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Tuesday, 27 July 2010 19:02

NBN dangles sword over media companies

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The national broadband network will act as a double edged sword for media organisations in Australia according to ABC managing director Mark Scott. While it will open a truly national market for broadband content, it will also encourage 'upstart' entrants to the already crowded media landscape.

Speaking at a CEDA (Committee for Economic Development of Australia) Digital Economies conference in Sydney today, Scott warned that media regional organisations, which have to an extent been spared the worst of the online onslaught, should in the future expect greater competition from online content providers thanks to the reach of the NBN.

Meanwhile for large organisations the NBN was expected to provide access to much richer content. This transition to richer on-demand content was already underway with the launch of services such as the ABC's iView said Scott.

'We will be launching iView on the iPad and you can carry with you all the ABC content from the last two weeks,' said Scott. The NBN will make such services available to more Australians as the reach of fast broadband extends.

Scott also announced that from today the ABC's iPhone application allows users to download content from its newly launched 24 hour news service.

The ABC is not alone in tapping the iPad as a new platform for content. Media giants News Ltd and Fairfax have both unveiled iPad versions of their print products as they attempt to garner new audiences.

Scott however questioned the economics of the approach for commercial organisations. As a government funded non commercial network he acknowledged that for the ABC 'It's not about how much money we make out of iView, but how I find the money to develop it.'


That wasn't the case for commercial networks, listed companies or media organisations owned by private equity investors he said. They were under pressure to turn a profit and grow revenues.

Using News Ltd's iPad version of the Australian newspaper as an example, Scott said that the company sold 130,000 copies of the newspaper, 20,000 of which were sold for the iPad generating revenues of $1.2 million.

Scott argued that the organisation still had to pay the overheads from its traditional media structure, such as the newsroom salaries, printing press costs, distribution networks, paper and ink. 'One of the challenges organisations will face even as they transition to online is how to recoup those fixed costs,' he said.

Scott estimated that News Ltd had a cost base of $40-60 million a year, which was substantially higher than the $1.2 million revenue stream that it might expect to generate via the iPad.

Meanwhile the internet continued to spawn 'upstarts' which did not have the cost baggage of established media players. 'Those doing best - and News is one,' he acknowledged, 'have multiple streams. So newspapers may be struggling but Avatar made a lot of money for Fox Studios.'

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