The public sector implication in electronic publishing already has large consequences in some European countries, as in the UK or in Scandinavian countries for example. Today, the public enterprises produce a great part of the electronic information available. This concerns administrative documents as far as artistic or cultural creations. In several European countries, the importance of the public sector will have a important impact on the future configuration of electronic publishing added-value chain .

(cont.) The complementarity large-small firms

Figure 21 : The regulatory "Melting Pot"

Function Distribution Service Provision Production

Added-value trend in the long term

Infrastructure Services Content Business

PSTN Telecoms Publishers Cable TV Media Media + Press Satellite Service Providers Entertainment Mobile Public Sector (Film, TV, Music, Games) Broadcast Software Producers Actors Private Networks (Multimedia) Data Coms Artists Education Medical

Competition Competition Cross-Ownership Safeguards Safeguards Pluralism + Diversity Interconnection Interoperability IPRs Open Access Universal Service Data Protection Regulation Ownership Pricing Security Licensing Censorship

Source : IDATE, OECD

2.2 A production which has to fill new consumption paradigms

2.2.1 Paradigmatic logic of the electronic publishing market

The development of the electronic publishing market comes within a particular paradigmatic characterised by several constraints :

 To reach consumers on a large scale, producers of multimedia services have to compile a very wide range of applications and information that can be personalised for each kind of consumer. At the same time, production has to change gradually from a supply adapted to active seeking by consumers to passive seeking.

 This trend implies that firms have to adopt a very particular approach towards the market : they have to be able to manage the supply of a multitude of personalised products to passive consumers. At the same time, firms have to offer low prices, adapted to each kind of consumer.

 There is no economic model that fits into this new supply context. So the stakes in terms of marketing are considerable. Each kind of players will exploit his own experience but alliances will be inevitable.

Figure 22 : Management constraints for electronic publishers

Precise consumers demands in terms of services and prices

Abundance of Personalized information Management and targeted supply (& competition) constraints

Passivity of behaviour

Source : IDATE

2.2.2 From mass marketing to precision marketing

Precision marketing can be summarised by the capacity to supply a large range of personalised services, to ensure customer loyalty :

 The issue at stake in the electronic publishing market is to sell a multitude of products at different prices. Each company has to have a profound knowledge of the market to develop its production and determine its price policy. It therefore has to study a lot of data concerning consumer habits, such as time and frequency of access to servers, products sought, kind of network used... A detailed analysis of this data can help firms to perfect their methods of obtaining customer loyalty.

 Today, the part of the general public interested in electronic publishing has mainly leisure needs. The problem for producers is that this demand is generally very unstable. People seem ready for a large access to leisure applications, but only if these are constantly renewed. Today, leisure consumption by the general public is characterised by an important weareness effect which multimedia enterprises have to take into consideration. (The demand of the youngest sector of the general public is particularly volatile, as can be seen in the video games market.)

 To overcome this constraint, electronic publishers have to supply a wide range of greatly differing leisure applications. Then, the most delicate operation for a company is to offer the consumer the possibility to move from one service to another, keeping him in the sphere of supply of this same company.

 To succeed in this task, firms have to build a strong brand name that can be recognised in the overabundance of information and applications. Creating this brand awareness will be one of their principal challenges.

Figure 23 : Reason for PC purchase - (example of UK households)

IDATE 48 99% 100%

77% 80% 68%

40% 33%

20% 10%

0% School work Education at Entertainment Hobbies Online

Electronic Publishing in Europe : Competitiveness, employment, and skills home

Source : Screen Digest

2.2.3 Diversification, but strong economies of scope2

To ensure a multitude of cheap services, firms will have to realise important economies of scope :

 The unstable character of the demand and its "zapping" behaviour impose a policy of wide diversification on firms. To be competitive, each firm has to be present wherever it is possible to capture a demand.

 Moreover, firms have to supply their services at low costs for the general public.

 To combine these two imperatives, electronic publishers will have to try to obtain the largest possible economies of scope, by exploiting to the utmost the common point between different products and proliferating varieties. The target is to manage to offer products made to measure in appearance, but made in a production process that is very rationalised in reality.

It is also important to note that diversification has to be accompanied by growing interactivity of applications in order to reinforce the "zapping" possibilities.

