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Pirate Bay sold for £4.7 million

Valerie | 30 Jun 2009, 13:20

Just months after a verdict was reached on the landmark Pirate Bay case, which saw the four co-founders sentenced to one year’s imprisonment and ordered to pay damages for copyright infringement offences,  Swedish software company Global Gaming Factory (GGF) has agreed to buy the controversial Bit torrent tracker in a deal worth £4.7m.

In a statement, Hans Pandeya, chief executive, explained that in order to live on, the website needed a new business model which “satisfies the requirements and needs of all parties, content providers, broadband operators, end users, and the judiciary.”

“We would like to introduce models which entail that content providers and copyright owners get paid for content that is downloaded via the site… Content creators and providers need to control their content and get paid for it. File sharers need faster downloads and better quality,” he said.

The company also announced plans last week to buy Peerialism, another Swedish technology company that develops filesharing technology, for $13m. Using Peerialism’s new technology, GGF hopes to “create a new financial model for filesharing network – or ‘ecosystem’ – by harnessing the vast number of people sharing files over the internet into a powerful, alternative network”, effectively enabling filesharers to earn money which could then be used to pay music and film companies for. 

The sale marks a new chapter for the world’s most high-profile file-sharing website, which also announced its intention to launch a video streaming service.  Like Napster, the music sharing site that was sold in the midst of legal challenges, The Pirate Bay faces a tricky balancing act in maintaining its popularity as one of the top 100 most visited Internet sites in the world whilst transitioning to a legitimate model.  Whether it will find a new lease of life will be something that the music industry will undoubtedly be watching closely.

Advertising must be creative in difficult times

Valerie | 29 Jun 2009, 10:00

Leading marketers have called for advertising briefs to focus on great ideas that consumers can interact with in the face of the deepening recession.

Speaking at the annual Cannes Lions Advertising Festival debate chaired by WPP Worldwide chief executive Sir Martin Sorrell, marketers from across the globe painted a bleak future for traditional broadcast and print media but there was optimism in ad agencies to come up with creative ideas that will engage people and encourage them to continue spending during the economic downturn.

Steve Ballmer, the Microsoft chief executive who was at the event explained that the global advertising economy has been permanently “reset” at a lower level, warning that media companies should not plan for revenues to bounce back to pre-recession levels. He argued that traditional broadcast and print media would have to plan business models around a smaller share of the advertising market, as revenues continue to move to digital outlets.

This comes as a recent report published by PricewaterhouseCoopers confirmed that the advertising market faces a prolonged slump following the collapse in marketing spending.

The Internet Advertising Bureau also confirmed that advertising revenues online have officially taken a dip for the first time this year, with ad revenue online falling 5 percent to $5.5 billion in the first three months of 2009. On the upside, the market is expected to pick up, with a projected growth of 8.6 percent in 2009, while the global ad market is expected to fall 6.9 percent, according to ZenithOptimedia, suggesting that the future growth of the industry may well lie in digital.

One firm that is putting digital at the heart of its growth strategy is the Publicis Group. At the event in Cannes, Microsoft announced a deal with Publicis Groupe’s combined media operation, Vivaki, which will see them working together to develop new content, improve marketing performance and better target digital advertising audiences by tapping into data from TV set-top boxes. The agreement is expected to help Publicis to achieve its target of generating 25 percent of its revenue from digital activities in 2010.

Digital, along with the promotion of green technologies have stood out as the rare bright spots amid the gloom at the annual advertising gathering this year. As Claire Beale of the Independent observes, “seeking out and celebrating this sort of transformational creativity has never been more vital”.

Marc Pritchard, global marketing director at Procter & Gamble added:
“The recession has allowed us to hit the reset button and rethink everything. We are striving to ensure that we touch and improve the life of consumers, looking at how to get more value and shift the media to where the customer is… Great ideas around what consumers are looking for are what it is all about.”

Cowell bids for new Global Entertainment company

Valerie | 25 Jun 2009, 15:46

Record and TV talent mogul Simon Cowell has joined forces with Sir Philip Green, the British retail billionaire who owns BHS and the Arcadia group, to form a global entertainment company that will create and own television content on both sides of the Atlantic.

The FT reports that the business deal will effectively see Sir Philip act as a holding company for all of Cowell’s entertainment interests, which include Britain’s Got Talent and The X Factor, and provide a springboard for future TV programmes.

At present, the X Factor Talent franchises sell to 30 countries, with profits going to either Simon Fuller’s 19 company or Sony, who bought the rights from Cowell’s existing production organisation, Syco.

The new venture, which would combine a TV production, talent management and merchandising company together would see Cowell developing his own content and achieve earnings that would propel the X Factor presenter into the ranks of the global entertainment industry’s top earners, alongside the likes of Oprah Winfrey. 

As the Telegraph observes, Cowell has been hugely successful in America, something that many British entrepreneurs have failed to do (TV production companies aside as previously discussed on c&binet) and is a “great asset for promoting Britain’s ability to mesh creativity with commercially lucrative programme formats.” 

For Sir Philip, the company is expected to create a lucrative merchandising opportunity, particularly in fashion. He will also provide business advice to Mr Cowell on his television work.

The news represents a significant change in the scale of ambition for Cowell, whose Syco firm is successful but relatively small in scale. The c&binet forum in October will include a session devoted to helping mid-sized businesses that are looking to build greater business capacity and achieve growth.

Study suggests Twitter users buy more music online

Valerie | 25 Jun 2009, 08:09

A NPD study published this week suggests that Web users who are active on Twitter are more engaged with music and tend to be more likely to purchase music online. 

The report found that 33 percent of Twitter users bought a CD in the last three months, compared to 23 percent of all Internet users, and 34 percent of Twitterers purchased a digital download, considerably more than the 16 percent of overall Web users who bought music online.

