Digital Media Overview

A report on the current status and characteristics of the Digital Media Sector in Ireland

Interim Report of the Technical Assistance Project August 2002

Author: Kieran O’Hea Version: 1.1 Date: 30 August 2002

Table of Contents

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Introduction ........................................................................................................................................ 3 Understanding Digital Media .............................................................................................................. 3 Defining Digital Media ........................................................................................................................ 4 Classification Issues ............................................................................................................................ 4 Digital Micro-Enterprises (DME’s) ...................................................................................................... 5 Market Size ......................................................................................................................................... 6 Market Drivers .................................................................................................................................... 8 Initiatives for Stimulating Growth ...................................................................................................... 8 Factors Inhibiting Growth ................................................................................................................... 9 Genetic Factors ................................................................................................................................. 10 Raising Finance ................................................................................................................................. 11 Intellectual Support .......................................................................................................................... 11 Intellectual Property Rights .............................................................................................................. 12 Development Schemes ..................................................................................................................... 13 Cluster Development ........................................................................................................................ 13 Industry Representation ................................................................................................................... 14 The Need for Champions .................................................................................................................. 15 Conclusions ....................................................................................................................................... 16

Annex I: About the Digital Hub ..................................................................................................................... 18 Annex II: About NIIMA (Northern Ireland Interactive Media Association) ................................................... 19 Annex III: Contributors ................................................................................................................................. 20

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1. Introduction
This report is a work in progress intended to inform the definition and validation of a number of pilot projects relating to the digital media sector in Ireland. It provides an overview of the current status of the sector, North and South, its nature and impact, comparing policy and progress in the two jurisdictions. It identifies market drivers and market inhibitors and considers the climate for future development that must exist if the sector is to fulfil its growth potential. In the South, it assesses the progress in the development of the digital media sector since the Government’s announcement of the Media Lab Europe and Digital Media District projects in 1999. At the time, the Taoiseach Bertie Ahern was quoted as saying “… by locating Media Lab Europe at the heart of an exciting new multimedia village in Dublin, we will reinforce our message that a small country like Ireland can nonetheless make giant progress on the world stage”. In the North, the report assesses the work of the Northern Ireland Interactive Media Association, whose mission is to build Northern Ireland as a centre of excellence for new media, promoting the personality and culture of the organisation throughout the industry. It compares growth patterns in the North with those in the South and states the benefits of investing in the development of an all-island digital media sector. It also assesses a number of measures that could be taken.

2. Understanding Digital Media
In order for digital media to reach its growth potential, it is essential that those who influence policy and decision making in industry, education and government know exactly what digital media is and are seen to be comfortable with it. Economies are shaped around well-defined commodities such as oil and steel but in the knowledge economy, very little is known about one of its key commodities – digital media. This may be due to the fact that digital media is proving hard to define. It represents content formats such as text, audio, video and animation. It also represents the convergence of traditional and new media. Finally, it represents the creation, management and distribution of digital content over an array of channels such as DVD, PDA and broadband. Traditional businesses may think that digital media is only of concern to the entertainment and publishing sectors. Educators may think that digital media means distance learning or using a digital camera in a film course. Policy makers may feel that digital media represents the intersection of art and technology. What is certain is that this combined lack of understanding of digital media is preventing champions emerging in the public and private sector, people and organisations that see the potential of digital media and are not afraid to invest in it. Many people talk about technology but few properly understand it and embrace it. Inevitably, many people who are involved in decision making about the future of the digital media sector in Ireland do not have a clear sense of where their efforts will lead. Digital media is nebulous and
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means many things to many different people. A clear and consistent understanding of the digital media sector and its potential is essential to informed decision-making.

3. Defining Digital Media
There is much confusion surrounding the definition of Digital Media. Some use the term to describe the digital content market, others to describe the online publishing field. Part of the problem in articulating digital media lies in the fact that many definitions exist and this is causing confusion and hesitancy in non-digital constituencies, hence creating an inhibitor to the growth of the digital media sector. Some of the definitions that have been considered include:      Digital media is binary content. Digital media companies are companies that have been enabled by the convergence of Telecommunications, Media & Technology (TMT). Digital media is multimedia without geographical boundaries. Digital media is multimedia plus telecommunications. Digital media means creating content, distributing it and managing it.

From the above it may be suggested that “…digital media is audio, video, text and graphics converted to binary form for delivery via global networks and digital devices”. Defining digital media in a way that is consistent and understandable to key communities such as investors and policy makers will be an important step forward.

