Creating a Digital Academy

in Dublin
© Kieran O’Hea November 2002

1. Introduction

We live in a digital world, powered by content. Digital is shorthand for a new approach to
business, one that is fast-paced, connected, non-linear, virtual and technology enabled. These
are characteristics not just of digital devices but of the business environment itself. Underlying
the digital revolution are the transactions, exchanges, products and services – all of them
content based – that characterise the knowledge economy.

Proficiency in the creation, management and trading of digital content may contribute
significantly to our future competitive advantage. This proposal concerns the creation of a
Digital Academy, operating under the patronage of a major publishing organisation, where
digital content companies can experiment, learn and trade in digital assets, working in a
collaborative environment of mentors, peers and customers.

2. The Digital Opportunity

The drivers of the digital 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. This has in turn accelerated the
development of new types of businesses and also new opportunities for existing businesses and
stakeholders, including publishers. This is referred to as the digital opportunity.

Once digitised, content can be regarded as a new form of software. Ireland is the biggest
exporter of computer software in the world and has built a thriving indigenous localisation
industry that customises software for international markets. The growth of digital content will
mirror the growth of the software and localisation industries. The electronic delivery of
software, music, books, games and video accounted for a mere 3 percent of such online sales in
1999, but a recent Forrester Research report predicts that digital downloading will garner some
22 percent of online sales in these categories by 2004, totalling $2.9 billion.

Outline Proposal: The Digital Academy 1

 Fig. 1 Digital Media Diversity

3. Digital Content Market Potential

The recently published report from Forfás “A Strategy for the Digital Content Sector in Ireland”
draws attention to the potential global demand for digital content and frames this in the context
of the development of the sector in Ireland. The vision is to develop a world class digital content
industry based on the targeted development of a number of clusters at the intellectual property
end of market, namely enabling technology and high-value content and applications.

While Forfás will not be drawn on the estimated size of this sector, other informed sources
predict that under the right circumstances the digital content sector in Ireland can grow to be
worth more than €1 billion by 2007. This prediction is partly based on the injection of funds by
the government into the Digital Hub, which is intended to grow the sector to 7000 jobs and a
value of €600 million by 2005.

This valuation is based on the anticipated growth of the indigenous sector. However the
eventual value of the Irish digital content sector could be a much more significant percentage of
the predicted global forecast of 400 billion Euro, provided incentives are put in place to attract
significant numbers of multinationals to locate content related activities in this country. These
activities may be productivity related such as the creation and distribution of content and also
fiscal, such as digital asset management, rights trading and collecting income from royalties. The
next five years therefore provides Ireland with an important window of opportunity.

Outline Proposal: The Digital Academy 2

4. Factors Inhibiting Growth

The way things are now, however, this growth simply will not happen because there is an
inadequate support structure in place for digital content companies. Research carried out in
Ireland and in Europe shows that these companies need a collaborative platform within which
to develop ideas, hone their business skills, secure deals and plan marketing and distribution
campaigns. What is therefore needed is for a major publishing group to act as champion,
combining hands-on expertise and infrastructure with global reach and the necessary leverage
to overcome the many obstacles that digital content companies encounter when trying to ply
their trade in Ireland.

 Failure to define the digital opportunity.

 The intangible nature of digital media.
 The broad scope of digital activities and influences.
 Failure to create sustainable business models.
 Hesitancy on the part of the investment community.
 Lack of champions in the public and private sector.
 Lack of cost-effective broadband
 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.
Fig. 2 Growth Inhibitors in the Digital Content Sector

The digital content community has specific needs and requires a special approach that few
people outside the sector are capable of understanding or providing. 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 content
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 sector.

Outline Proposal: The Digital Academy 3

 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.

2. 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.

3. 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.

4. 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.

5. 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.

Fig. 3 Where Digital Content Companies Need Help

5. Proposed Solution

According to the Harvard Business School 2nd annual Internet Conference, “Success on the
Internet is no longer driven purely by technology, first mover advantage and buzz. Rather, it is
much about quality of management and the ability to grow successfully in an increasingly
competitive market”. Digital content is the most readily exportable product in the world, lacking
only a shop window and a proper distribution platform. A Digital Academy based in Ireland
would provide a launch pad to success for digital content companies, allowing them to gain
exposure for their products, forge links with established multinationals and create a powerful
source of attraction for the world’s top digital talent.

Outline Proposal: The Digital Academy 4

The Digital Academy will aim to provide improvements in the digital content sector in the
following key areas:

 Improvement of quality of business models

 Better business networks for digital content

 Benchmarking of good practice in the sector

 Support for IPR and financial issues

The Digital Academy is not necessarily an incubator, more of a finishing school, one where
promising content companies and digital entrepreneurs can hone their business propositions
under the patronage of a major media company. Most digital content companies, including
those who have been operational for a number of years, are ill prepared for investment or for
the rigours of corporate life. In Ireland 95% of them can be characterised as being ‘micro’ in size,
meaning less than ten people.