Figure 24 : The imperative of diversification

DEMAND COMPANIES

Unstable “zapping” Have to “capture” as behavior many consumers as possible

Necessity of wide Large supply choice

Possibility to swing Imperative of from one application to economies of scope another at no extra cost

Source : IDATE

2 Economies of scope are factors allowing for diversification of production with no proportional increase of costs (economies of scale are factors allowing for the reduction of production costs per unit in relation to market size).

2.2.4 The management of a surfeit of information

Above all, the strategic stake for publishers is to define a competitive strategy which enables them to be distinguished in the surfeit of information :

 Today, the problem for publishers is not the lack of information, but its excess. The development of new technologies and the proliferation of publishers has led to a plethora of publishing. To have precise information on a subject, a seeker can find a multitude of documents and can feel lost, not knowing which is the best information. Sometimes also, people want information on a subject but cannot find any studies on it, not knowing whether or not such studies actually exist.

 One of the main expectations of electronic publishing is to help people to find the essential part of what they want rapidly, to help them to select the best information in a short time.

 This management of information will be essential for electronic publishers, because all information existing today is not easily accessible for consumers.

Figure 25 : The management of a surfeit of information

DEMAND COMPANIES

Time constraint Have to “capture” as (even for general public) many consumers as possible

Necessity to know what Present rapidly the most is available information possible on a subject Necessity to select rapidly the most Define selection interesting items of procedures or information summarizing procedures

Source : IDATE

2.2.5 Finding a compromise solution between passive and personalised use

Finally, the general public will buy electronic services if the product quality and rapidity are considerably improved and applications appear personalised. People will make greater use of electronic publishing if they find a real added-value at low cost. Today, the essential aspects of added-value needed, which correspond to the principal paradigms of the present consumer society, are :

 Nomadism : electronic publishing has to be available anywhere and at any time ;

 Zapping : interactivity has to function increasingly well to improve navigation among items of information and switching from one application to another.

 The « show » society and quality demands : applications have to be ever more rich and of a better quality. Esthetic aspects of applications will also have a considerable impact on their success.

Figure 26 : Electronic publishing : sources of added-value

Utilisez Word 6.0c (ou Contentult巖 ieur) availability

pour afficher une image Macintosh.

Content transparency and interactivity

Content format

3. Part 3 :

Impact on employment and training

3.1 Positive impact of electronic publishing development on employment

3.1.1 Consequences of a new « network effect » : lower costs but higher investments

As in the development of all network industries, (e.g. transport, water or energy infrastructures), the expansion of advanced communication networks will have an important impact on employment in Europe over the next few years. Electronic publishing, in particular, will lead to changes in the organisation of all human activities, professional or private, that can be expected to dynamise employment :

 Whatever the case, network development displays the characteristic of resulting in considerable economies of scale and scope. The consequences are important productivity gains in labour and capital. Costs are currently falling for all multimedia actors, but the market entrance fee is also lower, attracting ever more companies.

 In these conditions, global production costs are less important but competition is considerably harder and each firm has to grow and improve the quality of its production to stay in the race.

 In consequence, productivity gains from one side must be used for higher investments to improve production (in quantity and quality). The same argument applies to employment : the advanced communication network will certainly cut out a number of jobs because of a greater degree of rationalisation but, paradoxically, the higher pressure of competition will lead to the creation of a multitude of new jobs.

 If the expansion of information technologies in Europe is strongly encouraged, the positive consequences of keener competition may compensate for the negative impact of rationalising production.

Figure 27 : Positive and negative aspects of the IT development

Positive impact on micro- economic activity and employment Negative consequence of the greater rationalisation ? 1. “ network effect” and of the production process positive influence on macro-economy 1. encourages the development substitution of human 2. dissemination of labour with capital innovation and access to 2. the increase in labour new technologies by a productivity may larger number of eliminate some jobs enterprises (particularly SMEs) 3. elimination of spatial and temporal frontiers

Source : IDATE

3.1.2 Stakes which will stir up international competition...

The development of the advanced communication network will offer small and medium- sized European enterprises technical opportunities for attaining the same rank as the Americans :

 Electronic highways will exert an influence on all economic spheres. European players, and particularly small and medium-sized enterprises (SMEs), will profit from globalisation and liberalisation of information exchanges, that will offer them excellent opportunities to enter new markets abroad.

