1. Content industries and Australia's creative infrastructure


Multimedia products are a subset of the broader content industries. A more general appreciation of these content industries and the pressures leading to their progressive transformation is essential to understand the context of emerging interactive multimedia [IMM] opportunities in Australia.

Content industries are currently part of a major focus for national discussion and enquiry. This is reflected in such diverse activities as:

There are four reasons for this new focus:

The examination of content industries needs to be located within the context of wider national considerations, particularly the consideration of:

What do content industries involve?

There are three elements that support content industries

Each supporting element is necessary, but not sufficient in itself. In industry discussions, however, the creation of talent pools and user environments have often been neglected.

These three basic elements can be conveniently labelled as "bit creation", "bit delivery", and "bit usage". What makes digitised content different is that the core products are infinitely renewable and reusable, making the roles of producer and user interchangeable. In a world of digital technology, encoded bits are also completely transformable.

The business of the content industries involves four generic processes:

CREATION/PRODUCTION

The conception, design and execution associated with authoring, expression and performance.

ENCODING/STORAGE

The encoding or capturing of the created production in a form that can be shared and used.

DISTRIBUTION/NETWORKING

The mechanisms by which content productions or titles can be brought to market

USAGE

The consumption and use of content.

These processes are, of necessity, interrelated. When you add interactivity into the equation the individual characteristics of particular business processes can become very blurred indeed. Because of this, the distinction between two distinct spheres of activity needs to be maintained: this is the distinction between the creative infrastructure and the communications infrastructure (see Figure 1):


Figure 1: Distinguishing between creative and communications infrastructure


In this context the term "creative infrastructure" embodies a focus on the "bit creation" business and the linkages between creative producers and the creative usage and manipulation of symbolic reality. What this does is to draw a distinction between the substance of meaningful interaction -of content in its context - and the technological and market mechanisms for supporting the communication of content that we describe as telecommunications, broadcasting, or publishing. These market, distribution and exchange mechanisms are the "bit delivery " businesses.

This distinction between "bit creation" and "bit delivery" is important and useful. Bit creation and bit delivery are linked, but much of the rhetoric of convergence glosses over the distinctive business systems and operating environment in each market.

The creative industries are about imaginative authoring, and the things that are formative in this. The downstream communication industries are about the instrumental linkages, by various means or media, between the creators and users of meaning and content. Content industries cannot exist without the "means to market" - the access to consumers and users - provided by communication and distribution infrastructures. On the other hand, content industries are what stack the shelves of retail stores, or fill the pipes of carriers.

Whilst publishers, media distributors and the carriers are venturing into activities "across the boundary", through vertical or sideways diversification, it should be remembered that such ventures are often outside the original business operations or traditional competencies of these players.


Figure 2: Location of firms by core competencies

The Creative Infrastructure

Creation/Production              Usage                           
Authors,                         Consumer markets, schools and   
Scriptwriters,software           education, Government           
developers, art directors,       services.                       
producers, etc.                                                  

The Communications Infrastructure

Encodong/Storage                   Distribution/Networking           
Digital Processing/CD-ROMS,        Telecom, OPTUS, Microsoft,        
online servers, publishers,        News, Fairfax, Yellow pages.      
libraries, etc.                                                      


Why do content industries and interactive multimedia matter? Is there a large enough opportunity?

Content industries matter, and merit special attention. They are at the intersection of a significant industry development, and of the quality of life of the Australian community as reflected in its self-expression of culture, identity and the building of "knowledge banks".

Content industries are big enough to matter. They are, however, one of those service industries whose economic significance has generally been buried or under-represented in sectoral analysis. This study puts a value of $9 billion on the output of identifiable content industries, a figure that excludes advertising revenues and the expenditure on the supporting communications infrastructure.

Multimedia production in Australia is still small, but growing. Existing content industries are changing and new developments in multimedia and electronic delivery will lead to wide scale restructuring. The challenge with this migration is whether future multimedia industries will be located in Australia, or whether Australia will import multimedia products from remote information servers, (that is, export consumers rather than export services).

Existing content industries are vulnerable to displacement by offshore on-line services later in the decade. This could impact on the potential balance of trade in services. If Australian-domiciled publishers act quickly and overseas publishers use Australia as a centre for their Asia Pacific regional operations then a large, export-oriented industry could be built. This will create and sustain high value added jobs, and it will be consistent with Government policy towards cultural industries and development of a "creative infrastructure".

Cutler & Company's study has found that interactive multimedia products and services could become a major industry for Australia if distribution constraints can be overcome. The opportunity exists to become a clear leader in the Asia-Pacific region, if first mover advantage is taken during the next two to three years. In other words, Australia could become an importer of users of digitised content that is developed here and distributed electronically for access from this country.

To secure these outcomes, concrete steps must be taken to create a supportive environment to attract and retain activity in content production, and to remove distribution bottlenecks that will otherwise limit Australia's industry participation to small-scale activity for a shrinking local market. In particular, Government can assist the content industries to grow by executing active policy measures.

In our view, there are essential pre-requisites for success in building substantial content developing and publishing industries in Australia for the forthcoming era of computer and communications-based interactive multimedia services. These can be classified in terms of "the two infrastructures" (see Figure 3).


Figure 3: Summary of pre-requisites for success

The Creative Infrastructure

The Communications Infrastructure


This report examines the requirements associated with these success factors. The report also suggests a step-by-step process by which industry development could occur (see Figure 4).

To maximise the opportunities, the essential task is to build a framework and strategy for Australia to participate as a prominent supplier of interactive multimedia-based services to global markets. Whilst initial benefits may be modest (less than $0.3 billion in annual output within two or three years), the subsequent prospects are much more significant.


Figure 4: Benefits and key inputs


The essential challenge is to ensure Australia imports overseas consumers for its creative infrastructure (like we import tourists) rather than becoming merely a smallish consumer market for interactive multimedia services developed elsewhere.

This will require resolute examination by government of the policy instruments available to enable our content developers unimpeded and affordable access to global consumer markets. A "whole of government" effort is required, both at the Commonwealth and at a State level. The driving force, however, must come from the private sector, supported by government policies that are consistent with the aspirations and economic realities of the industry.