4. Classification Issues
One of the major difficulties with the digital media sector is classification. Lack of success in classifying digital media is hampering attempts to define the sector and determine what support it needs. It is also hampering the identification of role models and best practice. In some cases, classification of digital media companies not only addresses size and activities but also export potential. Digital media distinguishes itself from all other types of media because it can be exported globally from wherever it is created. All digital media is therefore exportable and all digital media companies are in theory export companies. What this means is that clear criteria that would usually allow classification to take place are blurred in the case of digital media. Yet nobody should underestimate the potential of digital media to make an impact on the economy, not only on an all-island basis but also on exports. Later in this report we will see that the value of the Irish digital media market can exceed €1 billion by 2007.

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Fig 1. Digital Media Industry Classification
Copyright Perfect World 2002

5. Digital Micro-Enterprises (DME’s)
Independent digital media companies in Ireland, that is, companies established exclusively for the purpose of creating, managing or delivering digital media are often characterised by their size. Some are very small, in fact so small as to be off the official radar in some cases. To help give these companies some sense of collective identity, the term Digital Micro-Enterprises (DME’s) can be used. Ireland has a culture of SME’s supporting bigger industry at home and abroad. When the localisation industry sprung up to support the software industry, it was a typical SME/larger client relationship. With the growth of e-business and electronic publishing, indications are that large corporations outside the entertainment industry are going to have a major requirement for digital media services, which could be outsourced to DME’s. Apart from their size, DME’s also have other unique characteristics. As rigorous early adopters of new technology, they are well qualified to act as catalysts in the development of tools, software and standards that will enable new forms of expression and interaction. As highlighted at the National Digital Media Conference in Dublin1, they also need a particular form of advice.
1

O2NDMC was held on May 1 2002 in Dublin. See www.ndmc.info for further details. 5

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Recent analysis of the needs of a cross-section of DME’s revealed five main areas in which advice is needed.

1.

Investigation of what NEW CONTENT and types of content can be and what will really take advantage of and work on new platforms and technologies, specifically creating original 'made for the medium' not versioned content. PLATFORMS / TECHNOLOGY - understanding the platforms and tools, the systems, and the skills needed to develop for them in the most creative way. Costs involved are often prohibitive for small new companies. INTERNATIONALISATION - The need to work with systems and technologies that work across national boundaries. Issues to be investigated include language versioning, the internationalising of product, the consistency of technology standards from region to region, testing issues, different types of system and content for different audiences. NEW BUSINESS AREAS in terms of funding, markets and distribution. All the way from finding out who from/how to get funded/commissioned to suggesting business models and helping potential commissioners/distributors to understand possibilities. Also understanding their perspectives, markets and strategies both domestically, transnationally across Europe and the world. All aspects of DEAL-MAKING including IP, rights, contracts, etc. Existing print/TV/film people understand these in terms of their own media which is not necessarily conducive to production of original 'interactive' content and because they are big and established, digital micro-enterprises are having to learn their languages and adapt to them in order to deal.

2.

3.

4.

5.

