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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. 12 comments

Wednesday, October 29, 2008

Entrepeneurship in Ireland

Many an armchair entrepreneur will have watched the BBC’s “Dragon’s Den” which pits individuals with a business idea against a team of so-called ‘dragon’ investors – five successful UK entrepreneurs who have the money to invest and make the idea happen…or not, as the case may be. It can make for painful viewing as you watch some poor individual’s hopes and dreams torn apart by the wealthy and opinionated. For some reason, it seems even crueller then telling people that they can’t sing!

So when I heard that iFoods.tv, a company resident in The Digital Hub, was to go in front of the dragon panel, I had to salute their bravery – as indeed every armchair entrepreneur in Ireland did. Established by chef Niall Harbison and his business partner Sean Fee, iFoods.tv is a website which provides free online video recipes with professional chefs and a social community for food lovers.

Niall Harbison, iFoods.tv iFoods has over 130 free high quality, professional video cooking tutorials presented by iFoods’ chefs Niall Harbison and Pieter Plaetinck and guests, as well as a host of social networking functions and the ability for members to upload their own foodie content.

Based now in the Digital Hub in Dublin, iFoods.tv was previously a participant – like a growing number of technology-based start-ups - on the Hothouse Enterprise Platform Programme in East Wall. DIT Hothouse (www.pdc.ie) is a year-long comprehensive support and incubation programme for entrepreneurs with technology-based business ideas and there are now a number of similar ventures all around the country, attached to universities and Institutes of Technology including Galway-Mayo Institute of Technology (GMIT), Cork Institute of Technology and Dun Laoghaire’s Institute of Art, Design and Technology. The programme offers participants a number of supports including incubation space, management development training, strategic business counselling and access to an enterprise and investment network.

Niall Harbison, has cooked for many of the worlds most famous people over the years including Bill Gates, U2 and Victoria Beckham, to name a few. Niall commented: “Before I got back to Europe to start iFoods.tv I hadn’t heard of the Dragon’s Den, as I’d been on super-yachts in the Caribbean for 3 years, but everyone I spoke to said if we were ever looking to raise money we should give it a try, so we did”.

Although, ultimately unsuccessful in gaining investment on the Dragon’s Den due to the similarity of their website address to a rival site, the iFoods.tv team exhibited all the traits that we are now beginning to see in technology start-up ventures emerging from these enterprise programmes; a solid business plan, excellent communication skills, technical proficiency, tightly controlled spend, a sense of passion and a thorough understanding of their marketplace.

Encouragingly, there are a number of well-funded start-ups emerging from all areas of Ireland – not just Dublin and The Digital Hub. Particularly, there are ones emerging from places that might have previously been considered unemployment black spots. Increasingly, it is a lifestyle choice for those involved to locate in the regions. Historically, the need for education or employment would have drawn them to the urban centres or abroad. But now, with increased connectivity, experienced IT people are returning and setting up shop in their home towns. Often, costs are lower and the upend in terms of lifestyle is a key driver.

Some of these enterprises are emerging organically out of the collaboration between universities and enterprise in the regions, benefiting from targeted investment by the government. Take for example, the innovative TripPlanr – which is a collaboration between Irish start-up Tourist Republic and the National University of Ireland’s Digital Enterprise Research Institute (DERI) in Galway. TripPlannr is an intelligent application that will suck data in from travel sites, blogs, social networks etc. and come up with a customised trip best suited to the individual.

“TripPlanr will take content that is already out there. It will scan different websites, online tourist guides, blogging platforms, and create a big library of reviews on location, as well as scanning all the different booking elements of a trip: flights, hotels, car hire, activities,” said Jan Blanchard, founder of Tourist Republic.

TripPlanr uses Semantic Web technology – a specialist research area for DERI - which is an evolving extension of the World Wide Web in which the semantics of information and services on the web is defined, making it possible for the web to understand and satisfy the requests of people and machines to use the web content. Put simply, it is a more intelligent web that understands the meaning of the information on its pages rather then just linking to them blindly. So, for example, if you search for Paris Hilton, the semantic web will understand whether you are a refined traveller looking to stay in a top class hotel in the capital of France or whether you are a keen reader of Heat magazine looking for gossip about a certain celebrity! Adapting this technology to the online tourism sector is a great example of how Irish companies are embracing the next generation of web applications (or Web 2.0) and are positioning themselves as potential leaders. The fact that this sort of innovation is coming from the regions is heartening and shows that the knowledge economy is a moveable feast.

