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Friday, October 31, 2008

A vision for an International Content Services Centre

It was definitely a ray of sunshine during a week of bad economic news to see that online gaming company GOA was to create 400 Multilingual Customer & Operations Support Centre jobs in The Digital Hub. GOA is the online Games Division of Orange, Europe’s third largest mobile telephone operator and the largest provider of broadband services.
It was this and a mention by Tánaiste Mary Coughlan of the desire to develop Ireland as an Intellectual Property hub that got us to wondering what initiative could coalesce the current digital media offerings in Ireland into a more coherent and truly global offering.

We have had success in this area before, all be it in a different industry sector: the International Financial Services Centre (IFSC), or An Lárionad Seirbhísí Airgeadais Idirnáisiúnta (LSAI), based in Dublin is now regarded as being a major economic engine for Ireland and arguably, its success was a cornerstone for the Celtic tiger era that followed its establishment. The centre was originally the brainchild of an associate of the billionaire Dermot Desmond, who together approached Charles Haughey, then in opposition, who made it the centre-piece of his economic manifesto (a brave move during recessionary times) when he came back into power. The Finance Act, 1987 (Section 30) allowed for the designation of such an area.

According to IDA Ireland, the main driving forces for attracting foreign investment to set up in the IFSC included: competitive corporation tax rate of 12.5 percent; the fact that Ireland is the only English-speaking common-law jurisdiction in the Euro zone; an extensive tax treaty network (41 treaties, and nine others awaiting ratification); EU and OECD approval; sophisticated pro-business regulatory environment; proactive, all-party political support; and world-class professional services. Other incentives for companies setting up in the IFSC also included: exemption from withholding tax on interest paid to non-residents; tax exemption for collective investment/life assurance funds; and no net asset value tax on funds.

Now as the financial sector worldwide stares into the abyss and our economy once more faces tough times ahead, it would make sense that another bold move be made to ground Ireland’s economic future. Times have changed and as we move closer to Europe (the Lisbon Treaty excluded), our hands are tied somewhat from offering the same generous incentives. However, where we can make a difference is tackling a global need with innovative solutions. Digital Media, or more specifically, Digital Content offers a fine opportuntiy.

First off, what do I mean by digital content. Well, it is just over 5000 days since the Initial Public Offering of Netscape on August 9th 1995. Many observers have argued that this heralded the birth of the internet boom as we know it as the money raised from the IPO allowed Netscape to give away their internet browser for free. This also set the field for open standards on the internet and created a competitive landscape that has meant that the internet has thrived as a pluralistic endeavour.

Over the last 10 years we have seen the majority of the worlds content – be it audio, visual or text – being digitized in some form and made available online. Indeed, the big daddy of the web at present – Google – has as its oft-stated mission: “to organize the world's information and make it universally accessible and useful.”

However, the problem with that, increasingly, has been the issue of copyright. Much of the world’s information is owned by someone – but that hasn’t stopped it being digitized and made freely available. Google’s mission has run into sizeable opposition both in terms of its online books project and its acquisition of YouTube, where a sizeable lawsuit for copyright infringement is still pending with Viacom. The internet has brought about a new world order where freely available has come to mean free and that, quite simply, is unsustainable. Someone has to get paid for making worthwhile content…or else it doesn’t become worthwhile.

However, piracy, to a large extent, is also due to the machinations of content holders trying desperately to control the free distribution of their content. In an analogue world, that meant contending with backstreet boot-leggers. In a digital world, that means taking on every kid in the world with an internet connection. This equally is an unsustainable situation.

So an enormous opportunity for Ireland is to create a clearing house for digital rights – providing the legal expertise and technical know-how to assist rights holders worldwide to take advantage of the new medium for the distribution and exploitation of their content globally. This would not only provide a destination for high value knowledge economy activity with global reach; it would potentially act as a magnet for ancillary service providers to set up here such as video on demand platforms or co-location facilities. This legal and technical offering could be the cornerstone of a larger project – an International Content Services Centre – the content equivalent of the International Financial Centre, dealing instead in global content as opposed to capital.

Already we have indigenous world-class digital media companies like DV4 who are offering these services, if only on a more limited scale. Graeme Kelly, Digital Producer with DV4 says that they have “over 10,000 music videos (Sony, Warner Universal & EMI) in digital format that we deliver to 22 countries worldwide for Vodafone and to the Itunes music store.” For content owners managing the rights and making sure the right format is delivered is of utmost importance. “Ireland”. Graeme adds, “as a world class hub for localisation is ideally positioned to be at the centre of the worldwide digital distribution network.”