Fig 2. Where Digital Micro-enterprises Need Help

6. Market Size
Digital media now impacts on almost every aspect of traditional media and the creative industries. At the same time ninety-five per cent of digital media companies in the Republic have less than 10 employees. In the North this figure is eighty-three per cent. As a consequence digital media companies often fall outside the scope of classification systems and state support schemes. Digital media companies in Ireland tend to be small and vulnerable, factors that nurture creativity and agility while at the same time hindering growth and investment. The very nature of digital media companies is therefore both their strength and weakness. The digital media sector is widely dispersed and ill defined. It includes self-employed people, digital micro-enterprises, independent digital media companies and the digital media divisions of traditional media companies. Some surveys also include manufacturers of enabling technologies for digital media as well as software companies active in areas such as e-business and e-learning. The situation is compounded by a broad definition of digital media, which describes a diffuse industry that overlaps with many other sectors and in which many players do not even know they are digital media practitioners.
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This diversity means that anyone from freelancers to multinationals can be included in an analysis of the sector. As a result, estimates vary widely as to the number of digital media companies operating in Ireland. In the South, it is somewhere between 400 and 900 while in the North it is 100-300. Assuming then that there are a maximum of 1200 digital media companies on the island and 90% of them employ less than 10 people (in fact 50% employ less than 5) then the sector currently employs somewhere in the region of 5,000-9,000 people. With the proper support, this is likely to increase by at least 50% over the next three years. This raises the issue of direct job creation versus indirect job creation. Some traditional media companies are in transition to digital or have set up digital divisions. Sometimes employees are retrained or new jobs created. On the other hand many independent digital media companies are startups that employ few staff but often use freelancers in busy periods. This make accurate analysis of the size and turnover of these companies difficult and can also lead to disputes over intellectual property rights between companies and freelancers. There can also be problems with skill shortages affecting the supply chain due to over reliance on the freelancing model. What is also interesting to observe is that while Northern Ireland has seen 40% growth in the number of digital media companies over the last two years (surveys done in 2000 and 2002), almost 50% of the companies surveyed in 2000 had ceased trading by 2002. This confirms the organic nature of digital media, with companies splintering into several new companies within a relatively short time. This is regarded as a fact of nature in this sector because digital media practitioners tend to feel threatened by large organisational structures and strive to stay small and agile. The value of the digital media sector in Northern Ireland is between €100m and €160m. This is proportional to the South where Enterprise Ireland has set ambitious targets for the growth of the Irish digital media industry, from an estimated current value of €317m to €760m (excluding the film industry) by 2007. This places the current value of the Republic’s digital media sector at twice that of the North, which is consistent with North-South market value ratios in other sectors. The table below shows that the Irish digital media sector will grow to become a €1 billion business within the next five years. Due to the diffuse nature of digital media activities, however, turnover in the sector is difficult to estimate accurately. In the UK it has been shown that digital media related activities, analysed in two independent studies, may account for up to 50% of the turnover of the creative industries, in other words £57 billion out of a total of £112 billion2. One can justifiably question the validity of this conclusion because different methodologies were used in both studies, but nevertheless there is clearly a significant interdependence between digital media and the creative industries and careful consideration of this phenomenon is merited in Ireland as well as in the UK.

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Data compiled in separate surveys by the Digital Content Forum and the Department of Arts, Media & Sport Digital Media Overview 7

No of companies (min) No of companies (max) No employed (now) Turnover (now) Turnover ( 5-year forecast) Annual growth

South 400 900 3500-7000 €320m €760m 20%

North 100 300 1500-2000 €100m-160m €250m-380m 20%

All-Island 500 1200 5000-9000 €420m-480m €1bn-€1.2bn 20%

Fig. 3 Shape of Irish Digital Media Sector, North & South

7. Market Drivers
The drivers of the digital media market have been the low cost availability of advanced digitally based communications and entertainment platforms to businesses and consumers. The scope of these platforms encompasses cellular phones, game consoles, PCs, CD and DVD players to name a few. In tandem with the availability of platforms, a wide-ranging transformation of the Technology, Media and Telecommunications industries that support them has occurred. This transformation has brought about the convergence of the TMT sectors. Businesses in what used to be isolated sectors find themselves embracing digital technologies, and using common technologies to deliver products and services via common channels. This has encompassed every component of the value chain, from production to marketing to distribution. The convergence phenomenon has been underway since the late ‘80s, but it has particularly had an impact over the last five years. The digital media market has resulted from the convergence of the technology, media and telecommunications sector. This has accelerated the development of new types of businesses and also new opportunities for existing businesses and stakeholders. This is the digital media opportunity. The scope of this opportunity is by its nature very wide. The dot.com meltdown and the troubles of the TMT sector in general has made it difficult for organisations to identify the best strategy for growth in the digital media sector.

8. Initiatives for Stimulating Growth
Policy is being implemented through a number of government initiatives on both sides of the border. In the South, the picture has been blurred somewhat by the apparent labyrinth that has been created by distributing digital media, e-business and the Information Society across many different Government departments, with no clear synergy or champion emerging. Navigating the maze is daunting for anyone in the private sector and even more so for digital media companies themselves. The major project in the South is the Digital Media District3, which involves a €130m government commitment to redeveloping parts of Dublin’s inner city into a world-class center for digital media. The district will also give visibility to Irish digital media efforts in a number of
3