 Thanks to the abolition of their current limits in terms of time and space, SMEs activities could benefit from a new economic dimension, with a direct access anytime and anywhere in the world. At the same time, this could give enterprises better access to new technologies, that will make it easier for them to stay within the competition.

 This easier access to electronic publishing and to its main key factors of competitiveness will lead to much stronger competition. European enterprises, like their American or Japanese counterparts, will try to exploit all possible means to stand out in the race for market shares. This can only result in an increase in job opportunities, especially in Europe.

 Obviously, not all firms will be able to last the competition, but in a very high growth market, the balance of employment for workers will be positive.

Figure 28 : European SMEs could attain the same rank as their stronger rivals in terms of :

 S patial and time dimension

 C onquest of markets

 A ccess to technologies

 E mployment

 Work organisation

3.1.3 ... and encourage employment...

Stronger competition will lead firms to create more jobs inside European frontiers. Nevertheless this job creation should take place in a context of adaptability and flexibility. More unstable and precarious for less-qualified workers, the jobs will also be more gratifying:

 Information highways will considerably change the nature of work organisation, permitting off-site work. For example, teleworking is expected to be largely developed. At the same time, electronic publishing offers the possibility of greater work flexibility and gives firms the opportunity to adapt the workforce exactly to their needs.

 As the question of flexibility is very much debated today, especially in the case of the fast- growing electronic publishing market, adaptation by European enterprises to multimedia activity on an international scale could be considerably enhanced by this kind of work organisation. For workers, it could also represent a good opportunity to acquire a rich professional experience in different firms, all the more so as the future multimedia work environment is expected to be more qualifying and gratifying.

 The higher degree of rationalisation permitted by information technologies is expected to decrease labour intensive and repetitive tasks. In this case, less-qualified workers will have to be adapted to new tasks with adequate training. The improvement in global work qualification will thus have a positive effect on currently disadvantaged workers, by raising their level of qualification.

3.1.4 ... at the risk of a greater degree of precariousness

If a flexible employment strategy permits lower costs, information technologies will contribute to relocating jobs in Europe. However, it is important not to overestimate job creation:

 Employment in electronic publishing will also have the advantage of removing the interest in relocation. While the transfer of production to Asian or South American countries is a cost- cutting measure, the production of immaterial services does not fit into this context. This means that job opportunities provided by European firms in electronic publishing will be inside Europe. Nevertheless, it must be emphasised that these jobs will be more precarious.

 While electronic publishing activities have to be developed in European countries, information technologies could also encourage the relocation of traditional industries. Electronic publishing will lead to important productivity gains in industry, which can be prompted to return to Europe (or at least stop the relocation process).

3.2 Probable scenarios 3.2.1 The growth of the electronic publishing market

The electronic publishing market will continue to grow at least at the same pace as today. Nevertheless, some even more optimistic scenarios project a real take-off of this activity. The final issue will depend on cost trends for users, penetration of end user technologies, availability of attractive content and regulatory policies :

 According to a study presented by Arthur Andersen, electronic publishing will win important market shares in the total publishing market over the next five years. An optimistic forecast shows that the electronic publishing market will exceed 13.5 billion ECUs in the year 2002.  Nevertheless, in the less optimistic scenario, electronic publishing sales could come close to the 10 billion-ECU mark in the year 2002.  In the two situations, the progress in activity will inevitably be supported by new human resources.