Indeed, a new report from the Irish-based Institute of International and European Affairs, entitled “The Next Leap”, will shortly make that very recommendation, based on a consultation with stakeholders across the Irish digital sector including the Digital Media Forum, the Irish Software Association and the Digital Hub Development Agency. Among The Next Leap's key recommendations is the development of a strategy to develop a Digital IFSC, established on the foundations of the Digital Hub. The first step, according to IIEA Senior Researcher Johnny Ryan, is for government "to convene a wise persons council, involving some of the figures behind the IFSC, to consider whether and how to establish a Digital IFSC".

So what other activities could be generated within such a centre. With the advertising industry globally embracing the internet (with online spend expected to be valued at $80.7 billion per year by the end of 2011 – Research & Markets 2008), the need for media-buying, hosting, tracking and optimisation of online advertising is a potential core activity that could be based in Ireland.

With advertising monoliths like WPP planning to base themselves here, fleeing the onerous corporation tax base in the UK, these opportunities are potentially there to be seized, if a timely co-ordinated plan were invoked. We already have a relatively strong burgeoning online advertising sector, with enterprises like ICAN, Sales Online and the newly formed Electric Media. Adding a global professional service is the obvious next leap.

Another potential activity relates to the future strategies of a number of multi-nationals whose European offices are currently head-quartered here – namely Microsoft, Google, IBM, Amazon and most recently, Facebook. All of these companies have outlined their strategy for the next phase of the internet – namely Cloud Computing. The race towards the Cloud – basically a globally-accessible hard drive that users can access through the internet - is as much about offering consumers content anytime, anywhere and on any device, but also about empowering the user-base to create their own content and applications that can be housed on the grid .
All of the above have released so-called Software Developer Kits – literally open source code instructions for developing applications that can sit on these companies various platforms, be it a mobile phone operating system like Google’s Android or a social network like Facebook or MySpace.

The impending explosion of user-generated content – both amateur and professional – will demand increasing management, both in terms of copyright issues and also payment fulfilment, hosting, legal obligations, accessibility etc.

Ireland has a real opportunity to grasp this opportunity just as we did in the 80’s when the Financial Services sector became an increasingly global business. Entertainment, educational, instructional and public service content worldwide could be managed and hosted from Ireland, with an International Content Services Centre providing a co-ordinated, end to end managed service for content creators and copyright holders globally. It’s a big idea. But it’s no bigger then the one we’ve already successfully achieved on the banks of the Liffey.

So where could such a Services Centre be located? Well, already we have a world-class enterprise area targeting digital media start-ups collectively called The Digital Hub. This is also home to the National Digital Research Centre.

Dr. Stephen Brennan, Head of Marketing & Strategy at The Digital Hub argues that “the main effect of this concept will be on foreign direct investment into the digital media industry in Ireland. The aim of building such a centre would be to produce scale and focus in the digital content domain. This would be targeted at foreign investment opportunities. The effect on the small and diverse indigenous digital media industry would be relatively small.” The kind of services he could envisage are: Tax designation aimed at international content distribution and associated e-commerce, Digital rights legislation to allow for operations akin to the funds activity in the IFSC and international telecommunications network connectivity with the USA, EU and Asia.

However, the long-term benefit that we have seen from the IFSC has been to accrue wealth into this country that has is turn facilitated the growth of other industries, both large and small. It might be simplistic to say, but all boats will rise if we have a determined effort to locate these new forms of product and services within the county. As the Digital Hub moves towards re-development, the location of an International Content Services Centre would be a welcome cornerstone to achieving Ireland’s aim of being a worldclass knowledge economy – not just developing out own knowledge, but like Google managing the worlds knowledge as well.

Calico Media and Digital Media Forum are actively looking for your input into this article so that we can make a comprehensive submission to government that is representative of the industries thoughts. If you have any ideas to add or comments to make, please submit them below. Everyone's point of view is welcome.

posted by Neil Leyden @ 9:02 a.m.


At 4:59 p.m., Anonymous Andrew Fitzpatrick said...

This makes perfect sense. I've had similar thoughts for some time. In developing any initiative in this area, it's important not to overlook existing digital media companies working in film and television, especially those producing internationally traded programming and those distributing programming internationally. We don't produce ourselves but we have a successful business sourcing programming around the world and selling it around the world.

Andrew Fitzpatrick
Monster Distributes

At 9:20 a.m., Blogger renegadearts said...

