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EUROPEAN PARLIAMENT Science and Technology Options Assessment S T O A LOOKING FORWARD IN THE ICT & MEDIA INDUSTRIES STUDY (IP/A/STOA/FWC-2005-28/SC34) IP/A/STOA/2007-12 PE 417.468 DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT A: ECONOMIC AND SCIENTIFIC POLICY SCIENCE AND TECHNOLOGY OPTIONS ASSESSMENT LOOKING FORWARD IN THE ICT & MEDIA INDUSTRIES STUDY IP/A/STOA/FWC-2005-28/SC34 MAY 2009 PE 417.468 EN STOA - Science and Technology Options Assessment _________________________________________________________________________________________ This study was commissioned by STOA under the Framework contract IP/A/STOA/FWC/2005-28. Only published in English. Authors: Knud Böhle, Michael Rader, Arnd Weber, Dirk Weber, Insti- tute for Technology Assessment and Systems Analysis (ITAS), Forschungszentrum Karlsruhe in the Helmholtz Association Hermann-von-Helmholtz-Platz 1 D-76344 Eggenstein-Leopoldshafen Phone +49-7247-82 2989 (KB) or -2505 (MR) Fax +49-7247-82 4806 Email: [email protected] or [email protected] Administrator: Mr Miklós Györffi Policy Department A - Economic and Scientifi Policy Directorate-General Internal Policies of the Union European Parliament Rue Wiertz 60 - ATR 00K076 B-1047 Brussels Tel: +32-2-2832505 Fax: +32-2-2844984 Email: [email protected] Manuscript completed in December 2008. The opinions expressed in this document do not necessarily represent the offi- cial position of the European Parliament. Reproduction and translation for non-commercial purposes are authorised pro- vided the source is accknowledged and the publisher is given prior notice and receives a copy. IP/A/STOA/2007-12 2 PE 417.468 Looking forward in the ICT & Media Industries _________________________________________________________________________________________ EXECUTIVE SUMMARY The topic: Unravelling Networked Electronic Media and the Web 2.0 If we cast our minds back to the beginning of the new millennium, European policy mak- ers at that time were worried that Europe was lagging seriously behind other regions of the world in terms of Internet access and application and that this would continue to be the case. According to EUROSTAT, in 2007, seven years after the announcement of the Lisbon Agenda, well over half of European households (54%) had Internet access, the majority over broadband (42% of households). In the leading countries, over 80 percent of households have access, well over three quarters of them via broadband. There are predictions that 3 million new jobs will be created by SMEs operating in the sector by 2015. Due not least to the rapid development and diffusion of new information and communica- tion technologies, new uses of the Internet have become possible, providing new busi- ness opportunities for a broad range of people, leading to new patterns of consumption and production of digital goods. While the changes have seldom been sudden, the result is a new quality of the Internet which has been labelled “Web 2.0”. This is linked with terms like networked electronic media, user generated content, social networking and many others which can easily confuse the observer watching developments at a distance. The aim of this report is to help unravel the concepts underlying the development of the Internet and to point out critical aspects which might require the attention of policy mak- ers in the foreseeable future. Where is what? The contents of this report In its Introduction, the report clarifies the basic concepts of "networked electronic me- dia", "Web 2.0" and "User Generated Content". Chapter 2 deals with Technological De- velopments and Technology Visions and provides facts and figures about innovations of hardware, software and networks important for media industries and Web 2.0 media formats. It considers at some length semantic technologies and the vision of the "seman- tic Web", and closes by looking at long term media technology visions. Chapter 3 posi- tions European Media Industries in the global context, analysing the audio-visual sector, the gaming sector, and the mobile Internet in more depth. Chapter 4 is devoted to net- worked electronic media associated with Web 2.0 and User Generated Content. The ba- sics of Web 2.0 media are explained in terms of the users' media experience and in terms of Web 2.0 business models, before addressing UGC-Platforms as a specific type of me- dia. The final Chapter 5 "About Exploitation, Remuneration and Copyright Policies in Web 2.0 environments" describes the new media business and outlines policy relevant in- sights. Implications and side effects of these new media focus on the possibility of hidden exploitation of the "prosumers" - consumers who also produce content -, potential im- pacts on the labour market