The Digital Media Manifesto

 

Source

S. Carmichael

Title

Digital Media value chain analysis

No.

030825carmichael01r01

This is a start at trying to round out the value chain. Compared to the DM Value Chain Player Definition and Cost/Benefit Matrix of 030822chiariglione 01, I have added a group labeled Producers which includes the studios, labels, sound people, etc. that take a raw creative work, refine it, and move it toward distribution.

Below I have added a cost/benefit stack. It establishes categories for cost and benefit elements, so that it will be easier to quantify a player’s cost/benefit associated with DM. The elements, for illustrative purposes, are at break even. Should the sum of the cost as compared to the benefit push the centerline into either the red or black, that player along the chain could be viewed to have an incentive/disincentive to do its part in helping to realize an end to end DM framework.

For the players in the chain each of the elements below is in play, but have a different magnitude and significance. For media companies, soft costs may be the most formidable, the potential for loss of IP being a more obvious one, but the requirements of cultural change perhaps being the more intractable. The aggregators and disseminators have formidable infrastructural capital expenditures to make the DM conversion. The CE manufacturers and software developers can have huge R&D costs to create products that are capable of meeting the market’s requirements, let alone making a profit.

I have renamed the matrix provided in 030822chiariglione 01. The next step is to make sure all players are listed, better define them, and then create a more detailed list of cost and benefits. From there, exploring each cost and benefit will help us define the relative preparedness of each of the players to respond to DM opportunities.

This is not the ultimate model, but I think it is a start at allowing us to quantify the perceived and actual cost/benefit of players along the chain.

 

+  New Revenue Streams  

products, formats, e-commerce, data asset, applications

(A)
+  Cost Reduction  

reduced staffing, production time, sales cycles

(B)
+  Expansion of Base  

geographically, volume, product diversification

(C)

Break-even

-  Soft costs of change  

 business models (loss of IP), training, strategy, process, marketing

(A)
- Hard costs of change*  

networks, hardware, software (infrastructure)

(B)
-   Research & Development**  

software and hardware developers primarily

(C)

 
Note: "+" benefit
  "-" cost
  * R&D is considered an elemental business function of a given organization, such as a software development firm. Planning costs for an organization less engineering oriented, such as a traditional media company, would be considered a soft cost.
  ** Sunk hard costs are not considered as part of new cost structure.

DM Value Chain
Player Definition and Cost / Benefit Matrix

 

Player

Definition

Examples

Costs

Benefits

Creators

Composer, Screen writer, Performer,
Artist, Engraver, Music Copyist

 

A: Time to develop of new skills (training)
B: New Equipment (Hard and/or Software)

A: More opportunities to have creations remunerated (relates to C:)
B: reduced dependence on producers (they don't have to be paid)
C: widening of market presence (e.g. via internet)

Producers

Film/TV/Music studios Publishers

Sony - film
Brill – TV RandomHouse

A: Loss of control to creators
B: Equipment/SW

A: Increased range of product types / variations
C: Potential for control of more value chain elements
C: New platforms

Content repositories

Library
Studio

SF Public Lib
Turner Classic Movies

 

C: Possibility to provide universal access to content

Rights societies

Rights intermediary and standards developer

ASCAP
HFA

B: Loss of levies

A: Opportunities of new services
C: Broaden base geographically

DRM solution providers

Provider of Rights Management Systems, and integrators

SAP, Rightsline, BearingPoint

A: Sales and Marketing
C: R&D

A: Opportunities to deploy solutions. Potential for new products

Media companies

Managers and owner of content, and often production and distribution facilities

Sony
NYTimes
HBO

B/C: Accelerate transition to digital

A: More opportunities to distribute content; e-commerce, data asset; consumer application sales
B: Radical reduction of piracy

Apps providers

   

A: Sales and Marketing
C: R&D

A: Creation of new markets
C: Standards allow expansion

Aggregators (network)

Cable, and IP based content providers

TW
CNN

A: Change in model, retraining, new staff
B: Servers…
C: R&D

B: No need to be concerned with end-user devices
C: More ways to offer content

Aggregators (broadcast)

Radio / TV Stations
Where does satellite go?

CBS
Clear Channel

A: Change in model, retraining, new staff
B: Digital Trans
C: R&D

B: No need to be concerned with end-user devices
C: More ways to offer content

Back-office apps providers

FICO, DAM, Ad, DRM, Customer Date Base, etc.

SAP,

A: Sales and Marketing
C: R&D

A: Demand for new applications
C: New opportunities to deploy solutions (content management, e-business, billing etc.)

Connectivity providers (network service providers?)

Two Way-IP based service providers

TW, Earthlink,

B: Service Provisioning
C:Infrastructure upgrade

A: Opportunities to bundle infrastructure services with higher-level services
C: More connectivity/bandwidth required by users

Network service providers (Same as above?)

   

Cap Exp for development / risk

More access required by users
Opportunities to bundle network services with higher-level services

Portals

Gateway to key digital media services

Amazon, e-Music

A: Right negotiations
B: Core business development
C: Discovery/planning for Products

A: More services than possible today
C: Opportunities to bundle search services with actual content offers

Device manufacturers (HW)

Devices required for management, and consumption of DM all along the Value Chain

Scientific Atlanta, MAC, Sony

A: Sales and Marketing
C: R&D

A/C: Creation of a dynamic market of devices

Device manufacturers (SW)

OS, game, DM Management SW

Palm, Real Player, Sony Java, JINI, Windows CE

A: Sales and Marketing
C: R&D

A/C: Creation of a dynamic market of software applications

End users

Consumer of Media, commercial and non commercial

Teenage, Restaurant, Magazine Publisher,

A: Time to update skills
B: Acquisition Costs of HW, SW, and DM

Richer access to content
Increased range of utility
Access determination / time - location