Ref. Annex I: About the Digital Hub 8

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key areas. The first round of enterprise accommodation will be ready in 2003. In the regions, a network of so-called Webworks will be set up but these are intended to support not only digital media but also other emerging sectors such as biotechnology. The Government announced the development of the Digital Media District (then referred to as a multimedia village) in 1999 along with the announcement that MIT Media Lab would be establishing a facility in the area. That facility, called Media Lab Europe, has been in situ since early 2000. The pace of development of the surrounding area has not been to MLE’s liking. Its parent MIT Media Lab has thrived in a campus environment inspired by diversity and by its very nature MLE cannot continue to exist in a vacuum. Another factor is the pace of development of digital cities in Asia, all of which will serve to compete with Ireland’s offering. Without an influx of multinational tenants the Digital Hub will remain diminished with a knock on effect for the Irish digital media sector. It is also perhaps worth noting that Arthouse, one of the longest-standing metaphors for Ireland’s creative ability, and a precursor of the Digital Media District, has recently closed down. Once a multimedia flagship in the heart of Dublin’s premier cultural zone, Temple Bar, Arthouse had mounting debts and recently ceased trading. While Arthouse was a much smaller initiative than the proposed digital district, there may be important lessons to be learned from this experience. Its demise may ultimately have been due to financial difficulties but poor understanding of digital media by its board members may also have been a factor. Driven by the Digital Media District, Enterprise Ireland forecast in their ITS 2007 Strategy Report that there will be 7000 jobs in the digital media sector by 2005 with a turnover of €600m. This is subjective because it assumes the timely development of the digital district and uses a rather generous definition of digital media. It is hardly surprising therefore that only two years after the launch of ITS 2007, Enterprise Ireland is currently working on a new strategy for digital media. The new strategy may sensibly reflect a scaling down of the forecast for growth due to the high-tech downturn but must retain enough scope and vision to ensure that digital media in Ireland is given every chance to reach its potential. Enterprise Ireland is not the only public sector player with an interest in digital media. The state training agency FÁS is commissioning a study on skills needs in the cultural sector with a specific emphasis on digital media. Forfás, the policy body for science, technology and innovation is carrying out a survey on digital content in Ireland. Dublin City Council is a major stakeholder in the digital district, while the Digital Hub, set up by the Department of Public Enterprise, will coordinate the input of the various public bodies into the digital district project.

9. Factors Inhibiting Growth
The recent National Digital Media Conference in Dublin reported that “Digital media is an immature industry but correspondingly, one that may present big opportunities. Like in the early days of software, the burning question seems to be, where’s the killer app? More importantly, what is digital media?” The growth of the digital media sector is being inhibited by a number of factors, both direct and indirect, including:
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           

Failure to define the digital media opportunity The intangible nature of digital media. The broad scope of digital media activities and influences. Hesitancy on the part of the investment community. Lack of champions in the public and private sector. Lack of cost-effective broadband Slower pace of development than other countries Failure by the sector to articulate its offerings. Poor knowledge of funding schemes. Failure to properly exploit intellectual property rights. Under developed use of networking. Immaturity and lack of basic business sense.

Some of these are basic but essential issues such as lack of clarity and vision, which must be addressed before the sector can move forward. Others are attributable on the one hand to failures by the system, for example the alarming failure to make broadband available to practitioners at a reasonable price and on the other, to the sector itself, which demonstrates a degree of immaturity in certain aspects of the way it operates.

10. Genetic Factors
The most common assumption in digital media is that Ireland has an abundance of creative people who given adequate bandwidth can build a successful digital media sector. Creativity and bandwidth are both crucial parts of the equation but there are also a number of characteristics inherent in the digital media persona that need to be addressed. Without a proper business culture, no amount of creativity and bandwidth will make a successful digital media sector, in an era when everyone has the technical capability and competitiveness is essential. The genetic factors of digital media include a tendency to stay small and agile and to splinter into smaller groups when one business gets too large. They also include a tendency towards networking in an almost non-conformist way while at the same time shying away from more formal networks that could lead to valuable business opportunities. Digital media practitioners have an instinctive affinity for new technology and were among the first to see the potential of the Internet. They move fast in terms of technology but are more reluctant to adopt other essential business tools such as accounting systems and quality standards. Business development tends to be an ad hoc process for many digital media companies. Partly due to a shortage of cash flow, very few of the smaller companies have sales managers and make little use of established marketing tools. Deals are often ad hoc affairs with one company accepting a subcontract from another company for part of a larger assignment. Often freelancers are drafted in to do the work. In deals made directly with clients there is often little thought given to intellectual property rights. Digital media companies often don’t look to secure a pipeline of work and are happy working on one-off assignments, a project-based business strategy similar to that found in the film industry. This is not attractive to investors.

