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Convergence

Convergence is a generic term covering several different aspects of the evolving media environment. The development of digital media technologies has allowed the distribution and reception of any kind of audio-visual or textual media content through any electronic platform. This has led to a blurring of previously distinct media platforms, value chains and business models.

For example, a combination of increased computer processing power and online bandwidth capacity has seen the extension of what used to be quite separate, parallel media sectors in print, radio and television, and telecommunications into a single space of market competition for views/clicks and platform-agnostic advertiser dollars. Telecommunication companies are providing content services and even newspaper companies are getting into broadband retail. In the converged media environment it seems everyone is out to eat their rivals’ lunch.

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Digital media have also enabled a huge proliferation of online services, ranging from blogs and user-generated content on YouTube to on-demand content services including catch-up TV and radio podcasts.

The development of online content services like subscriber video on-demand (SVOD e.g. Netflix, Lightbox and Neon) has been made possible by higher speed broadband and the increased affordability of uncapped internet services. This has also seen increased moves toward vertical integration (expansion up/down into new sectors of the value chain) by telecommunication companies seeking to offer not only distribution channels but content services (such as Spark’s Lightbox).

Competition has increased not only in the subscription TV sector (where Sky had enjoyed an historical monopoly) but also in the content rights/licensing sector, especially for packages for premium movies, dramas and sports. One consequence of this is that the costs of acquiring premium international content for the free-to-air sector have increased, leaving them less funds for local content.

The proliferation of online media forms and the blurring of media value chains across sectors and the distribution of digital content of any form on any platform has also been accompanied by an increasing variety of reception technologies. The miniaturisation of computer processors has allowed the development of portable multi-media devices such as i-Pads and 4G (and soon 5G) mobile phones, as well as the increasingly large-screen smart-TVs with ultra-high definition. Traditional media consumer behaviour has become increasingly complicated and difficult to track as people time-shift, binge-watch and stream on-demand content.

The media industry has also attempted to harness the momentum of digital consumer demand and generate revenue by monetising free access to content (eg. YouTube) or allowing access to broad libraries of content in return for a basic payment (eg. Spotify). There has also been a significant compression of the time-frames between movie and drama releases in the country of origin and availability overseas as well as between box office, DVD and SVOD access.

The media industries have not simply capitulated to the pressures of online consumer demand, however. Somewhat paradoxically, the convergence of platforms has led to more specific content rights deals for different modes of distribution within a region – so pay-TV, free-to-air TV, online/on-demand, and mobile content rights may all be negotiated separately.

Media industries have also taken steps to expand their presence across the value chain so as to control content rights, distribution platforms and reception technologies.  The tying of software (content) and hardware (devices) to create ‘walled gardens’ such as Apple’s i-Tunes which is mostly compatible with Apple devices, or Sky’s proprietary ‘My Sky’ which is intended to help ensure consumer choice and revenues are kept within the company. Likewise, the ‘bundling’ of services including broadband, phone and content is often aimed at keeping consumers committed to a single provider rather than shopping around. The disruptions to the traditional value-chains and business models brought about by convergence, coupled with New Zealand’s highly deregulated media ecology, raises important questions about media competition and help explain why the Commerce Commission has recently declined two major merger proposals by Vodafone-Sky and NZME-Fairfax.

Another critical issue that has arisen from convergence and the proliferation of online media is the issue of navigation and content discovery. Just as video-recording allows time-shifted TV viewing and disrupt the linear content schedule, so new media offer more options to discover/consume content at our convenience. For example, Google searches have become the default navigation tool for internet browsing while Facebook now provides disaggregated news-feeds based on users’ social media metrics, browsing history and ‘likes’. However, in prioritising and directing their users to online content, Google and Facebook co-opt online traffic to generate advertising revenue by providing direct links to third party content (the loss of online advertising revenue to social media is a key reason why NZME and Fairfax wanted to merge).

 

Keeping Up With Convergence

Another key challenge of digital convergence is that the regulatory and policy models have tended to lag behind the evolution of digital media. Put simply new technologies develop faster than new laws and regulations can be developed. There are several gaps and ambiguities in the existing legislation dealing with online media, including questions of content standards, classification and regulator jurisdiction.

The Telecommunications Act 2001 (as of 2011) defined telecommunication services thus:

Telecommunication—

(a) means the conveyance by electromagnetic means from one device to another of any encrypted or non-encrypted sign, signal, impulse, writing, image, sound, instruction, information, or intelligence of any nature, whether for the information of any person using the device or not; and

(b) for the purposes of subpart 2 of Part 4, includes any conveyance that constitutes broadcasting; but

(c) for all other purposes, does not include any conveyance that constitutes broadcasting

telecommunications service means any goods, services, equipment, and facilities that enable or facilitate telecommunication.

The Broadcasting Act 1989 (as of 2011), meanwhile, states that:

Broadcasting means any transmission of programmes, whether or not encrypted, by radio waves or other means of telecommunication for reception by the public by means of broadcasting receiving apparatus but does not include any such transmission of programmes—

(a) made on the demand of a particular person for reception only by that person; or

(b) made solely for performance or display in a public place

Clause a) here excludes precisely the type of subscriber video-on-demand services being offered by Netflix, Lightbox and Neon as well as other online content such as YouTube. The problem that emerges here, therefore, is that the status of such services falls precisely between the two legislative frameworks. It must be said that the National government’s cancellation of initiatives such as the Review of Regulation permitted such ambiguities to remain unresolved.

The previous Labour government did begin to explore media regulation in the digital environment in 2008, but the incoming National government canned the Review of Regulation before it was completed in 2009 (probably to ensure it did not delay the roll-out of the Ultra-Fast Broadband Initiative).

In 2015, the National government issued a series of discussion papers on digital media convergence and examined options to create a more consistent policy & regulatory frame-work for the new media environment. In 2016, the government announced its intention to introduce a new Digital Communications Bill. One key component of this bill would be to give statutory jurisdiction over online content, including video-on-demand to the Broadcasting Standards Authority. The regulation of news content will remain with the industry’s own self-regulatory bodies – the NZ Press Council (print and broadcasting journalism) which is merging with the Online Media Standards Authority (online journalism).

However, the new legislation may leave other digital media regulatory issues unresolved. For example, it isn’t clear how complaints over online content from providers based outside New Zealand can be dealt with, or consistent content classification of content across platforms can be ensured. Meanwhile there are many questions about the definitions of journalism and news in the digital environment. Although the 2013 Law Commission report on news media in the digital age made some interesting recommendations these have not been implemented.

Whether or not the proposed new bill dealing with convergence issues is progressed depends on the direction government policy takes. BPM wants to ensure that future policy developments include consideration of civic and community media needs, not only issues of technical capacity and economic benefits.

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