This sounds great to me. I'd welcome an "ICSC" to adopt, experiment and follow through on sustainable financial and production models for digital content production. Looking to the future, the ins and outs of where the money comes from when you produce digital content- music, film, web stories...whatever- are unclear. But there are millions of people who want content and, as was the case with facebook, once the audience is there you can look at how to monetise it. I imagine that it will take a few radical ideas and the leverage to implement those ideas to make a new model work sustainably at the level you're talking about. It would be refreshing and empowering to have the best legal minds, business heads and technology experts working on solutions to this. I don't think it would be enough to base the center on the availability of existing content and easy access to that content. That sounds too easy to hack or replicate to me. I could be wrong about that, but the tendency so far has been for the internet to break any of those boundaries that might protect content rights. The centre would be need to be the frontrunner in ideas such as targeting, subscription services and interactivity of content. The progress in digital media production is taking place in the wild, where the restrictions of rights management and copyright are overridden by creative commons and piracy. Unless we can lock down the internet and offer content that is controlled, as is the case currently on the mobile internet (which is also changing), we are in the position of deference to the pirates. I don't support locking down the internet! The key is in new forms of rights management and the definition of the kind of content that can be quantified and have value. Audiences are good people- they'll pay if they're asked nicely. New modes of distribution of content should be defined. Those new modes would need to break ground, perhaps adapting and expanding on some of the models being adopted by advertisers online and on mobile networks for example. It would be useful to take cues from successful Web 2.0 companies, where the expertise is as much in monetisation of an audience as much as in providing a decent service website. The audience is huge, willing to pay if it is easy, and it's ready and willing to participate in and consume digital media content. If I produce or direct content under something like a Creative Commons license, my options as a director in how that content is produced and distributed are exciting and groundbreaking. I can produce, remix, crowdsource, interact with the audience, anything I like. As is the case with most of this early economy of ideas, its very difficult to monetise this kind of production. Doing so sometimes even restricts the production- many marketing companies have tried and failed to leverage the 'user generated content' phenomenon, and are only now beginning to make strides by disassociating the content from the monetisation of that content. Digital content of any worth to me has so far been the kind of content that can only be produced in an independent but potentially large scale, quickly and efficiently, by the viewers themselves, or by producers the viewers relate to on a personal level. This kind of content has to drive whatever new economy digital content as an industry is based on. I want to make content, but to do so I have to produce that content on the fringe, until my rights can be quantified and protected. I agree that the free availability of content is unsustainable in the current model. But there's also new content being produced and consumed for free, by the viewers themselves. Anyone making successful content online is making their money outside of the normal pay per view model. I disagree that free content is not good content. That's an old idea and its a bit elitist, grounded in a fear that we'll lose those big inflated budgets. I'd be interested to hear how the Centre would approach the new models of distribution and monetisation of content, based on subscription models, optin advertising, consumer crowds pulling the content they want, remixing... With these models in place I can start to see a future as a digital content producer who gets paid, as well as creating new content for the world. A new center for Digital Media along the lines of the IFSC would be a frontrunner in defining and experimenting with these new production and distribution models. To progress, the first of those models need to be clarified so we can give them a go, see how they work, then adapt and grow- just like a Web 2.0 company. The content we're talking about is the work of musicians, artists, filmmakers and other creatives who are currently struggling in a new internet based industry that needs a newly structured economic or financial system to work within. We can then provide a more secure environment for those producers of content to work within, so they can build their work and their audiences- investment and the industry will follow that flow.

-Andrew McAvinchey

At 12:27 p.m., Blogger Neil Leyden said...

Can I add that anyone commenting on this article might also choose to read the special report in this month's The Economist (October edition) -

The Special Report is on the rise of Cloud Computing and I think adds further weight to the arguments being made.

At 10:27 a.m., Blogger Cathal Gaffney said...

This is an excellent concept. Ireland has become too expensive a location to sell itself as a 'Knowledge Economy' any longer. We need to refocus and support the growing 'Creative/Cultural Economy'. It is often harder to exploit and monetise copyright than it is to create it. Our shared goal needs to see us moving from being a Service led exconomy to being the Rights holders in IP.

An 'IFSC' for Copyright holders is an inspired idea and turning this aspiration into a reality deservces support at every level.

Cathal Gaffney

At 10:23 a.m., Anonymous Alx Klive said...

As a Company serving up Internet TV and games to 3 million global users each month, and with an administrative base in Limerick, this proposal is most interesting.

There is no question that the hosting and serving of digital content is only going to increase ten or a hundred fold in the next 15 years, and a focussed initiative to be associated with that at a national level is a bold but intriguing idea.

A key component naturally would be attracting many of the existing companies active in this area to set up operations in Ireland. The IFSC seemingly achieved this with attracting global banks, so perhaps it can be done here. Could the same kind of tax breaks be offered, or something substantially similar? Hollywood, Silicon Valley and Soho are already very active in developing the kinds of platforms and solutions Ireland would need to host. Existing music, film and TV companies have much to offer as Andrew from Monster Distributes correctly points out.

The question of physical hosting is significant and potentially the key element of the initiative. Computing and media is moving into massive data centres and for any digital storage, content delivery network, cloud computing or digital media processing company, the desire is for cheap power and connectivity to major undersea fibre. Ireland is geographically well situated for Europe and the East Coast sea board, so could Ireland be the ideal physical host for serving content to a huge part of the global Internet population? I know it would appeal to have our servers located 'halfway' between Europe and America.

