Throwing money down the drain

Annie Turner
30 Apr 2009

No-one would suspect we’re in the worst global downturn ever. TV channels are under huge pressure as advertising revenues fall and Deutsche Telekom gave everyone the jitters last week when it missed its earnings target, suggesting operators are vulnerable, after all. Yet opportunities for new revenue streams are being neglected by the media and telecom industry alike.

In the UK, the biggest commercial TV channel, ITV, is foundering, yet it has just thrown away the opportunity to make millions because it can’t reach agreement with YouTube: in the two weeks since Scot Susan Boyle appeared on ITV’s Britain’s Got Talent, the video of this ordinary looking, 47 year old lady blowing the smirking, hostile audience away with her performance has been viewed over 100 million times.

And ITV hasn’t made a penny from it because it refused to let YouTube run adverts alongside the clip until it had thrashed out a revenue sharing deal with Google, owner of YouTube.

Fremantle Data, which owns the distribution rights to Britain’s Got Talent finally woke up and signed a deal with YouTube at the end of last week, with ITV’s approval, for when the clip is accessed from outside the UK.

Speculation is rife about the reasons for this extraordinary, wasted opportunity. Michael Grade, head of ITV, has called YouTube a parasite. Perhaps ITV was unrealistic about the level of income and how much it would receive (certainly, it would be nothing like the level and margins for TV advertising) or perhaps it was, like everyone else, staggered by the scale of the response to the volunteer charity worker, although there have been suggestions that the whole thing was highly contrived.

Similarly, I was at a Visa Europe Insights (yes, the payments handling concern) conference in Berlin last week. CEO Peter Ayliffe described mobile as the most important innovation looming in payments and admitted that he and all senior staff at Visa Europe carry payments-enabled handsets while David Birch, the Visa-sponsored Research Fellow at the Centre for Study of Financial Innovation said that he now realises mobile is central to the future of payments.

The O2 trial with Transport for London, that enabling 500 people to pay their Tube fares using contactless technology on enabled handset early in 2008 was a smash hit with all concerned and lots of trials have gone very well indeed (although not all involve Visa), so what’s the hold up?

The financial institutions and operators can’t get their collective ducks in a row – neither party is used to doing business via a channel someone else controls – just like ITV.

But instead of doing something to capitalise on the huge pent-up demand for mobile payments, we are locked in stale mate by two industries that allegedly are most keen to pursue new revenue streams in tough economic times.

The question is, if not now, when?

Old habits evidently die very hard indeed and one has to wonder what will move these disparate parts of what are so often referred to as the digital ecosystem to act like one.

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