Speech by Minister Pat Rabbitte at IAB Connect Conference
Thursday 16th February 2012
Good morning (afternoon) ladies and gentlemen – I’d like to thank the organisers for inviting me to address you today, at the close of your conference.
There has been a lot of discussion recently about the media, about its future both in Ireland and globally. Unsurprisingly, there is a profound tendency for traditional media outlets to focus their attention on the threatening nature of some of the changes the industry is experiencing, and to cast about looking for a ‘solution’. This is an entirely understandable human reaction when faced with challenges which threaten to undermine the basis of long standing and long valued institutions.
But whether we like it or not, or whether we want to partake or not, the world is changing around us. In many ways, the premise of a debate or contest between old media and new – a simple dichotomy that makes for easy headlines if there ever was one – is a fallacy. It’s possible, perhaps even likely, that there will be limited print runs of a newspaper in Ireland in 20 years time. But the future of media, like so much else, is online – that much we know. It is already clear that actual debate is or should be about the nature of the media ecosystem we want to have in the future. There is much that we can’t foresee, like how long this will take, what shape it will ultimately have, or the role of national versus international actors. But there are clear public policy goals that need to be explored and articulated – for example, I hope that this media ecosystem holds a place for the venerable – and presently vulnerable – institutions of the Irish media industry, regardless of the format on which they publish. But this is a matter for another day.
This future media ecosystem will likely be different in many ways from the one we know today, and probably a lot more diverse; the manner in which people buy content, and the business models used to deliver that same content are still evolving, as are the consumer end technologies used to consume content. In a world where money talks however, it’s worth stopping every now and then to listen to precisely what it is saying.
The message the market provides now is that the advertisers and their revenue are increasingly comfortable with migrating to new platforms. The rate of growth for online advertising in Ireland – over 20% of an increase in the first half of 2011 in a period that saw advertising revenues in other media fall by 1.5% is a startling message to anyone interested in media in Ireland or elsewhere – online is not just the future, it’s also an increasingly large chunk of the present.
The larger consequences of this are very challenging for both print and broadcast media, and will occupy us all for a long time to come - but in this there is also an opportunity.
I’ll explain.
As a small, open, flexible economy, we are often painfully aware that challenges like this one always bring an additional layer of complexity for us when compared with larger States – not least the obvious questions around how we might preserve a distinctive national voice in media, and how to ensure that we have players of sufficient scale to be able to compete on an increasingly globalised playing field.
But globalisation in media offers us, a well connected and technologically literate English speaking country with a very open economy, an opportunity to offer ourselves as a base for the rapidly diversifying range of online activities. We continue to demonstrate successes in gaming, IT support and cloud computing – tapping into a massive – and growing – global internet economy. Media, and media services promises to be a focal point for an entire new phase of growth over the next decade; critically, with our international connectivity and critical mass of existing businesses, and thus expertise, it is one that we are well positioned to capitalise on.
We often hear of the internet referred to as a nebulous, offshore entity, something that exists on a different plane to the ‘real’ economic life of States and doesn’t contribute in a meaningful way to the economy or society. This is verifiably false. A recent McKinsey study found that in the UK, the internet economy contributed wholly 5.4% to GDP, compared to 3.8% in Germany and 3.2% in the United States. Even more impressive is the fact that, in a basket of 9 mature economies, the contribution made by the internet based economy grew by over 20% in the period 2004 to 2009, at a time when overall GDP growth was low. In Ireland, over 80,000 people work in the ICT sector, and the sector continues to create jobs, despite the difficult economic conditions.
Moreover, the research shows that the internet provides a dramatic opportunity for businesses that exist in the real economy - most of the added value created by internet use is captured by them rather than by ‘new economy’ companies. A vibrant, active and robust ICT sector not alone adds to the domestic economy, it also adds to the sustainability of existing businesses.
Reaping maximum economic benefit from these global trends is unlikely to be a simple process. Industry needs certainty around a number of issues before they can invest, but in this there are many positive signs for Ireland. In many cases, we have already demonstrated either a competence or a suitability for online services – we have a stable electricity grid and reasonable electricity pricing, a suitable climate and a suitable business environment. Similarly, recent developments like the publication of new Data Protection Rules in the form of a draft EU Regulation offers the possibility of resolving a number of contentious and difficult issues around online services; customers, citizens, need assurances about the uses to which their data is put, and business needs clarity around what is permitted. Certainty over these important issues is in everyone’s interest, and I’m sure we all look forward to the negotiations on that Regulation with interest.
Government can help also; the same McKinsey study I have already referred to suggests a model of the internet ecosystem which identifies four key factors that underlie a countries success – human capital, financial capital, infrastructure and the business environment. In each of these four areas, the Government is already working to build our national capacity.
The Programme for Government Commitments under Innovation and Commercialisation, including the commitment to a Digital Island cover this area in detail. I was delighted to be able to announce, with my Ministerial Colleague, Minister Quinn, the provision of high speed Broadband to every secondary school in the country over the coming years.
We still have more work to do with regard to broadband penetration and use, and particularly around high speed broadband; despite the considerable progress made to date, we still lag our European partners – who also happen to be our competitors. The forthcoming report of the Next Generation Broadband Taskforce will guide us in the development of targeted and effective policies with a view to achieving greater penetration and use of broadband. There are no silver bullets in this, but with the close assistance of industry, I believe that we can make significant improvements, and quickly.
Industry too, at a variety of levels, can do more. I am particularly minded of the fact that only a tiny percentage of commercial SMEs offer consumers the opportunity to purchase directly from their website - assuming that they have one, that is. Given the size of the market for goods sold on line, in Ireland and internationally, this is a major missed opportunity for Irish businesses. The ‘Getting Business Online’ campaign is a great idea – and businesses need to engage constructively with it.
The work of the IAB, the promotion of online advertising is sometimes portrayed solely in terms of the threat it poses to traditional media models. But it is much more than that – it is a vital element of all of our future. With a little luck, and a lot of work, this rapidly evolving digital world will be a central part of our economic recovery, and organisations like the IAB have a critical role to play in helping to bring that about.
Thank you for your attention this morning.