Parallels with Shannon and its aerospace/logistics facilities come to mind. Geographically the West Coast would seem to be an ideal place to have data centres located, if power were no object. On my many flights into Shannon I've passed over nearby mountains and often in a lot of rain - what hydro power or wind/tidal/wave options are possible? Could servers be cooled by the Shannon Estuary?!

Environmentally friendly, economical and prolific power generation are huge questions for the Google's and Amazon's of this World, and will only become bigger questions for all of us. This aspect in my view should be carefully thought about in any discussion.

Alx Klive, Founder / CEO

At 1:47 p.m., Blogger Neil Leyden said...

This is from an email sent by Michael Walsh, CEO Global DMX where he raises some excellent points:

The key to creating an International Content Services Centre is to realise what the IFSC deals in and start from there.

If you think the IFSC handles money, then the new entity would be something that handles content.

But the IFSC doesn't see any money - it deals in 1s and 0s, expects light regulation and has an archive of deals (a clearing house).

Once content goes digital - which has been felt to full effect by the audio industry, is starting to be felt by the video industry and is appearing over
the horizon for the text industry - then you have to confront the distribution model, par excellence, which is the Internet.

The disruptive nature of the Internet lies in the instant, global distribution of digital content. This breaks all the established copyright/localised rights agreements, which have been built up, over time,
in territories designated by the physics of the distribution model for tangible, physical content.

I would contend that building an entity which mimics the functions of the IFSC but for Digital Media - deals in 1s and 0s, light regulation and is an archive - is the sweet spot for Ireland Inc.

I would call it an International Digital Media Exchange or a Global Digital Media Centre.

Two examples that touched on some of these ideas are: The BBC - a Digital Commons The BBC - a Digital Commons redux

Both of these are merely for the benefit of one of the established incumbents in the analogue world, seeking to find it's place in a digital one whilst still performing a public service, but they give a taste of some of the challenges facing the main players in adapting to the new global, digital media distribution system that is the Internet.

Having relocated to Limerick and started up a digital media company which deals explicitly with this issue, I believe Ireland can, and should, create
an imaginative solution to a global problem. The conflict between an historic rights framework and a new distribution model, which must be confronted at some stage, is a golden opportunity to the nation state which seeks to understand and address it.

By pro-actively creating the correct entrepreneurial, legal, administrative, political and commercial environment to support this idea then we can create a world-class solution.


Michael Walsh

Phone: +353-(0)61-338157
Mobile: +353-(0)85-1278212
Mobile: +44-(0)771-2524200


At 12:58 p.m., Anonymous Anonymous said...

The cloud is going to be the real test for t.v to withstand and endure.

At 12:49 p.m., Anonymous graeme kelly said...

We have just sent a 3 hr movie to the iTunes guys.

It was 17 GB and our internet connection dropped twice.

The file took 24 hrs to deliver.... this needs to be 1hr !

Who will be the dermot & charlie for this vision ?


At 11:54 a.m., Anonymous Frederic Herrera said...


Great proposition!

SMEs would strongly benefit from a Digital Media IFSC that brings content production/rights and distribution closer to enabling technologies. Skills development and knowledge around vertical content applications/workflows would create unique global position for Ireland among the likes of Singapore, US markets, Montreal, Amsterdam, ...

Content models offer new possibilities as users want relevant access and playback of media. They also want to engage.

The example given by Graeme shocks me. Bandwidth is not available in Ireland and cases of successful bandwidth-hungry content applications developped in Ireland need to be communicated to decision-makers. Make this process open for stakeholders to support arguments.

I manage a Digital Media enterprise platform programme for Dun Laoghaire Institute of Art, Design, and Technology and can provide qualitative information on how a digital media cluster should be developed to support your idea.


At 1:05 p.m., Anonymous Ed said...

Great post Neil. The Knowledge Economy concept is currently elastic and gets abused as a political football as a result. So this type of tangible idea helps to solidify it.

Johnny Ryan's approach is obviously the way to go. Convene a few of those involved in the IFSC planning and develop a strategy for how this could be replicated for an International Content Services Centre.

Ireland needs to provide strategic rather than operational value though. We're not cheap anymore.

At 11:29 a.m., Blogger antoin said...

Why did GOA decide to locate 400 jobs in Ireland? It is important to really understand this. More importantly, how do we get more of it?

That's the first stage. The question from there is how to move up the value chain. The reality is that in many instances, Ireland is doing well getting volumes of jobs, but we are often failing to move up the value chain.

At 10:46 a.m., Anonymous Johnny Ryan said...

We are working with DMF to take this concept further - see - this is the stakeholder based report 'The Next Leap: Competitive Ireland in a Digital Era' that was launched by the Tanaiste earlier in Dec 08. We are now planning a scoping excersize to check interest and feasibility. Please check one page in particular - - and leave comments.


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