Table 9 : European publishing market segments and their potential for electronic publishing SCENARIO 1: EP market takes off 1996 2002 SCENARIO 1 EP market % of total EP market % of total volume market potential market (m ECU) (m ECU) Newspapers 310 1 - 2% (1) 3700 7 - 10% (1) Magazines 200 1 - 2% (1) 2750 7 - 10% (1) Book market (total) 250 0,5 - 2% (1) 2600 6 - 8% (1) - STM/Specialist * 50 1 - 3% (1) 700 16 - 20% (1) - Educational * 70 1 - 3% (1) 550 10 - 12% (1) Corporate (total) 375 2 - 5% (2) 3300 16 - 20% (2) - Catalogues 3% (2) 16 - 20% (2) - Telephone directories 0,5 - 3% (2) 8 - 10% (2) SCENARIO 2: Conservative forecast 1996 2002 SCENARIO 2 EP market % of total EP market % of total volume market potential market (m ECU) (m ECU) Newspapers 310 1 - 2% (1) 2700 3 - 6% (1) Magazines 200 1 - 2% (1) 2000 3 - 6% (1) Book market (total) 250 0,5 - 2% (1) 1700 3 - 5% (1) - STM/Specialist * 50 3 - 5% (1) 600 12 - 15% (1) - Educational * 70 1 - 3% (1) 420 8 - 9% (1) Corporate (total) 375 2 - 5% (2) 2400 10 - 15% (2) - Catalogues 3% (2) 10 - 15% (2) - Telephone directories 0,5 - 3% (2) 5 - 7% (2) * also including magazines (1) in terms of revenues (2) in terms of copies produced (e.g. CD-ROM compared to printed matter) Source: AC/IENM

3.2.2 The role of telecommunications deregulation

In any case, a rapid liberalisation of telecommunication infrastructures would be the main driving force behind the take-off of the electronic publishing market, providing substantial cost reductions for general public consumption:

 a rapid liberalisation of telecommunications in Europe could encourage fair interconnection standards and equal access for general public users, content providers and SMEs. Moreover, it would help to reduce the competitive gap with the USA, favouring greater co-operation among broadcasting players and telecoms operators, vertical and horizontal alliances, better development of content production, etc.

On the question of slow and rapid diffusion of technology, rapid liberalisation of telecommunications may enable the creation of between 700 000 and 1 400 000 new jobs in content industries (cf. various scenarios presented below).

Figure 29 : Four scenarios for liberalisation implementation and technology diffusion Slow diffusion of technology Rapid diffusion of technology

 Complicated & restrictive licensing  Trend towards globalisation and international  Little de facto competition in long distance alliances Gradual services  Restrictive licensing liberalisation  No competition in the local loop  Creation of a European regulation body  Preferential treatment towards the Dominant attempting to maintain "special rights" for Network Operator operators  Low consumer orientation of the national  National voice telephony protected from regulatory authority competition

 Fast licensing  Fast licensing  Asymmetric regulation  Asymmetric regulation Rapid  Full-scale Open Network Interconnection  Full-scale Open Network Interconnection liberalisation Provision Provision  Low cost of universal service  Low cost of universal service  Liberalisation beyond the 1998 deadline in  Liberalisation beyond the 1988 deadline in large EU member States large EU member States  Little co-operation between the large  Fast globalisation and co-operation between competing groups lead to competing all players lead to early de facto proprietary standards and market standardisation fragmentation  Emergence of new mass markets like DECT, interactive multimedia applications or videotelephony  Investment in alternative infrastructures  Union-wide presence organised around big DNOs but growth will leave opportunities to small, customer-oriented niche players

Source : Effects on employment of the liberalisation of the telecommunications sector, DGV/DG XIII, BIPE -IFO - LENTIC 1997

3.2.3 Impact in terms of job creation

Table 10 : Overall European scenarios for impact on employment, 2000 and 2005

Gradual liberalisation/ Gradual liberalisation/ Rapid liberalisation/ Rapid liberalisation/ slow diffusion rapid diffusion slow technology diffusion rapid diffusion Employment 2000 2005 2000 2005 2000 2005 2000 2005 (in difference between the scenario considered and the scenario 0 - see below) Dominant national operator’s employment reduction -159,100 -248,200 -155,200 -225,900 -206,600 -312,100 -221,700 -286,300 + Job creation in the other telecom services (new operators+new services) 36,100 54,400 50,200 80,800 63,900 108,800 93,700 162,400 + Job creation in equipment manufacturers 8,100 500 25,800 46,900 12,100 15,700 24,000 41,200 + Job creation in telecom equipment distributors 4,000 8,100 8,100 15,800 7,700 15,700 11,400 24,900 + Job creation in direct suppliers -21,500 -30,600 17,600 54,000 2,000 29,100 42,600 150,700

= Sub-total: telecom cluster -132,300 - 215,800 -53,400 -28,400 -120,9000 -142,800 -49,900 93,000

Contents and others 253,300 444,000 427,900 862,400 412,600 784,600 540,100 1,207,300