On the other hand, digital content companies are usually generous in nature, and are willing to
do deals and make compromises, often it has to be said to their own disadvantage. They would
almost certainly agree to participate in a scheme that would furnish them with the facilities they
need most, including bandwidth, investment and business support, in return for a share of their
equity. In terms of their willingness to collaborate, they could be classified as “user-friendly”.

6. Academy Structure & Services

Despite the inevitable association of content with creativity, the digital academy will be
primarily a business centre. Creativity and bandwidth alone will not guarantee a successful
future for the digital content sector, whose Achilles Heel has always been poor business-models.
Many digital ventures have proved unsustainable and this has impeded the growth of the
sector, deterred investment and, because it is dependent on the availability of compelling
content to sell, has adversely affected the growth of e-business. It is in publishers interests to
help robust business models to emerge, driven by market demand for quality content products
and services. Without a proper business culture, no amount of creativity and bandwidth will
make a successful digital content sector, in an era when everyone has the technical capability
and competitiveness is essential.

The Digital Academy will address the following challenges, which are associated with helping
Irish digital content companies to access the global market:

 Developing business knowledge of how to provide continuity of supply and how to protect,
harness and exploit intellectual property rights.

 Finding cost-effective ways for emerging talent and talented products, works or
programmes to be showcased internationally.

Outline Proposal: The Digital Academy 5

 Supporting small companies to secure international distribution deals and to provide a
compelling global online presence.

 Creating networks and partnerships that allow digital media companies to establish
profitable working relationships with a range of clients

The proposed structure of the Digital Academy is represented graphically on page 7 of this
document.

6.1 Support for Indigenous Industry

There is a verified need in the digital content sector for support in the areas of
collaborative marketing, fundraising, mentoring and content production. The availability
of these resources will help to build scalable business by ensuring continuity of supply
and proper quality. A type of co-operative for the 21st Century, the Digital Academy will
aim to support the aspirations of digital enterprises on a collective basis. This will fulfil
the growing need for an appropriate physical, virtual and intellectual space in which
digital content companies can equip themselves to do business and which helps them to
articulate their offering to potential clients and investors.

6.2 Business Training

The academy will provide a programme of business support to digital content

companies with the aim of promoting best practice in business management. The
programme will impart knowledge on business development, branding and intellectual
property rights. It will also encourage companies to exploit the resources around them,
such as academic support, R&D facilities and business-to-business networking and
collaboration opportunities. The contributors will include established digital content
companies and experts in business, law and finance.

6.3 Attracting Inward Investment

The Digital Academy can become the home of digital content in Ireland as well as a
means of attracting international talent to the country. As Science Foundation Ireland is
endeavouring to do in attracting the world’s leading scientists to carry out primary
research in this country, so will it be possible to provide an attractive environment and
appropriate financial incentives to attract world-class digital talent to our shores. Thus
we will eventually be able to boast an international centre of excellence and a
renowned productivity centre which together with the right infrastructure and
appropriate trading incentives will provide the world’s leading content companies with a
compelling argument to base their European operations here. Ideally what will emerge
will be a successful economic cluster with home grown digital content companies
forging successful relationships with multinationals in their own back yard.

Outline Proposal: The Digital Academy 6

 6.4 Knowledge Base

A dearth of knowledge about the digital content sector and the risks and rewards
associated with it is hindering investment, another problem the academy will be in a
position to address. As it develops a deep pool of knowledge, the academy will be in a
position to offer advice on a commercial basis to organisations outside the content
sector, such as government departments and major corporations, helping them to
realise the potential benefits of digital content and how it can impact on their policies
and organisations.

6.5 Intellectual Property Rights

Encouraging the development of new intellectual property by Irish companies must be a

major thrust of future economic policy. Digital content 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. Ireland has traditionally 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 content is by its very nature even harder to protect than analogue material.
Digital content 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 digital enterprises particularly when trying
to negotiate with large clients who have access to significant legal resources. The Digital
Academy will lobby for effective legislation and financial incentives, operate an IPR
awareness programme and provide digital trading systems that will help digital content
owners to secure a fair return on their assets.

7. Investment & ROI

As the academy patron, the publisher will be expected to fund the creation of a centre, which is
fully equipped for digital content business. Companies will pass through the academy’s different
competence zones – creativity, production, business, marketing – attaining credits along the
way before emerging as fully-accredited academy members. This process will equip them for
doing businesses in world markets and also make them more attractive to prospective investors.
It will also entitle them to become shareholders in the academy.