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11. Raising Finance
Despite the downturn in the global technology sector there is no shortage of finance available for viable ideas. Estimates are that funds totaling €1billion are currently under management, €600m in Ireland and €400m abroad. However, who you should approach depends on the type of funding you require and this is where the confusion lies. For example, someone wanting to raise €50k for a digital movie and someone wanting to raise €5m for a company expansion will not get their money from the same source. At the moment there is no central source of information on funding for all aspects of the digital media sector. Financing the digital media sector is not only about providing investment but also about providing incentives. Schemes whereby Irish content companies would receive subsidies towards content creation, particularly in export markets, must be considered, as should financial relief relating to the exploitation of IPR, i.e. tax-free royalties. In this respect, not only the software industry model should be examined but also the localisation industry and the finance sector model, including the IFSC (International Financial Services Centre). Cross border investment in digital media in Europe does not follow the same pattern as for other sectors. The European Commission has determined that there is insufficient cross-border investment in the sector and that the market needs to be stimulated. It is addressing this problem through an action line of its e-Content programme4 called “Opening up access to capital for digital content companies”. It is likely that the same phenomenon exists in Ireland and that more cross-border investment in digital media could stimulate the growth of the market.

12. Intellectual Support
The results of the recent O2 National Digital Media Conference (www.ndmc.info) indicate that digital media companies would benefit from better advice in a number of areas including business development, raising finance and intellectual property rights. They also need help in networking and in making collaborative approaches to clients and investors. The cost of obtaining such advice can however be prohibitive and there is need to provide this support at a highly subsidised price if companies are to be able to participate. The Digital Media community has specific needs and requires a special approach that few people outside the industry are capable of understanding or providing. The support has to be delivered by experts who have first hand experience of the sector. Digital micro-enterprises have many creative ideas but inadequate time and resources to develop them. They are often ill equipped to deal with investors and content commissioners. The success of the digital media sector relies heavily on developing sufficient creative talent to satisfy the demand for diverse and compelling content. While their work is recognised and flagged as being at the forefront in terms of innovation and content, digital media innovators and entrepreneurs need an intellectual infrastructure that will support business growth in this dynamic industry. There is a verified need for collaborative marketing, collective fundraising, mentoring and content production. This approach would help to build scalable business by ensuring continuity
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See www.cordis.lu/econtent for more information. 11

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of supply and proper quality. A type of co-operative for the 21st Century, there is a need to support the aspirations of digital micro-enterprises on a collective basis. Enterprise Ireland as a general rule only supports companies with 10+ employees so there may be a gap in the market here. The format of the co-operation needs to be investigated without delay but is unlikely to involve the formation of an association in the traditional sense. What is more likely to emerge is the need for a resource that provides an appropriate physical, virtual and intellectual space for digital media companies to equip themselves to do business and to help them to articulate their offering to potential clients and investors.

MISSING!

Financial Support
Enterprise Ireland Other agencies & VC’s

Intellectual Support
Business Development – Marketing – Intellectual Property Rights

Infrastructure Support
The Digital Hub Digital Clusters

Fig 4. The Digital Media Support Chain

13. Intellectual Property Rights
Encouraging the development of new intellectual property by Irish companies must be a major thrust of future economic policy. Digital media is an IP intensive business and must therefore be positioned as a sector with high growth potential in this context. To have economic consequences however, IP needs to be protected and leveraged on a wide scale. Traditionally however Ireland has been poor at doing this. Poor business education, ineffective systems for promoting Irish innovation and the second lowest level of patent registration in the EU have brought about this situation. Digital media content is by its very nature even harder to protect than analogue material. This is why digital media enterprises must learn about their rights and practice what they preach. Digital media may not lead to many patents being registered but a large amount of trade will be based on licensing and royalty payments. Negotiating the best deal possible can be an intimidating challenge for a micro-enterprise particularly when faced with a corporate client with access to significant legal resources. At the moment, digital media companies are ill equipped to trade in this environment. Acquiring the necessary knowledge usually involves hiring a prohibitively expensive media lawyer. A mechanism needs to be found whereby digital media companies can equip themselves with this knowledge or acquire it for a reasonable amount. Some form of subsidised programme will ultimately be necessary to do this.

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14. Development Schemes
We can use some Hollywood metaphors to describe how the Irish digital media sector might develop, namely “Digital Media: The Blockbuster Model” and “Digital Media: The Understudy Model”. One way of defining the characteristics of the digital media sector and the way it will develop is to decide which of these models or perhaps a combination is most appropriate. The “Blockbuster Model” is the multinational approach whereby international media giants such as Bertelsmann will be lured to Ireland by a package of incentives not unlike those offered to IT multinationals in the 80’s and 90’s. The “Understudy Model” is the careful nurturing of the indigenous digital media sector, characterised by skill, creativity and technical know-how. The bulk of the money seems to be on The Blockbuster but if The Understudy is not groomed in parallel, the chance to develop a truly indigenous sector with world beating potential may be wasted. Ideally what will emerge will be a combination of both with home-grown digital media companies forging successful relationships with multinationals in their own back yard.

