The Development and Diffusion of Digital Content”, OECD Digital Economy Papers, No

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The Development and Diffusion of Digital Content”, OECD Digital Economy Papers, No Please cite this paper as: OECD (2012-12-18), “The Development and Diffusion of Digital Content”, OECD Digital Economy Papers, No. 213, OECD Publishing, Paris. http://dx.doi.org/10.1787/5k8x6kv51z0n-en OECD Digital Economy Papers No. 213 The Development and Diffusion of Digital Content OECD Unclassified DSTI/ICCP/CISP(2011)9/FINAL Organisation de Coopération et de Développement Économiques Organisation for Economic Co-operation and Development 18-Dec-2012 ___________________________________________________________________________________________ English - Or. English DIRECTORATE FOR SCIENCE, TECHNOLOGY AND INDUSTRY COMMITTEE FOR INFORMATION, COMPUTER AND COMMUNICATIONS POLICY Unclassified DSTI/ICCP/CISP(2011)9/FINAL Working Party on Communication Infrastructures and Services Policy THE DEVELOPMENT AND DIFFUSION OF DIGITAL CONTENT English - Or. English JT03332791 Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. DSTI/ICCP/CISP(2011)9/FINAL FOREWORD The Working Party on Communication Infrastructures and Services Policy (CISP) discussed this paper in December 2011. It agreed to recommend the paper for declassification to the Committee for Information, Computer and Communications Policy (ICCP). The ICCP Committee agreed to its declassification in March 2012. The document was prepared by Kevin Werbach, Associate Professor of Legal Studies and Business Ethics at The Wharton School, University of Pennsylvania. It is published under the responsibility of the Secretary-General of the OECD. © OECD /OCDE 2012 2 DSTI/ICCP/CISP(2011)9/FINAL TABLE OF CONTENTS MAIN POINTS ............................................................................................................................................... 5 POLICY IMPLICATIONS ............................................................................................................................. 6 Internet as the primary distribution channel ................................................................................................ 6 Elimination of legacy distinctions ............................................................................................................... 6 Infrastructure as a content issue .................................................................................................................. 7 Careful application of proven policy tools .................................................................................................. 7 Technology as both the problem and the solution ....................................................................................... 8 THE DIGITAL MEDIA LANDSCAPE ......................................................................................................... 9 Brief tour of the industry ecosystem ........................................................................................................... 9 Media economics ....................................................................................................................................... 10 Regulatory context .................................................................................................................................... 11 MAJOR TRENDS ........................................................................................................................................ 13 Growth of online video.............................................................................................................................. 13 Commercial video .................................................................................................................................. 15 User-generated content .......................................................................................................................... 16 Two-way video ...................................................................................................................................... 17 Changing user experiences ........................................................................................................................ 18 Device proliferation ................................................................................................................................... 19 IMPACTS ON TRADITIONAL DISTRIBUTION MARKETS ................................................................. 21 Cord cutting ............................................................................................................................................... 21 Unbundling ................................................................................................................................................ 23 Tug of war to control the experience ......................................................................................................... 24 Transformation of advertising ................................................................................................................... 25 INFRASTRUCTURE CONSIDERATIONS ................................................................................................ 27 Network capacity ....................................................................................................................................... 27 Video demands on infrastructure ........................................................................................................... 27 Games .................................................................................................................................................... 28 Metrics and transparency ....................................................................................................................... 29 Robustness ................................................................................................................................................. 29 Wireless networks ..................................................................................................................................... 30 REGULATORY QUESTIONS .................................................................................................................... 32 Competition/non-discrimination ............................................................................................................... 32 Network neutrality ................................................................................................................................. 32 Competition policy ................................................................................................................................ 33 Program access ...................................................................................................................................... 33 Wireless carterfone ................................................................................................................................ 34 3 DSTI/ICCP/CISP(2011)9/FINAL Backbone and peering regulation .......................................................................................................... 34 Media policy .............................................................................................................................................. 36 Broadcast regulation .............................................................................................................................. 36 Public media .......................................................................................................................................... 37 Copyright ................................................................................................................................................... 37 Intermediary liability and responsibilities ................................................................................................. 38 Privacy ....................................................................................................................................................... 39 Standards fragmentation ............................................................................................................................ 39 User protection .......................................................................................................................................... 40 4 DSTI/ICCP/CISP(2011)9/FINAL MAIN POINTS Digital content distribution has reached an inflection point. Streaming video now represents the largest component of Internet traffic.1 Viewers are watching a growing share of video via Internet-based distribution systems to both television sets and new endpoints such as computers and mobile devices. A substantial share of that video content is user-generated, user-selected, or otherwise outside the traditional model of professionally-produced linear programming. A prior OECD report highlighted the convergence of telecommunications and broadcasting into a multiplatform audiovisual environment.2 Recent developments have deepened that convergence. New digital content distribution services are having appreciable impacts on established media industries and network service providers in many OECD countries. An analysis of recent developments and trends is therefore timely. New entrants and services are competing with the linear broadcast paradigm and the bundling arrangements
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