What the publishing company will get from this is as follows. The publisher creates a platform
(the Academy) through which digital content companies can reinforce their business
propositions and showcase their capabilities. Any company coming into the academy will sign an
agreement with the publisher entitling the latter to equity. The amount of equity will depend on
the estimated ROI and on the nature of support provided by the publisher. At a minimum the
publisher will provide all occupants of the academy with workspace, state-of-the-art bandwidth
capability and asset management facilities. In addition to its equity arrangement, the publisher
has the right to a percentage of royalties accruing through content sold or broadcast through its
distribution platform.

Outline Proposal: The Digital Academy 7

As a stable of talent develops, the publisher can host open days for potential investors and
customers. They can assess the quality of the companies and services on offer and any
subsequent deals done with academy members, whether through investment or by purchase of
products and services, will prove beneficial for the publisher. The academy could also be
instrumental in launching a business expansion scheme (BES) for the digital content sector.

8. Contribution to Sector Development

The Digital Academy will contribute to the creation of a sustainable and profitable digital
content sector by operating on two parallel, mutually dependent development paths, one
designed to build an indigenous core of digital talent and the other to attract a critical mass of
multinational investment to these shores. In this way the Academy will actively support
government strategy calling for the development of a vibrant digital content sector. The
following shows how these two paths might develop with the Government driving PATH 1 and
the private sector driving PATH 2, through initiatives such as the Digital Academy. The successful
integration of PATH 1 and PATH 2 will be assured by close co-operation between the public and
private sectors.

PATH 1: Focus on Inward Investment PATH 2: Focus on Indigenous Development

 Invest in marketing campaigns aimed at  Invest in local talent aimed at developing a

attracting the best international companies. strong indigenous base - starting now.

 Offer tenancy deals which will appeal to  Focus on subsidised bandwidth, the
research facilities and multinationals and tie currency of the digital media sector,
them in for the long term allowing companies to get on with what
they do best – making content

 Target established media companies with  Target riskier independent digital media
digital media departments – film companies, companies who often tend to be involved
advertising agencies etc. in more groundbreaking work.

 Create an international hub for the creation,  Create a knowledge base where new
storage, localisation and distribution of forms of content are being created, new
content delivery techniques developed and new
business models tested.

 Create packages based on fiscal incentives and  Grow a digital content sector organically,
on physical infrastructure, aimed at attracting by consulting with companies and
multinationals. providing opportunities for networking
and resource sharing.

Fig. 4 Sector Development Scenarios

As well as reflecting national policy in relation to the development of the digital content sector,
The Digital Academy is aligned with the objectives of the European Commission who have
recently launched a €100m programme to stimulate the development of a dynamic European

Outline Proposal: The Digital Academy 8

market for digital content. Over the next three years the Commission will provide significant
support in the following areas:

 Access to available investment capital

 A unified European approach to online rights trading for multimedia production

 Support for the development of a common vision on market trends and developments

 Creating a favourable environment for the creation, distribution and commercialisation of

European digital content.

By aligning itself with the actions being taken at the European level, the Digital Academy can
increase the chances of participation of Irish companies seeking to take part in European
projects while at the same time giving greater prominence to Ireland’s digital content policy.

Outline Proposal: The Digital Academy 9

 The Digital Academy is a
fully equipped digital
business centre set up and

THE
managed under the
patronage of an international
media group

DIGITAL
The academy will offer a range ACADEMY Major emphasis is on
creating ways in which
of commercial services to
resident and non-resident academy members can
companies
OPEN DAYS, MARKET PLACE & INTERNATIONAL SHOWCASE showcase their talent

CONTENT SERVICES, NETWORKS & COLLABORATIVE PLATFORMS

NON- RESIDENT MULTI- Interfacing with policy

External companies can access RESIDENT ENTREPRENEURS & NATIONALS, makers and potential
the Academy knowledge base in
areas such as content quality
COMPANIES DIGITAL CONTENT GOVERNMENT investors is carried out by
(CLIENTS COMPANIES AGENCIES & Academy management
and certification
FOR (ACADEMY OTHER
SERVICES) MEMBERS) ORGANISATIONS
S.

- PHYSICAL INFRASTRUCTURE –
Facilities must be state-of-the- W ORKSPACE, BANDWIDTH & TECHNOLOGY SUPPORT.
art with enough bandwidth to CREATION, MANAGEMENT &DISTRIBUTION SYSTEMS Business skills and
deliver the full potential of business models are the
digital content areas that need most
- INTELLECTUAL INFRASTRUCTURE – attention in the digital
BUSINESS DEVELOPMENT, MENTORING & KNOWLEDGE BASE content sector.
LEGAL SUPPORT (IPR, CONTRACT NEGOTIATION)

Lack of access to capital is

- FINANCIAL INFRASTRUCTURE –
a serious growth inhibitor
INVESTOR READINESS & FINANCE APPLICATIONS
IN-HOUSE INVESTMENT

Fig. 5 Proposed Operational Structure of Digital Academy

Outline Proposal: The Digital Academy 10