Striking among the results are those that reflect the challenges thrown up for businesses and lawyers as a result of the growing demand for online content unmatched by willingness to pay.
Growing consumer appetites for online content
The public’s behaviour in consuming rich media content online is changing. There is significant demand — when asked what video content they would ideally want to watch online (assuming they did not have to pay for the privilege), respondents indicated a clear preference for full-length movies (selected by 59% of respondents), catch-up TV programmes (55%) and archive TV programmes (54%).
Despite this, actual take-up today is dominated by free and, mostly, short-form, services, especially user-generated content sites — for example YouTube —which are used by 63% of respondents every month. Free services allowing time-limited access to full TV programmes, such as the BBC’s iPlayer, itv.com and 4oD are used monthly by 18% of respondents.
Worryingly, only 12% of respondents state that they already pay — or would be willing to pay — a small sum for streamed/downloaded video content. Interestingly, respondents who admitted illegally streaming or downloading TV programmes or movies were more willing to pay, which would suggest that piracy is not simply a means to avoid payment, but a means of accessing content which was, until recently, not widely available legally.
Even these few who are prepared to pay are not expecting to do so incrementally — 43% of them stated that they would expect to spend less on DVD purchases as a result, with 39% saying the same in respect of DVD rentals and pay-TV also affected.
The industry’s response
The unwillingness of consumers to pay for content drives two different responses from industry — the first is to seek to reduce the use of illegal free content, while the second is to offer content to consumers free at the point of use.
For most businesses, this means content supported by advertising, while the BBC can provide content paid for through the TV licence fee (subject to the checks and balances in the BBC Charter that aim to ensure the licence fee is appropriately spent).
The good news is that, judging by our survey, consumers are surprisingly willing to be subjected to online advertising in order to obtain free content. Forty-four percent of respondents were prepared to view adverts at the beginning of a streamed or downloaded TV programme or movie — with 8% prepared to put up with ‘more than a few’ adverts — if, as a result, the programme would be free.
What makes this more remarkable is the context that, generally, respondents disliked internet advertising (more so than traditional media adverts). They found it intrusive and actively used pop-up blockers and other techniques to suppress it.
Piracy, the other means of accessing content for free, remains prevalent among a minority of respondents. Fourteen percent of respondents to the survey, predominantly 16-to-24 year olds, admitted illegally downloading music, with TV and film piracy gaining ground (at 6% and 5%), while a further 9% said they would “prefer not to say” about illegal activity.
Confusion over the exact definition of piracy
What people understand to be piracy is somewhat confused. Currently, it is illegal to make a copy of a CD which you own for use on, say, an iPod, with the only lawful home recording generally being that undertaken strictly for ‘time-shifting’ purposes. The record industry has publicly stated (in evidence to a Commons Select Committee) that it would never enforce this law and the recent Gowers Review of Intellectual Property recommended the law be changed to reflect this reality.
The UK Government accepted the finding in principle and is currently consulting on implementation.
Our survey supports Gowers’ recommendation. Less than one-third of people appreciate that such activities are illegal, while more than 70% consider they should be entitled to use content which they have bought across all devices they own and 53% consider that they should always be entitled to make back-up copies.
Implementation is, however, not straightforward. In particular, unlimited ‘format-shifting’ could undermine a variety of business models (such as pay-per-listen or time-limited downloads) which are supported by digital rights management (DRM).
Digital rights management
There is significant consumer confusion about DRM, what it is for and whether it is appropriate. For example, a third of respondents agree that it is fair for DRM to be deployed to stop people from using content they have not paid for and only 12% believe they should be able to give copies of purchased content to their friends, for free (this rises to a still relatively modest 25% among illegal downloaders).
It might be thought, therefore, that DRM is something which people could be persuaded to support, if its role could be effectively communicated.
However, only 8% of respondents consider it fair for copyright holders to use DRM to limit the way in which people can use content they have paid for — one of its core functions.
One industry response to this has been the embracing of DRM-free content, by eMusic, EMI and, most recently, by Amazon MP3 (currently available only in the
There is clearly a huge appetite among consumers for online rich media content. However, this is not always matched by a willingness to pay, although there is a surprising openness to the inclusion of advertising.
Companies will, however, need to work hard to persuade consumers that free content will come with some strings — such as DRM — so that the ‘catch-up’ TV programme does not become equivalent to a DVD that can be kept forever.
John Enser is a partner in the media, communications and technology group at Olswang.