A Changing MediaEnvironment ?

Timo Ruikka27 February 2008

Nokia will bring everyone to Internet

Six focus areas

Games

Photos

Music

Internet

Video

Maps,Navigation &

Search

Broadcast, Mobile and Fixed Networks willconverge and enable new user experiences

CONTENT

Today Tomorrow

Convergedmedia delivery

architecture

telecom

mobile

broadcast

Separatemedia

CONTENT

deliveryplatforms

cable

satellite

Digital Convergence Requires HorizontalStructure

Delivery

Consumption

New Horizontal Market

Content

ServiceProvision

Content

BroadcastingTerrestrial/ Cable/ Satellite

Content

Content

Service Provision

ServiceProvision

Service Provision

Fixed-linenetwork

Mobilenetwork

TV, radioPC,

telephoneMobile

terminal

Independent of location

Opportunities and risks from convergence• Convergence Promise: “more” “greater value” “innovation” “network effects”

• Major value chain disruption / redefinition• Big winners emerge (eventually)• Big (and currently powerful) losers will not give up easily

• Verticalization as barrier• Tasks and transfers (roles, prices, terms) are up in the air

• Transaction costs as a barrier

• Territoriality as a barrier

• Creating / maintaining / re-establishing the needed societal balance• Security vs. civil liberties• Rightsholders and consumers• Liability of intermediaries

My work perspective to this

• The Mess in Digital Media

• Media-related regulatoryagenda right now

Decade of Fear

•WIPO Digital Agenda•WIPO Digital Copyright Treaty 1996•U.S. Digital Millennium Copyright Act 1998•EU Information Society Directive 2001•Napster litigation• ISP, User litigation

Lots of legal activity…But Very Little Business Through Digital Distribution

12 months of panic• Steve Jobs’ “Thoughts on Music” - Feb 6 2007• CD sales tanking, downturn accelerates (- 22 % 4Q07)

• Stores closing, floor space reductions

• 360-degree deals vs. Artists becoming less dependent• Big fights about Internet royalties to artists etc.• Pricing disagreements – wholesale level disarray• Power Struggle Labels vs. Apple, others – refusals to trade• Unconstrained content: EMI (Apr. 07), UMG (Aug. 07), Sony BMG and Warner

(Jan 08)• Wal-Mart, Amazon among new channels• Pay What You Want releases appear

Old Paradigm becoming obsoleteNew Experiments – short of Sustainable Business Direction

Pay What You Want – the solution ?• Radiohead new album can be downloaded at any price (even free) – a pay what you

want model• Radiohead's test may set an example for more such experiments. Besides naming their

own price for the new album, fans can also buy a luxury version: £40 ($82) will buy a boxcontaining two vinyl LPs and two CDs as well as artwork and lyric booklets.

Weighted Average: $2

Regulatory actions – examples of topical EUcontextTopics of broad review

• TV without frontiers directive• Content Online consultation• Telecom package• Mobile TV• Standardization policy• Standards and IPR

Tough questions to solve

• Copyright limitations(exceptions) and levies (or othercompensation systems)

• DRM interoperability and DRMissues for consumers

• EU-wide content licensing• Copyright enforcement in the

Web (filtering – cutting offaccess ?)

Takeaways• Change is bigger than “just” migrating from offline to online• Technology is an enabler of change• Value chain adjustments take years, even decades to play out• Legislation and regulation can be catalyst for change – and a barrier• Absolutely necessary to ask the question of what regulation is needed and what

is the role of the regulator• Single market arguments often speak for harmonization and/or centralization at

EU level

Thank you