Digital disruptors: the latest developments in digital media

On 21 April 2015 Matt Rennie, Managing Director of The Box Plus Network, joined Osborne Clarke partners John Davidson-Kelly and Michiel Odink at our “Digital Disruptors” event to explore the latest changes in the digital landscape.

The Box Plus Network: digital business in transition

The Box is the largest music television network in the UK, primarily targeting the 16-24 age range. Matt described how television viewing numbers had been in decline due to the changing ways that media can be consumed. In response to this, The Box has been transitioning from a traditional broadcaster to a digital business in a variety of ways.

Matt explained that the business first changed its name to ‘The Box Plus Network’ to demonstrate the shift to being a “platform agnostic content network” and to encourage the culture of the business to think beyond television. Secondly, and most importantly, the business needed content and created a production business.

“For a content business, [The Box] actually didn’t own any content. And when you’re staring at a digital future…that can be scary.” 

Alongside shooting shows for its channels, the business has focused on increasing the number of musical performances produced (from 50 to over 500 per year in the past three years) in order to own more intellectual property and so, hopefully, create value in the long term. Despite this increase in content, the business has also reduced its production costs by 40% in the past three years, by having an in-house studio and production team embrace new digital production methods- which also creates content that audiences identify and engage better with. This is essential because:

“TV is a real estate business, where you are in the Electronic Program Guide (EPG) links to your potential. In a digital world, that goes away… [The Box] now live[s] or die[s] by [its] content. It has to be great.”

The quality of The Box’s production business has led to the business being approached by other companies and partners to create content. This can range from record labels requesting performances, to retailers requesting make-up tutorials for social media networks. This additional new revenue stream is important as traditional advertising is now less powerful than it was, as viewers are able to skip the ads on a device, or skip to another channel once the ads begin on television (which is easier than ever because of the vast amount of channels and content now available).

Finally, The Box has embraced social media as its viewers usually combine watching television with using their smartphone. This has been done in many ways, including encouraging engagement by allowing viewers to choose the music videos being played and having viewers submit news pieces via YouTube. Additionally, given that the majority of content is consumed on mobile phones through social media rather than websites – the business has adapted its content to be consumed effectively through social media. For example, by focusing on posts appearing in feeds (rather than The Box’s own profile) and adding subtitles for viewers on-the-go.

Digital media law: geo-blocking

Michiel Odink explained the latest changes in geo-blocking. Geo-blocking is currently widely used throughout the EU, mainly through IP address verification, and the effects differ between Member States usually due to contractual restrictions. The European Commission is keen to restrict geo-blocking and is currently investigating whether such contractual restrictions are anti-competitive. As part of this, portability of digital content (whether a consumer can view content available at home when visiting or holidaying in a different Member State) has become a central hot topic.

Michiel explained that the new draft regulation on cross-border portability of online content creates an obligation to provide access when the service is deemed to occur where the subscriber usually resides, which must override contractual positions. Michiel explained that the proposal still needs clarification, given the difficulty in screening where consumers live and is likely to be viewed unfavourably with both content owners and licensees.

Digital media law: Digital Content Directive

John Davidson-Kelly then gave an overview of the Digital Content Directive. The current draft of the full harmonisation directive was published in December 2015 but the European Commission plans to produce a final draft before the end of the year. Issues of interest include:

• Definition of “digital content”: the new definition has three limbs: (1) content supplied and produced in digital form; (2) services; and (3) social media, storage and platforms. 
• Digital content for counter-performance: if a consumer actively provides any data in exchange for digital content, then the consumer will be provided with the same set of rights and remedies. 
• Modification of Digital Content: content providers must inform their consumers if there is an adverse change, and give consumers the right to terminate. 
• Business-to-business contracts: if a consumer-facing entity is exposed to liability without contractual protection from a content licensor, then the consumer-facing entity will be able to look to the content licensor to fill this liability gap in the event that it has to compensate a consumer. 
• Return of data on termination: a consumer must be able to export all data it has shared or uploaded when it leaves a service. 
• Right for consumers to terminate long-term contracts: a consumer has the right to end any long-term contract (12 months or longer) by giving 14 days’ notice. 

About the event

On 21 April 2016, the Osborne Clarke Digital Media Team invited the UK’s largest music TV network to share the changes and challenges it is facing as the digital media landscape adapts. This was followed by an interactive overview of the latest changes in digital media law.

The panel included:

• Matt Rennie, Managing Director, The Box Plus Network 
• Michiel Odink, Partner, Osborne Clarke (Amsterdam) 
• John Davidson-Kelly, Partner, Osborne Clarke LLP (London) (Chair)