You participated in THE ARTS+ Innovation Summit 2017, which united a network supporting tech-triggered innovation within the Cultural and Creative Sectors (CCS). What are your ideas for the Summit in 2018, where we aim to adress a strong unified message from the CCS to the public sector on European, national and regional levels?

Dr. Heritiana Ranaivoson: The message needs to be at the same time simple and relevant at many levels: EU, regional, national level, and at the same time relevant for different CCS sectors, plus it should also make sense for newcomers and tech companies. What I think should be part of the message, beyond of course the basic fact that the CCS need this support:  Innovation support measures should not only focus on technological innovation, but on innovation on all levels, which includes content innovation, but also business model innovation. Nobody within the CCS has resources for experimenting with new business models the way the big four (Google, Apple, Facebook, Amazon = GAFA) do, and this should definitely be a scope for innovation support.

 

You recently published – together with colleagues – a new study, commissioned by the European Commission, called „Creative Value Chains“. What is, for you, the most important finding of this study?

Dr. Heritiana Ranaivoson: What we set out to research is the question – and the usual view – that digitisation is turning everything upside down within the Cultural and Creative sectors (CCS). What we found is that there is no really drastic reconfiguration of the sectors through digitisation (yet) when looking at the structure of the CCS. The powerful players remain powerful, yet have to deal increasingly with a loss of power, challenged by tech companies like GAFA. We observed that the sectors are getting more complex, but not completely destroyed by digitization. There is convergence happening between all these sectors, which has to do with digitisation. We didn’t really try to work with scenarios and ask what will happen in 10 to 20 years, yet I can say that one of the major points of concern is the impact of the big tech companies: GAFA are really changing a lot withing the CCS structure and if we follow the same trend as we see it happening now it is possible for the powerful incumbent players down to the creators to be threatened.

 

The US economist Gary Hamel said once that “Competition is no longer between products and services, it is between competing business concepts.” Is this quote adequate for the CCS? After all, a recent study has found that business models remain relatively stable, i.e. most of the CCS players are still predominantly selling products – and not services etc….

Dr. Heritiana Ranaivoson: Yes, I would agree with Gary Hamel – if you take business models in a larger sense, which means looking not not only at the revenue sources, but at how revenue is created and controlled. Even though the revenue sources of the CCS might not have changed that much – one thing has changed in a big time: the strength of new online platforms to control the markets. With the success of GAFA everybody realized the importance of these platforms as intermediaries occupying a central middle position between markets, like Facebook does between users and advertisers. This so called „platformization“ is happening everywhere, not only within the CCS. As as a reaction some big and mid-sized CCS players try to develop their own platforms online. Broadcasters and press publishers extend their „old“ business model to digital, so in a way this is not new. Yet there are also other players, eg from the games sector, who are newcomers in this platform business. One example is the Steam platform developed by Valve, a game publisher. Their platform mediates between game publishers and consumers: Gamers create an account to buy and play games, and game publishers connect on the platform to promote their games and make them available.

The problem with the „platform“ is that it is a business model of the few and not of the many. And the dominant platforms (GAFA) are US-driven – and not European. My colleagues Karen Donders and Pieter Ballon wrote a piece about this, stating „platforms such as Amazon, Facebook, Google, and Apple work across different sectors and also apart from national and sector-specific regulatory frameworks that, instead, regulate our European players. Under these conditions, one should not be surprised that there are few European platforms.“ Digital platforms are getting more and more monopolistic – which has to do with network effects and economies of scale: The bigger the platform is, the more dominant they will get.

There is also innovation in revenue sources, yet this less impressive and is mostly about experimentation with models such as freemium, metered models, ingame purchases etc.. The video game sector, but also newspaper and magazine publishing are quite advanced in this experimentation, look for example at the Wall Street Journal.

 

Looking at the big GAFA companies, the invention of new business models seems to be a very difficult task: Google/ Alphabet is still all about advertising (which is not a new business model), Facebook is as well (and has warned for some time about declining non-ad revenue. That part of its business consists almost entirely of video game players on desktop computers buying virtual currency, and it has fallen as gaming has moved to smartphones). Microsoft sells software, Apple sells hardware & software. If the „Big Four“ are struggling to find really new business models – isn’t it demanding a bit too much of the CCS to be „inventive“ and „find“ new business models? What role could innovation support have here?

Dr. Heritiana Ranaivoson: I totally agree. At least in the way things are in Europe right now it is impossible for the CCS to „find“ and „invent“ new business models just like that, in the face of competition by GAFA. If the CCS are not united, and supported, they can never keep up with the „big four“. They need support by the public sector to tackle this business model innovation,  and it would also be a good idea to support EU platforms as an answer to the US dominance. There are already a few initiatives, such as the French search engine Qwant, which promises privacy and protection.

 

You are responsible for the „Policy Hub“ in a EU funded project, MediaRoad (Horizon2020). Could you explain the aim of the project – and your role in it?

Dr. Heritiana Ranaivoson: The objective of MediaRoad is to support tech-triggered innovation in the media sector, i.e. in broadcasting and radio/ audiovisual, but also journalism/ news publishing and media in a broader scope, such as games, social media, music recording). The project will be running until August 2019, and acts at EU level in three ways:

• In our „Network Hub“ we organize events to raise awareness, to exchange with stakeholders from industry, research, policy, and to communicate our message for innovation support
• We organize a so called „Sandbox Hub“ which aims at creating a European network of media innovation incubatorsis . A „sandbox“ is a new platform to validate new technologies, services and solutions across the European media sector.  We try to proliferate and possibly replicate this „sandbox“ idea – which the Flemish public broadcaster VRT already applies, and so does the BBC (with its „taster“ approach).
• Last but not least, we have set up a „Policy Hub“ – which is what I am responsible for, representing the consortium partner imec (Flanders/ Belgium): We will be making proposals for media innovation & research and we will make them heard and hopefully applied by the EU.

Picture: © Heritiana Ranaivoson

About

Dr. Heritiana Ranaivoson

Dr. Heritiana Ranaivoson is Senior Researcher at the institute for Studies in Media, Innovation and Technology (SMIT), at the Free University of Brussels. He holds a MSc in Economics and Management from the Ecole Normale Supérieure de Cachan and a PhD in Industrial Economics from Université Paris 1, Panthéon-Sorbonne. He has led several projects for European Commission, Unesco, Google, etc. His main research interests are cultural diversity, media innovation, wearables and the economic impact of digital technology on cultural industries. Heritiana was a speaker at THE ARTS+.