Digital Media: The Blockbuster Model  Invest in state-of-the-art infrastructure aimed at attracting the best internationally – within a few years. Offer tenancy deals which will appeal to research facilities and multinationals and tie them in for the long term 

Digital Media: The Understudy Model Invest in local talent aimed at developing a strong indigenous base - starting now.

Focus on subsidised bandwidth, the currency of the digital media sector, allowing companies to get on with what they do best – making content Target riskier independent digital media companies who often tend to be involved in more groundbreaking work. Create a knowledge base where new forms of content are being created, new delivery techniques developed and new business models tested. Grow a digital media community organically, by consulting with companies and providing opportunities for networking and resource sharing.

Target established media companies with digital media departments – film companies, advertising agencies etc. Create an international hub for the creation, storage, localisation and distribution of content

Rely on creating an instant community by adopting a “build it and they will come” philosophy.

Fig 5. Sector Development Scenarios

15. Cluster Development
Clustering of digital media companies has not been a priority up to now. However clustering may prove to be a very viable proposition. It will need to take into consideration not only the
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unique genetic characteristics of digital media companies but also how effectively they are likely to cluster with companies with different characteristics. In the Digital Hub model, for example, it is likely that the cluster may include large multi-nationals, university research centres and digital micro-enterprises. However, several types of cluster may be suitable for the digital media sector:  Genetic Cluster: This is the clustering of companies that carry out different but related functions and whose genetics – motivation, culture, mode of business – are similar, e.g. multimedia, animation and film companies. Brand Clustering: Here an attempt is made to cluster companies round a common brand, to create a perception that the area in which the cluster is located is particularly creative or innovative or that its workforce is particularly well educated, thus causing the area to become attractive for that reason. The Digital Hub may become an example of a brand cluster. International Clustering: Creating a cluster of companies that are either based in different countries or attracting international companies to locate to a certain region because of the perceived qualities it has (see Brand Clustering). Consolidation Clustering: This is a new concept which helps companies who cannot compete individually to collaborate and acquire the skills and knowledge necessary to deliver a continuous supply of product or services to their clients.

Digital media companies are often small and lack the resources and knowledge to be competitive. They lack business and legal knowledge and are often undermined during negotiations with larger clients. A consolidation cluster would consist of a number of digital media companies capable of providing multiples of each others output in order to satisfy clients’ demands for a continuous supply of service. Also in the cluster would be financial experts and legal advisors working with the digital media companies to ensure they were adequately equipped to do business with larger organisations.

16. Industry Representation
Digital media companies are surprisingly poor at networking, often remaining oblivious to or suspicious of networking opportunities. There is no digital media association in the Republic but a traditionally structured association with rules and charters is probably not what is needed anyway. The National Digital Media Conference suggested that what is needed is a collaborative platform led by industry actors that can help its members in the following ways:    Digital media companies can find out what financing options are open to them, in relation to the type of investment they require. Companies can access knowledge on the factors driving growth in the digital media sector and can avail of assistance in how to apply this knowledge to their business. Companies working on a co-operative basis can make a more effective approach to potential clients or investors because of their collective ability to guarantee continuity of output.
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Marketing costs can be reduced and a more coherent image of the industry created by collaborating on international marketing activities.

In the absence of a Southern association, lessons can be learned from the experiences of the Northern Ireland Interactive Media Association (NIIMA). We can also look for guidance to the UK where the Digital Content Forum (www.dcf.org.uk) and in particular New Media Knowledge (www.nmk.co.uk) have been set up to provide support services to the digital content/digital media industry.