Among users who bought music online, 67 percent said they were aware of Twitter. Twelve percent of music buyers said they had used Twitter, compared to 8 percent of Web users overall.

As this blog points out, Twitter is changing the way music is discovered on the Internet. The four major labels, EMI Music, Warner Music, Sony BMG and Universal Music , all have Twitter accounts, no doubt to “take advantage of easy distribution on the platform”. It also argues that the instantaneous nature of Twitter also encourages musicians to release music more quickly rather than keeping followers waiting months for new material.

However, this Billboard article warns that taking the research at face value can potentially lead to some blind alleys, arguing that “it’s wrong to assume Twitter use has a causal effect on online music purchases. All NPD has done is found a correlation between Twitter use and online music consumption.”

Discrepancies with data aside, the implications of the report for the music industry are clear, as illustrated by a statement given by Russ Crupnick, entertainment industry analyst for NPD:

“Based on their music-purchasing history, active Twitter users are simply worth more to record labels and music retailers than those who are not using Twitter.”

Whist Twitter offers the potential for record labels to reach and engage with consumers in new ways, Crupnick warns that they need to think before they leap:

“There must be a careful balance struck between entertainment and direct conversation on one hand, and marketing on the other.”

British Film Industry needs to drive growth by exploiting new digital technologies

Valerie | 24 Jun 2009, 08:38

Despite riding high on the crest of the recent Oscar success of films such as Slumdog Millionaire, The Reader, Frost/Nixon, and Revolutionary Road, the British Film Industry still faces numerous challenges which means it won’t be a red carpet all the way, the Sunday Times reports.

Speaking to the Sunday Times, British Directors Tom Hooper, Justin Chadwick, Saul Dibb and Stephen Poliakoff , best known respectively for The Damned United, The Other Boleyn Girl, The Duchess and award winning TV dramas such as The Lost Prince, acknowledge the uniqueness of British films, which don’t have a “look” but argue that it is the “self-expression of directors making personal statements that makes British cinema distinctive.”

They also argue however, that despite recent success, the “British film community is still an extremely fragile thing” and that whilst films like Slumdog prove anything is possible, the same challenges remain – particularly raising money and having the means to market a film. As Dibb points out, new technology means that “everyone can make a film now, but it’s all about whether it gets seen or not.”

It is precisely technology that could be the industry’s salvation. NESTA and the UK Film Council have this week called on the film industry to expand digital distribution and work with online audiences as publishers not just viewers, as part of series of findings from their digital innovation programme. 

Releasing its interim findings from their Take 12 programme at the Edinburgh International Film Festival, the ‘Take 12: Digital Innovation Guide’ includes key recommendations for how to harness digital media to build and reach new audiences and increase potential for growth and investment, from encouraging directors, writers and actors write a blog or Twitter to engage audiences in the film-making process to looking to brands and content creators as new sources of funding.

The Take 12 programme is working with 12 independent film companies with specialist ‘innovation partners’ over a period of 18 months to try and improve their potential for growth using digital technology and new methods of distribution.  Companies taking part include Warp Films, Revolver Entertainment, Metrodome and B3 Media.

Jon Kingsbury, Director of Creative Economy at NESTA said:

“The Take 12 programme allows us to test how traditional business models can be adapted for emerging digital technologies. Feeding back these learnings to the rest of the industry will help ensure independent film companies are well equipped to take advantage of the exciting new opportunities that a Digital Britain presents.”

Investors bet on Mobile Payments

Valerie | 22 Jun 2009, 16:27

As c&binet has discussed previously, the micropayments market has struggled to take off, as the New York Times’ withdrawal of its subscription model last year illustrates. However that could be set to change with the entry of two emerging start-ups hoping to turn mobile devices into virtual wallets.

The New York Times reports that recently launched mobile payments startup BOKU has acquired competitors Paymo and Mobillcash and raised $13 million in Series A funding from Benchmark Capital, with contributions from Khosla Ventures and Index Ventures. 

Mark Britto, Boku’s chief executive explained that whilst many people play online games that use virtual currency and digital goods do not have bank accounts or credit cards - such as those in developing countries - many of those same people do have mobile phones, which opens up a new market for Web publishers through Boku. Boku estimates that so far in 2009 people have bought more than $500 million (£204m) of virtual goods on Facebook alone.

CNet notes that Boku already has an extremely close competitor: Zong, which first launched in the US in 2008, and which offers the same strategy of facilitating micropayments with a mobile phone number.

Earlier this year, Obopay, a start-up that lets people transmit money to one another via text message, raised $35 million from Nokia’s investment arm, the single largest investment in a financial services start-up this year, according to the National Venture Capital Association. MasterCard has also introduced a service called MoneySend that uses some of Obopay’s technology.

According to the New York Times, the flurry of recent investments has been driven by the success of smart devices such as the iPhone and Blackberry, which makes complex interactions much easier and illustrates that consumers are willing to spend on music, games and virtual goods.

However, one large challenge that mobile payments will need to overcome if they are to become a viable micropayment option is the transaction fees charged by mobile carriers. Boku says that fees can range between 10 to 50 percent of the purchase price which could pose a significant obstacle.

Still, venture funding for virtual goods-related companies reached nearly $70 million in the first quarter of this year. And both companies say they’re looking forward to the extension of Facebook’s internal payment system to developers, hoping that they can integrate their products into the platform for even broader reach.

It may take some time for either BOKU or Zong to reach Pay-pal like levels of ubiquity but the battle lines have been drawn – taking the “friction” out of the process and making it much faster and easier to purchase online could be the propelling force that’s needed for this second wave to find success.