Since the advent of the printing press in 1440, when Johannes Gutenberg’s invention for the first time allowed information to be disseminated at scale, mass communication has been an instrumental tool for human progress. The printing press laid the foundations for the plethora of media we see today, but modern media and communications are in the midst of another seismic shift.
As printed materials give way to digital distribution, traditional forms of broadcast media are facing profound upheaval – with the dominance of ‘linear’ television and radio being challenged by new streaming services.
But it cannot be taken for granted that the proposed ‘new normal’ will be better, or that our existing institutions will be able to reorient themselves around a digital world. New regulatory paths will have to be carved out and new business models explored. The in-house teams of both new media businesses aiming to ride the wave and traditional media companies struggling to adapt, must find ways to match rapidly-expanding expectations of efficiency and ease of access.
Cutting the cord
‘What linear does a poor job of, is that it serves the same content in the same way to everyone,’ says Sunjay Mathews, head of legal for North America at sport streaming service DAZN.
‘As a Yankees fan in New York, if I watch ESPN, I get the same shows that a Red Sox fan in Boston is seeing on the same channel. But with streaming, we have the ability to serve very specific content and, more importantly, specific advertising, that speaks to consumers as individuals.’
In the past, the line between the broadcaster and receiver was clear but the advent of the internet has shifted the landscape significantly. The popularity of YouTubers, for example, individuals often armed with little more than a webcam and basic editing software, can outdraw Hollywood-produced blockbusters.
‘Streaming is the future, and that will only become clearer as the industry provides users the total experience they’re seeking,’ says Mathews.
‘The technology is changing so rapidly that right now, streaming platforms are able to provide personalised access. In the future we are going to see even more personalisation.’
Such trends are rapidly changing media consumption. Between 2012 and 2016, the amount of television watched by US audiences dropped by 19%, with younger generations accounting for the most severe drop: those aged 18-24 watched 39% less television over that period.
‘Content delivery needs to be adjusted in a way that serves that audience.’
Sunjay Mathews, DAZN
‘To use sports as an example, viewership has seen dips among the four major US sports in recent years, and a lot of that is demographics. But it’s not that younger people don’t like watching sports: they love sports as much as previous generations did. It’s just that they might not want to watch a three-hour sporting event, but they are perfectly happy to watch three hours of highlights. Content delivery needs to be adjusted in a way that serves that audience. If you’re not serving the audience, you’re going to get left behind,’ says Mathews.
As of September 2018, YouTube had 1.9 billion logged-in users on a monthly basis; Netflix had over 148 million paying subscribers worldwide having long since become the world’s highest-valued media company; Hulu generated $1bn in advertising revenue in 2017.
‘Product and advertising integration, where advertising becomes part of the experience to the degree you don’t even realise that you’re being served up an ad, is one of the next steps we’re likely to see with streaming technology,’ says Mathews.
‘There are going to be adverts specific to what it is that you want to see. If you’re a brand and want to speak to the people you can reach, you don’t want to waste time trying to reach people that don’t care. Equally, if you deliver content, you don’t want to ruin the experience by serving an ad for 30 seconds which can get the message across in five seconds, or serving up the same 30 second ad repeatedly during the course of the viewing experience. That speaks to the huge potential that exists in this space still waiting to be realised.’
One size won’t fit all
Despite the upheaval in traditional media, not all corners of the industry are feeling the pressure equally. Some serving more targeted demographics are doing fine. Take, for instance, the Spanish language market in the US, whose habits remain relatively steady, according to findings by US market research firm Parks Associates.
‘While pay-TV penetration declined among US broadband households, adoption has remained steady among Spanish-bilingual households over the past few years,’ says Brett Sappington, senior director of research at Parks Associates.’ Cord cutting does not have the same impact in Spanish-language households as it does for the larger broadband population. In fact, most of their recent pay-TV changes have been upgrades to more expensive services.’
Similarly, National Public Radio – better known in the US as NPR – has found that rather than looking to replace traditional offerings, building out a suite of ways to host content has negated the need for an overhaul in fundamental strategy.
‘Radio still reaches 92% of all US adults every week. That’s more than any other platform, including television. And this isn’t just an audience of older Americans: broadcast radio reaches 93% of those aged 25-54 and 91% of those aged 18-34. Rather than witnessing the death of radio, we see an audience that wants to access our content whenever they want it,’ says Jonathan Hart, chief legal officer at NPR.
‘So we meet our audience where the audience is. One hundred and three million Americans access NPR content every month, across broadcast radio, podcasts and our digital properties.’
As media companies grapple with increasingly diverse portfolios, in-house teams are left with the challenge of providing advice on areas that may not have always been a part of the regular media landscape. Further, they’re required to advise on technology that hasn’t even been properly regulated yet.
‘My biggest challenge as NPR’s chief legal officer is keeping up with the relentless pace of innovation. Supporting innovation is a much heavier legal lift than supporting a mature business. We have to do both,’ says Hart.
At DAZN, Mathews finds himself in a similar position, but looks towards the opportunities provided by treading into the unknown.
‘In a traditional, linear space, the legal questions you are asked have been asked for the last 40 years: TV has been around for a while and these regulations are now crystal clear,’ he says.
‘For me, here at DAZN, I can’t say the same because some of the regulations have not yet caught up, and for the ones that have, the court cases haven’t been raised, tried or settled yet because we’re so on the fringe. But that’s how I provide my value.’