= Global impact 121,000 228,200 374,500 834,000 291,700 641,800 49,020 1,300,300

Hypothesis : GNP growth rate : 2.6 % for European Union over the period 1995-2000 average annual growth of exports/imports (including intra-European trade : 10 %) Table 11 : The non-liberalisation scenario “0”

Key assumptions  3% uniform annual volume growth of total telecom activity from 1993 to 2005  annual productivity gains of 3% in volume and staff numbers for dominant operators maintained at 1993 levels  prices indexed to inflation (2% annual increase)  equipment market penetration by imports unchanged  stability of equipment purchases by operators, companies and households

Source: Effects on employment of the liberalisation of the telecommunications sector, DGV/ DG XIII, BIPE -IFO - LENTIC 1997

3.3 Professions being developed

3.3.1 Competencies and professions

Electronic publishing is developed by many different professions. It is used in business, education, entertainment, public places, at home, on the Internet... Therefore, the market is organised around an ever high number of competencies and applications. To simplify qualifications presentation, professions can be grouped into three main categories :

 the first category consists of professions which have only emerged in response to the new market ;  the second consists of professions drawn from other industries ;  the third category involves a few elements which are not generally associated with the profession in question.

Figure 30 : Professions in electronic publishing

Core professions

Multimedia editor Multimedia designer Multimedia project manager Multimedia programmer

Overlapping competencies

2D/3D graphics artist Multimedia author Sales and marketing Network technician Web master On-line journalist Multimedia database manager Audio technician Video technician Film director Digital photographer Instructional designer

Double competencies

Researcher Lawyer/Multimedia copyright clearance expert

Multimedia planner/manager of multimedia services Translators

3.3.2 "Core professions"

Core professions are mainly divided into three principal functions :

 Multimedia editors have competencies of director.  Multimedia designer are visualisers.  Project manager s have administrative occupations.

Figure 31 : Competencies of "core professions" Occupation Alternative terms Scopes  Creative director  Clarifying the nature of the client’s product Multimedia editor  Story boarder requirements, the target group and the delivery  Content developer medium/media  Conceptualizer

 Screen designer  Clarifying the nature of the client’s product Multimedia designer  Art director requirements, the target group and the delivery  Designer  Interface designer  Interactive designer  Interactive multimedia designer  Instructional designer  Web designer (on-line)  Producer  Clarifying the nature of the client’s product Project manager requirements, the fee and the time frame  Entering into a preliminary agreement with the client  Clarifying the roles of the client and the company  Arranging meetings with the client as required in the production cycle  Ensuring effective meetings : agreement as to what has been agreed and meeting expectations  Quality assurance of sales and rights  C-programmer  Contributing to the draft proposal submitted to Multimedia  High language client at the first project meeting with creative programmer programmer inputs to do with the product’s functionality  Authoring  Assessing the technical feasibility of ideas put  HTML programmer forward by the client or others  Estimating the manpower needed for the design and programming required in the budget and the design specification  Selecting the most appropriate technical solution for product implementation  Draw up flowcharts if required Source : IDATE

3.3.3 The jobs which have the highter rate of recruitment

In the short term, new jobs will mostly be created in content production sectors, while in the medium term the new communication performances will boost employment in all spheres of the economy :

 The wish and, above all, the necessity to meet the needs of the general public, will have a considerable impact on content development (cf. graphs below). So while the added-value of electronic publishing is moving from networks and infrastructures to the production of contents, it is in this latter activity that job creation will be the most dynamic.

 A veritable « copyright » industry, including software, audiovisual and electronic publishing, will be developed on a very large scale over the next few years. Requirements for multimedia publishers, multimedia designers, project managers and programmers will thus grow. At the same time, the artistic quality of products will imply the contribution of even more multimedia authors and especially 2D/3D graphic artists and web masters. Needs in sales and marketing will also lead to heavy recruitment of this kind of workforce.

 The most dynamic segments of the telecommunication market, in particular mobile telephony, and satellite communications, also offer great potential for new employment.