17. The Need for Champions
As with all emerging sectors, particularly in technology fields, there are a number of factors that make the difference between success and failure. For example, there is always a need for champions. In the IT sector the champions have often been the drivers of new products that changed the market, such as Bill Gates of Microsoft and Marc Andriessen of Netscape. Even though digital media has the potential to become the new IT, and we should certainly see the creation of digital media departments in most major companies over the next few years, it has been slow to create champions up to now. Part of the reason for this has been the behindthe-scenes way in which digital media operates, the lack of technological advances that can be directly attributed to digital media and the lack of successful entrepreneurs, many having been tarred with the same brush as the dotcom millionaires. Some champions are happy to work in the public eye while others can be just as effective working behind the scenes. In Ireland a relatively small group of champions could achieve a lot and they should come from North and South of the border. There are four types of champion and all are badly needed. 1. The Politician: Government policy on digital media needs to be transparent so that people can see what is being done, they know where to go for information and a clear message is being sent out that progress is being made. Having a visible and senior member of the Government to oversee digital media is crucially important. 2. The Investor: It is more likely that investment will be forthcoming from individuals who have made money in a related area than it will from conventional investment companies. Not many of the characteristics of the digital media sector appeal to fund managers, but a certain amount of insight and vision is essential for future development. 3. The Entrepreneur: Many digital media entrepreneurs are surprisingly modest about their achievements because they do not fit the mould of the traditional entrepreneur. Many are technically qualified and very passionate and often protective about digital media. They lack the entrepreneur’s instinct for business. However exceptions exist and there are several North and South that come could make worthy champions.
4.

The Enterprise: Championing of digital media comes mainly from within the sector but it is not yet a strong enough voice. Large corporations such as banks and others who have made a substantial commitment to e-business will in the future start to use more and more digital
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media. Supply chain convention means that they will sooner or later start to outsource these requirements to enterprising digital media companies. Convincing even one or two large corporations to publicly champion digital media will have an enormous impact on the sector. Champions can also create market pull and in Ireland the Government should be an important champion in this respect. It could help to highlight the sectoral implications of digital media by running pilot projects in high-profile areas such as health, education and e-business. These pilots would show digital media fixing real problems in the public services and would encourage established companies to invest in digital media and to partner with digital media specialists.

18. Conclusions
Digital media in Ireland has the potential to be a €1 billion industry by 2007. Yet there are a number of issues that urgently need addressing if this potential is to be realised. The sector needs to define its value proposition and show that it can solve real problems. Role models need to emerge and the sectoral implications of digital media must become apparent. Launching a number of pilot-projects addressing real issues and supported by the public and private sector is likely to help this happen. One of the most obvious conclusions emerging from this overview of the digital media sector, and one that was echoed by many of those consulted, is the need for a clearer and more widespread understanding of digital media. This need applies to both sides of the fence: policy makers and users of digital media on the one hand and digital media practitioners on the other. There is confusion about the relationship between digital media and traditional creative practices such as film and advertising. There are also those who view digital media solely as an entertainment medium and not as one with wider sectoral implications. In order for digital media to reach its growth potential, it is essential that those who influence policy and decision making in industry, education and government learn exactly what digital media is and are seen to be comfortable with it. Visible examples achieved through pilotprojects will allow people to see and understand the application of digital media in different sectors. Similarly, defining digital media in a way that is consistent and understandable to key communities such as investors and policy makers must be viewed as a priority. Understanding is fundamental to getting the most out of digital media. At the moment digital media is struggling for comprehension and recognition in a conservative climate. Something must be done to empower the digital media sector. Part of the reason for the success of digital media in the US is the support given to the fledgling sector by other enterprises. In Ireland, no established industry sector has taken digital media under its wing and champions are badly needed. Skills are another issue. It is not enough to say that inherent creativity will drive the development of the sector. The traditional practice of feeding a pipeline of skilled graduates into industry will not necessarily work for digital media. Companies are smaller, links with academic institutions are weaker and the freelancing culture is endemic. A stronger 3rd level research

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culture that would feed into higher end start-ups would improve the cachet of the digital media sector. Digital media distinguishes itself from all other types of media by the fact that it can be exported globally from wherever it is created. All digital media is therefore exportable and all digital media companies are in theory export companies. Development agencies need to look again at their own criteria regarding what constitutes a company with export potential and may find that many digital media companies are being overlooked in this respect. The most common misconception is that Ireland has an abundance of creative people who given adequate bandwidth can build a successful digital media sector. This is not true. Creative individuals do not necessarily make creative companies. Other types of skills are needed. Digital media companies must be given better advice on business development, raising finance and intellectual property rights. They need to know more about building scalable businesses, negotiating with clients, quality control and ensuring continuity of supply. There is a need to provide a programme of business support to digital media companies ensuring that they become competent in these practices and fully aware of the resources around them, such as academic support, R&D facilities, and networking and collaboration opportunities. The Digital Business Labs programme is an initiative that has been especially designed for digital media companies with these needs and will be thoroughly evaluated as a suitable basis for a support programme. This programme should be made available on a subsidised basis to companies who meet certain criteria relating to size and turnover, including independent digital media companies and traditional media companies who are in transition to digital. There is also a need to provide a scheme that helps to match digital media companies with suitable investors and financiers. This should involve the development and widespread dissemination of an all-island matrix showing digital media companies who they should approach for different types of funding. The matrix should take into account the criteria of the financing organisation, including minimum and maximum investment, type of company supported and types of investment made. This information is not available in matrix form at the moment. This exercise should be accompanied by an examination of investment trends in digital media, in the North and South and in cross-border investments. Finally, an all-island campaign should be launched to endorse digital media and to promote its uptake by industry and in the public sector. A number of high-profile pilots using digital media to address issues which are in the public eye plus some initiatives to encourage large enterprises to work with local digital media companies will lead to more widespread recognition for Irish digital media capability.