This new normal in media and entertainment law has put the spotlight too on the skills required to be successful in the industry. When looking to recruit and hire new team members, Hart says that what may have worked before, won’t be fit for purpose for long.
‘Familiarity with technology is now an essential skill for media lawyers. We need lawyers who understand each of the distribution technologies we use and aren’t afraid to figure out the ones we’ll be adopting next,’ he says.
‘And because perfect digital copies of copyright-protected content can be made almost effortlessly and can be distributed worldwide almost instantaneously, familiarity with intellectual property law is essential.’
Piracy on the airwaves
The obvious downside to the rise of new media platforms is the ease with which broadcasts and streams can now be reproduced and shared illegally, presenting a potential existential threat to media business models.
‘Piracy is one of the biggest parts of my job. Sports rights are expensive. And you pay such a high premium for them, it’s disheartening that people are watching that content for free – especially if you have a good value proposition,’ says Mathews.
For platforms like DAZN, the focus is on individuals taking their paid-for sports feed and sharing it online for free via illegitimate websites. For other platforms, such as Hemisphere Media Group’s Pantaya and the likes of Netflix, it is the possibility that the original video files will be uploaded to file-sharing sites or other illicit peer-to-peer platforms.
TV and movie revenue lost to piracy increased from $6.7bn in 2010 to $31.8bn in 2017 and a projected $51.6bn by 2022.
While numbers are difficult to come by, consumer research firm Statista reported that TV and movie revenue lost to piracy increased from $6.7bn in 2010 to $31.8bn in 2017 and a projected $51.6bn by 2022. The figures dampen expectations that the accessibility of the likes of Netflix would take the wind from the sails of pirates.
‘There are ways you can combat piracy,’ says Mathews. ‘The first is knowing that you’re never going to eliminate it. No matter if you do everything right, there will always be somebody somewhere streaming your content illegally.’
Multiple general counsel interviewed for this feature used the same analogy: ‘You know the carnival game Whac-A-Mole? It’s like that,’ muses Hart.
‘There are also technology solutions rights holders can use; video can make use of content ID and third parties can identify where your content appears on sites like YouTube and Facebook and move to get them taken down immediately,’ continues Mathews.
‘The main issues I see with addressing piracy with legal action are firstly, how do you identify the target? And you can imagine with these streaming links, it’s often impossible to identify who it is. Secondly, you have the problem of, even if you are able to identify the person, they may not even have the means to pay a penalty.’
‘I see a shift in the legal remedy being used by the rights holders. They focus increasingly on prevention rather than punishing those responsible. We can threaten them if they post a link to Twitter or Facebook and tell them that we know that what they’re doing is illegal, and more importantly, what they are doing is making consumers have to spend more.
‘The final point is, having a product that is good and affordable, so there is no point in suffering through the lack of quality of an illegal stream. We need to have our quality be so crisp and integrate so many options that watching illegally becomes not a worthwhile experience.’
‘If someone is OK squinting their eyes and watching a poor quality picture of, for example, the Premier League, with foreign-language commentators, then we are never going to acquire them as a subscriber. But if we give them a good value proposition that they can use to watch their preferred team, with great definition and great usability, then we have created a product that will combat piracy by itself.’
Another challenge in this area is that sometimes the piracy is being facilitated by competitors: those who hold rights to distribute content in other jurisdictions but have not taken care to stop those in the US and elsewhere from accessing them, for instance by ensuring their platform is region-locked – a practice known as geo-blocking. Alex Tolston, executive vice president and general counsel of Hemisphere, elaborates: ‘Let’s say Turkish product, they’re licensing all over the world. And while we demand that their co-licensees are geo-blocking the licensed content for their territories, we are constantly seeing broadcasters in Latin America who make the product available either on a catch-up basis or through one of their streaming platforms that are in violation of their geo-blocking restrictions.’
‘As [streaming services] and other digital alternatives to linear become viable alternatives to traditional television viewing, licensors and licensees around the world are becoming more sophisticated on the segregation of rights being licensed. As this digital transition evolves, the protection of the IP that is being granted to licensees becomes more crucial. My hope is that the industry moves forward with a uniform preventative technology that is able to manage the distribution of worldwide rights; some inroads are being made with respect to piracy, but a uniform solution really doesn’t exist today to deal with the shifting landscape of rights management.’
Bundling up
Another factor is the success of the streaming model may be everyone’s undoing. As competitors begin to replicate Netflix’s pioneering subscription model, rights holders have more choice as to where their content lands. The result is that instead of several giant troves of content, consumers will be forced to fracture their spend among many competing service providers. This may ultimately kill the benefits which drove the initial success of streaming platforms: convenience.
‘I have no idea what the future will hold, but what I do think is, right now, there are a lot of people cutting cords and buying more subscriptions,’ says Mathews. TDG Research, a US media market intelligence firm, reported in 2018 that all major television networks in the US will offer a direct-to-consumer (DTC) streaming service by 2022.
‘These are early signs of an emergingmedia tribalism,’ says Mike Berkley, senior adviser at TDG and chief author of the report. ‘Major networks will increasingly reserve their best titles for their own direct-to-consumer services, which will help drive total network DTC subscriptions close to 50 million by 2022.’
Mathews, however, predicts that the market will do what it always has: adapt and thrive.
‘At some point – I don’t know if it will be a collaboration or more like a giant company such as Verizon or Amazon or Disney buying all these platforms and combining them, or if it is going to be one of those deals where you have one login that gives you access to all of them – we could come up with a way that we do deals with each other.’ LB
Greg Hall is managing editor of GC magazine.