Another surprising example emerging from the regions is the self-professed Google-killer, Cuil – a search engine start-up which emerged out of County Louth, not the first place you would normally think of for a silicon valley wannabe. Cuil was founded by highly respected search experts, husband and wife team Tom Costello and Anna Patterson who have now set up their headquarters in Menlo Park, California with 10 – 15 employees.

Costelloe, originally a graduate of Trinity College Dublin, brushed up against Sergei Brin, the founder of Google, while at Stanford University before gong on to join IBM. Meanwhile, his wife Anne was working on an internet archiving system that was snapped up by Google. Soon, she was designing some of Google’s most important search programmes. Costelloe, meanwhile, became a house-husband and took to his garage to tinker away on what would later become Cuil (pronounced “Cool” as in the Gaelic word for knowledge). Reports suggest that they have received around €20 million in private investment. Cuil is just starting its journey towards hopeful dominance in the online search market.

Meanwhile, in Kilkenny, IT professional Keith Bohanna has set up DB Twang (www.dbtwang.com), a niche social network site for guitar players. dbTwang provides a trusted place on the web where guitar players and collectors can keep important information about their instruments securely and in complete confidence. It also provides a unique and dynamic platform that enables its members to share information selectively in a trusted and safe environment with fellow members and to complete secure trades by mutual consent.
“Everything we do has to be focused on making it easier for our users/members/subscribers to learn from each other, share their passions and knowledge and allow them to trade with each other in a trusted environment. “ says Bohanna.

Currently, both he and his partner in the business, Fintan Blake Kelly, are still working as IT consultants, but hope to raise the necessary Angel investment to put 100% of their energies into the enterprise.

Finally, there is, of course, the success of the young Collison brothers from Limerick who in their teens have successfully built and sold their first web company, Auctomatic, for a seven figure sum. This was done with the assistance of Y-Combinator, a Silicon Valley based start-up scheme that helps young entrepreneurs in the web arena. As is increasingly common with these global-orientated, web-based initiatives, it doesn’t matter what country you come from, the main requisite is simply a good idea. (This, by the way, is another paradigm shift that seems to be eluding policy-makers in the European Union; in a globalised environment where everyone is connected, the idea of nationhood rapidly becomes irrelevant.)

Perhaps this is the next stage of evolution for the Enterprise Platform Programmes. As the recent Digital Hub Enterprise Survey suggests, the big barriers for start-ups developing in this country is both having the necessary business experience as well as gaining the enough investment.

An initiative like Y-Combinator provides both and, more importantly, it is shamelessly commercial which in turn incentivises success. Also, capital is now firmly global and we should be trying to set up more mechanisms whereby venture capital and angel investment isn’t solely coming from local investors. Although the clarion call of Silicon Valley is hard to ignore, the likes of Israel have proved that you can grow a healthy, global technology hub anywhere in the world.

The founder of Y-Combinator, Paul Graham, recently posted an interesting “Call to arms” on the Y-Combinator site (www.y-combinator.com) outlining the sort of ideas that they would like to see being pitched to them. For our budding armchair entrepreneurs in Ireland, it makes for exciting reading. These include:

Something your company needs that doesn’t exist, New news, A cure for the disease of which the Recording Industry Association of America is a symptom. (This is a call for new business models to sort out the music industry as the studios entrench themselves deeper in their futile battle against piracy). Simplified browsing, Enterprise software 2.0, Dating, Photo/video sharing services, Off the shelf security, Shopping guides, a buffer against bad customer service, a Craigslist competitor, fixing email overload and Start-ups for start-ups (like Y-Combinator itself, this is a call for enterprises to develop that support new enterprises.)

So now there is no excuse. No matter where you come from in Ireland or where you choose to live, as long as you have a Personal Computer, an internet connection and driving ambition, you too can go to work on the internet. Who knows maybe you’ll be the next Google or Ebay… or Cuil or TripAdvisor. But you have to get off the armchair first.

posted by Neil Leyden @ 8:13 a.m. 2 comments