 In the medium term, the entire European economy is expected to become more dynamic thanks to electronic publishing, which will lead to a multitude of new jobs in a large range of sectors. Figure 32 : Content industries : the most dynamic activities for job creation in the short term*

Business Customers Private Customers

100% 100% 3% 3% System integration 5% System integration 10% 9% 8% 90% Content 90% 8% 80% 80% 30% 70% 40% Software 70% 50% Content

60% 39% 60% 5% 50% 50% Enduser/terminal 25% 40% 14% 40% 10% Software 10% equipment Enduser/terminal 30% 8% Value-Added Services30% 10% 5% 5% equipment 7% 20% Server 20% 15% 15% 26% Value-Added Services 10% 20% 10% Network/infrastructure 5% 10% Server 5% 0% 0% Network/infrastructure 1995 2000 1995 2000 Source: Booz Allen & Hamilton, Enabling the Information Society, 1997 * it is to be recalled that private applications present the great potential for future electronic publishing consumption.

3.4 Importance of training for European workers

3.4.1 Training and/or professional experience : it depends the profession

The European training structure in multimedia is rich and varied. It has a particularly good reputation in artistic applications:

 Training opportunities for multimedia professions are abundant in Europe. Public and private institutes ensure courses in all disciplines.

 Nevertheless, opinions are divided among firms on the training for electronic publishing jobs: training seems indispensable for special professions concerned with the development of microcomputing and the conception and production of multimedia services. On the other hand, firms are more guarded as to the effectiveness of training in multimedia design and production. Professional experience is really more important than training in these latter cases.

 Concerning the legal aspects of production, training does not appear to provide good operational ability. This is the case in the work of lawyers and multimedia copyright clearance experts. Commercial and marketing job applications are also only considered on the basis of professional experience.

 Artistic professions, such as designers or 2D/3D graphic artists, constitute special cases. While workers' skills are not dependent on professional experience, recruitment is carried out directly after training. For this kind of job, the initial specialised training appears clearly indispensable.

3.4.2 Importance of basic training for « core professions »

As regards « core professions », if a large professional experience is very important, a high level basic training is also necessary :

 The functions of multimedia editors, as well as project manager imply competencies in terms of human resources management and production organisation. These people have very often passed an University degree.

 The multimedia designer and programmer should have an important technical background achieved through training in a technical college or polytechnic training.

Figure 33 : Importance of training for "core professions" Occupation Educational level (entry) Technical and professional qualifications  University degree, preferred  basic computer literacy Multimedia editor in humanities  fully conversant with strengths and the language  Alternative : commercial of multimedia training  ability to handle interactivity and narrative conventions  insight as regards user interfaces  an understanding of graphic conventions  ability to write a storyboard  technical skills are an advantage but not prerequisite  Technical college /  basic computer literacy Multimedia designer Polytechnic  fully conversant with the strengths and the Speciality : Design language of multimedia  Communication design  ability to handle interactivity and narrative conventions  insight as regards user interfaces  an understanding of graphic conventions  ability to write a storyboard  technical skills are an advantage but not a prerequisite  University degree  basic computer literacy Project manager speciality : industrial  fully conversant with the strengths and the management language of multimedia  ability to handle interactivity and narrative conventions  insight as regards user interfaces  an understanding of graphic conventions  ability to write a storyboard  technical skills are an advantage but not a prerequisite  Technical college /  high-level computer literacy including the basic Multimedia Polytechnic principles of different types of programming programmer speciality : informatics  conversant with database structures and programming  ability to handle interactivity and narrative conventions  comprehensive knowledge of the strengths and weaknesses of different programming options (e.g. authoring packages such as Director vis-à- vis object-oriented languages)  technical creativity  ability to draft flowcharts  high-level skills in using programming tools and languages  overall grasp of the basic principles of multimedia programming e.g. the integration of the various data types Source : IDATE

3.4.3 Beyond « pure » multimedia training the role of other kinds of schools

Like electronic publishing production involves intense cooperation between different kinds of specialists, three categories of skills are required :

 Managing and directing of multimedia projects ;

 Production of tools and environments, dissemination and mastering of the technology ;

 Creativity in the expression presentation and interaction.

Figure 34 : Key competencies to develop a project in Electronic publishing

Creativity

Management Technology master

Source : IDATE

Finally, beyond multimedia training schools, several others kinds of training structures have a important role in future electronic publishers competencies development, like schools of communication, journalism, music, art and history of arts, computer science and graphic sciences...

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