in the media sector, with respect to privacy and with respect to more general transformations of the media industries due to automated or semi- automatic media production. There is then an extensive discussion of the appropriate (micro)payment infrastructure for the Web 2.0 environment. Last not least the issue of Digital Rights Management technologies is raised in the context of copyright policies in Web 2.0 environments. IP/A/STOA/2007-12 3 PE 417.468 STOA - Science and Technology Options Assessment _________________________________________________________________________________________ Where are we now? The state of industry 1. The new environment: Web 2.0 Web 2.0 is shorthand for recent trends in Web-technologies, a changing networked me- dia landscape with new business models and visible changes in the way people communi- cate via Internet. Beyond a series of new forms of networked electronic media such as blogs, wikis, social networking sites, video sharing platforms and photo sharing sites, Web 2.0 can be regarded as an environment based on a homogeneous underlying infra- structure. This can bring together the local and the global, the stationary and the mobile, the private and the public, the commercial and the amateur, work and play in countless ways. This Web 2.0 environment provides innovative business opportunities for media companies, telecommunications and IT industries. The open architecture of the Internet and Internet standards enable large scale interop- erability and globalisation of services and applications. Developments in hardware influ- ence the creative content industries by improving the connectivity and performance of distribution channels. The newly emerging Web 2.0 technologies embrace advances in client-server communication and facilitate the use of services on the Web as extensions to the personal computer. Advances in programming tools, social software, and easy-to- use and inexpensive tools for content creation have enabled new media forms (like blogs and wikis) and new communication and co-operation forms like virtual communities. Thanks to Web 2.0 technologies users can better control their media consumption: The Desktop and the Browser have turned into the user's powerful media content control cen- tre allowing the personalisation of networked media experience. 2. User Generated Content and-Platforms for its display One class of new media to emerge from Web 2.0 environments are so called User Gener- ated Content (UGC)-platforms. A typical example is Flickr, a platform to share personal photographs. These new media are far from being non-profit. Although UGC is intuitively associated with a certain amount of creative effort of users, the term covers a whole range of input from users, even including the involuntary production of commercially ex- ploited data traces. User Generated Content in principle caters for a niche market, in which each separate niche covers customers or audiences with specialised demands. UGC-Platforms serve numerous niches. By providing an infrastructure for the aggregation and presentation of content serving niches these platforms become a new form of networked media. The role of the user is not only to upload original content, but also to act as broker between sup- ply and demand by tagging, recommending etc. Content on UGC-Platforms often stems from users and the media industries. UGC platforms currently serve as an exchange where amateur content can qualify for commercial exploitation in mass media, and com- mercial content is offered for free to regain attention. They can also be understood as "free access markets" created by companies, where neither "buyer" nor "seller" pay for market entry. Some markets have been heavily impacted by the rise of user generated content ser- vices. The most notable examples are encyclopaedias, the online adult industry and the market for music videos. In other markets UGC complements the existing supply. All ma- jor media companies are in the process of setting up UGC services or taking over suc- cessful grass roots initiatives, witness the example of the acquisition of the YouTube video platform by Google.. IP/A/STOA/2007-12 4 PE 417.468 Looking forward in the ICT & Media Industries _________________________________________________________________________________________ 3. The digitisation of the audio-visual business There are clear indicators that the Internet as Internet of media is turning into the growth motor of the media and entertainment industries. Traditional media migrating to the Internet are able to compensate for lower growth rates or losses in the physical world, but digital born content like video games is showing the highest growth rates. Forecasts see EU27 members from Southern and Eastern Europe as most