Making Jimmy Wales right

About a month ago I was at the Global INET conference in Geneva. One of the keynote speakers was Jimmy Wales, best known for building Wikipedia.

The bit from his keynote speech that got the most Twitter and mainstream media coverage was towards the end - the prediction that “Hollywood will be mostly dead and no one will care”.

His point was that while Hollywood is focused on "piracy". They are missing the real threat: his 11-year-old daughter.

She is already adept at iMovie and won a local award for a short film she made.

Jimmy’s prediction was that collaborative storytelling and film making will do to Hollywood what Wikipedia did to Encyclopaedia Britannica.

The new generation will find ways to collaborate online to create movies to entertain themselves and their friends.

Many thought he was wrong
Jimmy Wales hedged his prediction by noting he was often wrong. Many people also thought he was wrong. After all, telling a story and building a feature-length film collaboratively is very different and much harder than collectively adding verifiable facts to a Wikipedia entry.

Much of this ‘user-generated video’ lands up on YouTube. In turn, this is fuelling massive growth in the amount of videos people watch online. At the end of last year, Google noted that two days worth of video are uploaded to the site every minute.

With three billion views a day, that’s about half of everyone in the world watching a YouTube video every day. And it continues to grow at 50% a year.

Our seeming obsession with the antics of our cats and ‘baby bites man’s finger’ is driving much of this mind boggling growth of ‘user-generated video’. However, that masks something else that is happening- increasingly: YouTube is becoming a distribution channel for Hollywood and the music industry. And creative re-mixes.

A 2010 report calculated that only about 17% of the top 100 most-viewed videos were user-generated. One article noted that 70% of all YouTube videos are barely watched at all. About 30% of YouTube videos account for 99% of all views.

This isn’t surprising. It’s the way the long tail based on the power law works.

In other words, Jimmy’s prediction is wrong. While his daughter’s video will be a part of the long tail, it won’t affect Hollywood at all. Hollywood and the music industry will continue to get the vast majority of viewership and, more importantly, the dollars.

I thought he was wrong, too
Along the lines above, I thought he was wrong, too. But there was also one other thing on my mind.

This was prompted by David Hughes of the Recording Industry Association of America, the body whose “member companies create or distribute 85% of all legitimate sound recordings sold in the United States.”

On one of the panels at Global INET, Huges said, “We are venture capitalists. We go out and find talent. We invest. And, unfortunately, like Silicon Valley always says, 1 in 10, 1 in 12, the rule of thumb in my industry is 1 in 20.

"So we go, sign, give them in advance, record music, shoot videos, subsidise touring and, of course, in some cases hundreds of thousands or millions of dollars in marketing and still only 1 in 20 makes money, 17 out of 20 lose money and a couple break even. So to equate the value of music with distribution, it's a red herring, it's really not the case."

That’s equally true for Hollywood and film making. The venture capital nature of the industry creates the few mega blockbusters at the head of the long tail. The ‘democratisation of distribution’ that is the Internet cannot out-muscle the marketing millions.

Therefore, Jimmy Wales was wrong. Hollywood has nothing to worry from his 11-year-old daughter despite the collaborative network and technology available to her.

UFB is based on his being wrong
Earlier this year, at the NZNOG conference in Christchurch, David Awatere of Crown Fibre Holdings spoke about how the UFB “provides alternate deployment options for the nationwide delivery of broadcast TV signals”. I likened that to going into the lions den to preach the virtues of being vegetarian.

His presentation included how the UFB provides for distribution of linear broadcast TV. Overseas experience, particularly AT&T and Verizon, showed how important that was to uptake of fibre.

Given that most of the broadcast TV content and video on demand will come from Hollywood, the UFB represents a new distribution channel for Hollywood. In turn, Hollywood will drive the uptake of residential fibre internet.

This view was met with widespread dismay from the audience. Was the Government investing $1.35 billion of our money for 75% of New Zealanders to have another way to watch Hollywood content?

Wasn’t UFB supposed to be all the wonderful things we would do in the future with ultra-fast broadband? Like video conferencing, home-based aged care, remote video monitoring, and cloud services?

The perceived critical importance of Hollywood content for the UFB’s success, at least for the residential segment, is also playing out in the calls to regulate SkyTV.

For example, Quickflix says Sky TV content deals hinder broadband uptake while SkyTV points out that “the rights to the most-watched TV shows in New Zealand sit with TVNZ and Mediaworks exclusively.”

Again, Jimmy Wales was wrong. Not only can Hollywood ignore the threat from his 11-year-old daughter, it is the UFB’s white knight. Given our single cable system piping in all that Hollywood content, with apologies to Norman Vincent Peale, once we roared like lions for fibre; now we bleat like sheep for Hollywood rights and international cables.

On the other hand...
Last week, research as a result of collaboration between the Internet Society, the Organisation for Economic Co-operation and Development and the United Nations Educational, Scientific and Cultural Organization was released.

The report is called The Relationship between Local Content, Internet Development and Access Prices. It “shows a strong correlation between the development of network infrastructure and the growth of local content, and a connection between developed local Internet markets and lower reported prices for international bandwidth”.

The study finds that the three elements are inter-related and likely feed into each other in a virtuous circle:

1. Better connectivity is significantly related to higher levels of local digital content creation.

2. Countries with more international connectivity have lower domestic broadband prices.

3. Countries with better domestic infrastructure have lower international bandwidth prices.

So it's about local content
In the case of New Zealand, it is natural that we will seek English content and the source of much of that content is Hollywood today. That is reflected in the fact that about 80% of our consumption of Internet content originates from US.

Yet we seem to be missing out on quality local content, relevant to us. Māori Television is an honourable exception, “and supports a unique New Zealand identity within a global society. It is a taonga [treasure], at the very heart of Māori culture and identity, and for that reason alone it must be preserved and fostered”. 

Unfortunately, there are only a small number of exceptions to the rule that New Zealand has little quality local content.

The importance of the ISOC/OECD/UNESCO report is that empirical research shows there is a strong correlation between the development of network infrastructure and the growth of local content, even after accounting for economic and demographic factors.

In other words, UFB will promote local content and, if we can demonstrate the courage and wisdom of backing local producers, local content can be a big driver of the UFB’s success.

In a broadcast TV sense, NZ On Air’s figures show New Zealand broadcasters are airing an increasing amount of homegrown television, clocking up over 11,000 hours of Kiwi programmes last year.

Overall, TV One screened the most local content, followed by Māori Television and TV3. However, I’m not an expert in local content but even I can see funding The GC and killing off TVNZ7 are hardly inspiring portents.

Now, local content does not equate to ‘user-generated content’ in the way Jimmy Wales spoke about it. Local content is as much about mass entertainment as it is about the local school multicasting Saturday rugby to the community as it is about innovations such as the New Zealand music equivalent of Megabox.

These are areas beyond the current debate of growing commercial pressures on broadcasters and the demise of public service broadcasting.

Perhaps that’s where some of the gaps are.

I don’t think Hollywood has much to worry about Jimmy Wales’ 11-year-old daughter just yet. But the same technologies and skills available to her are available to New Zealand.

We, and others around the world, have the ability to produce local content. The UFB can provide for efficient distribution of local content in addition to being a broadcast platform for Hollywood. Done right, that could be a worry for them.

Bottomline
As Winston Churchill never said, "we are not the lions but it falls on us to roar like a lion for local content". And to make Jimmy Wales right. Well, partially right. 

Vikram Kumar is chief executive of InternetNZ