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Annex I: About the Digital Hub
The Digital Hub is a catalyst for future growth and competitiveness and an opportunity for innovators and entrepreneurs in digital media. The Hub is a Government initiative that is part of an Enterprise Ireland and IDA Ireland national and international digital media strategy. The Government, through the Department of Public Enterprise has committed €130m to The Digital Hub and to Media Lab Europe, to create a cluster of excellence in innovation, creativity, research and learning focussed on Irish and international digital media companies. The Hub will not provide direct finance to companies but its partners Enterprise Ireland and IDA Ireland provide a range of support services. The Hub offers a city centre location with access to high-speed broadband (already on site); high-tech enterprise space (planning permission applied for, ready by summer 2003); and an environment conducive to networking and learning (pilot projects already underway). The second phase will be developed with the private sector and will include enterprise, residential and retail developments. This went out to public tender in June 2002 and the competitive process will be completed by next Spring. The Hub is already consulting with industry on a one-to-one basis and by facilitating Focus Groups. Groups on games, animation, film, e-learning already exist and new groups planned include mobile technologies and e-music. Contact: Brighid Smyth Director of Communications The Digital Hub T. +353 1 4084624 E. bsmyth@thedigitalhub.com W. www.thedigitalhub.com

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Annex II: About NIIMA (Northern Ireland Interactive Media Association)
NIIMA is Northern Ireland's co-ordinating body for new media. The new media industry in Northern Ireland is young, dynamic and service orientated. This is reflected in the personality and ethos of NIIMA. Founded in 1998, NIIMA enjoys worldwide recognition, enabling the NI industry to excel and compete in a world class forum. The association aims:  To build quality standards in bringing together like-minded individuals and businesses building a vibrant industry sector with export focus and working towards a dynamic knowledge based economy in Northern Ireland, raising standards and perceptions of the emerging new media industry. To build world class clusters of excellence and create networks of common interest and partnerships within business and education, striving to develop school, college, university and vocational curricula that support emerging new media technologies and global competitiveness.

NIIMA's role would be to agree a vision and strategy for the emerging multimedia industry sector. Subsidiary activities will include liaison with government, the promotion of awarenessraising activities, skills development, and the provision of a single global interface for Northern Ireland industry. NIIMA will also provide the infrastructure to promote strategic and operational plans for a flexible and progressive multimedia industry sector within Northern Ireland and to provide coordination throughout the region and the island of Ireland. NIIMA aims to set and maintain standards in professional practice and conduct for the benefit of member companies and purchasers of new media products. . It exists to improve the knowledge, market share and professional status of its members in the new media industry. It also exists to highlight issues, which affect new media, and to safeguard the future of the industry in Northern Ireland. NIIMA's aim is to be a recognised, trusted and credible body aimed at promoting and supporting new media companies in Northern Ireland, raising and maintaining the standards of its product. Its members represent specialisations in all fields of new media and the association will be increasingly involved in developing links with educational establishments, nurturing young skills and setting standards within new media and emerging technologies. Contact: Stephen Boyd Chief Executive NIIMA T. +44 777 1987793 E. stephen.boyd@niima.ni.org W. www.niima.org.uk

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Annex III: Contributors
The author is grateful to the following people whose views and contributions proved an invaluable part of this exercise.      Chris Horn (Chairman of the Board, Iona Technologies) Colm Reilly (Chief Executive Officer, Irish Internet Association) Karlin Lillington (Journalist, The Irish Times) Stephen Boyd (Chief Executive Officer, Northern Ireland Interactive Media Association) Lester Manley (Chief Executive Officer, Dimex)

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