Counting the cost of regulation

It should be happy days for the PRS business, if PPP is to be believed, because its consumer survey – carried out independently by ThinkTank – finds that consumers welcome the new code of practice on PRS and that having a clear and fair regulatory regime will give people the confidence to spend more money through such services.

Just as well really, since PPP’s annual report also seen by Telemedia-news this week reveals that the PRS sector in the UK is currently worth £730million: 11.4% down on 2008 and a whopping 54% lower than the industry peak in 2006, when it was worth an estimated £1.6billion.

The annual report puts this drop down to the recession and there can be no denying that it probably has had some sort of an impact – but to see the industry cut in half in three years is really quite something.

Industry body AIME, which has assessed PPP’s figures in detail, has found that the cost of regulating the industry has gone up from £3.6million in 2006 to £4.8million in 2009. That’s a doubling in cost to the industry per £1000 of revenue from £2.25 in 2006 to £5.28 in 2009.

AIME’s study of the numbers also suggests that despite the reduction in revenues from PRS, complaints have dropped even more dramatically – representing about one compliant per 50,000 PRS transactions.

Now, you could argue that its money well spent as the complaints to PPP are falling dramatically: something seems to be working. However, you could also argue that, while the cost of regulation has gone up, the value in terms of revenues from services that it has delivered to consumers and the industry has, in fact, gone down.

Of course, this is all under the old, 11^th Code regime, so I don’t think its right to be too critical. PPP is shifting how it regulates the industry and is embracing many of the ideas put to it by industry body AIME over the past four years into its new code of practice – we may yet see a shift towards the nadir of light and fair regulation that delivers value to the industry and encourages consumers to use the services.

The new code, as most of you know, will see AIME suggestions of a much more proportionate apportioning of blame along the value chain, a more open approach to trying to correct errors in services, rather than let them run then instigate actions, and the introduction of a registration scheme come into play.

All great news for the industry, in theory, and it has being warmly welcomed – not least by the public if the survey is to be believed. But the proof will be in the pudding. PPP believes that the new code will have a soft launch early next year and will be properly in force – all teething troubles overcome – by the summer of 2011. I guess we won’t then know until the summer of 2012 how well it has worked.

But those teething troubles, many of which will be thrown up by the overlap from 11^th to 12^th codes are already causing headaches for some in the industry. As we reported in our monthly Telemedia360 newsletter last month, there are concerns as to how the registration scheme will work long term. PPP is confident that it is listening to these concerns and adjusting how systems will work as we speak and it would be foolish to assume that they won’t get it right for the soft launch.

But what no one can foresee or answer now is whether it offers better value for money regulation or not. The PPP survey suggests that consumers welcome clear, yet not overly nanny-ish, regulation and that this would persuade a significant number to use PRS than do at the moment.

Whether this comes about or not remains to be seen, but for now the traditional two way tug of war between PRS industry and the regulator has now taken on a new dimension – consumers pulling in a third direction. Watch this space (or at least watch out for the July issue of T360 which will have an in depth look at the how the new code is shaping up and what it all means for the industry).

iPhone 4 bad, World Cup good

Suddenly not being bothered to queue up like a mug for an iPhone 4 seems to be one of my better decisions: it looks like they are going to be recalled anyway. OK, this means that it will be even longer before I get my grubby paws on the new ‘Jab Screen’, but hey, I am still enjoying my old iPhone to be honest. It fits better into the curve of my hand and I think it looks more stylish – the new one looks like something Nokia might come up. I am disappointed.

Anyhoo, enough about the travails of Apple and my Pyrrhic victory over its idiotic strategy of making their devices so hard to come by that, rather than creating a fervour of desire they just p**s off their loyal fan base. What is really more intriguing is how the World Cup played out on mobile.

It seems that, after all the hype, this World Cup did indeed turn out to be ‘the mobile world cup’, with mobile broadband use rocketing upwards by 24% during the tournament, web browsing on mobile during the games growing by 35% and YouTube hits looking for the goals and highlights post-match scoring a whopping 32% rise.

The study by Allott Communications (who, it has to be said, does provide mobile broadband equipment – so something of an own goal? Did you see what I did there?) backs the notion that more and more people are watching TV (or ‘event TV’ as some would have it) with their smartphone clutched in their hand and are using this extra screen to interact with friends and content and services while watching programmes.

Some of the games at the World Cup were so dull that the numbers may admittedly be skewed (I am sure a lot of browsing went on during England’s dismal display), but the findings demonstrate that the way people are using mobile and interactive technology around TV has changed.

While there is much to be said for PSMS text voting coming back to our screens – and its return still seems to be set on ‘imminent’ as it has been for nearly two years – things have moved on. The smartphone – and even the iPad and similar – mean that the role played by ‘small screens’ while watching the telly has become one of constant interaction and idle surfing, texting, social networking and even shopping.

People who vote on Britain’s Got Talent will of course continue to do so, but what the World Cup has demonstrated is that many more people will now interact in some way using the mobile web while watching stuff on TV. And this presents a huge opportunity. We have already in these hallowed pages reported on how ITV sees mobile as a brilliant way to sell ads and content while matches are on, because the game itself only allows for ads at the start, half time and the end.

I think that now we have seen how people behave with their mobiles during the World Cup, it is time to totally reappraise media interaction and look at how they can shape programmes, view adds and content and even buy goods and services all targeted around what they are watching and who they are talking to.

It’s the idea of social TV, that I know companies such as Starling is looking to exploit. The World Cup, while a disappointment for 31 of the 32 countries involved, has certainly been a revelation to the media and mobile industries.  All you guys have to do know is work out how to monetise it.

Media paywalls – really such a great idea?

This week is a very special week for the industry as the Times and Sunday Times have finally gone live with their paywall. It was meant to happen in May. Then June. It finally came to pass on 2 July and, one amusing upshot has been that none of the staff at News International were given any way to by-pass the paywall, so they have all been having to register their credit card details to access their own site.

And they might well turn out to the only ones who do, since most users of online news are likely to not bother. I mean, why would you? For starters at £1 a day and £2 a week it is very expensive (the newspaper itself costs £1 a day). Also, there is plenty of free, quality news out there on the web, so brand loyalty is likely to go out the window. Couple this with the fact that, had you been a loyal reader of the Times online for many years, the affront that they want to shake the lose change out of your pockets irks somewhat too.

And this is backed up by research too. A study by Sixth Sense finds that UK adults do want to pay for quality journalism, but are more likely to do that in the form of buying a newspaper than pumping cash into the web, which they still see as a free medium.

The fact that the web is still largely free for all other news outlets – and is likely to always be free for BBC news – and that many newspapers, such as the London Evening Standard are also free, means that as Rupert Murdoch tries to charge for content, everyone else is giving it away. And it won’t wash.

The newspaper industry really needs to think again about how it operates. I have absolutely no doubt that they have to charge for content and believe that quality content can carry a fee. But it is all about looking at the platforms available and how consumers use those platforms and THEN looking at how to monetise them.

It’s the old Free-mium model again. Only this time, things like the iPad mean that there is finally a platform the rival good old fashioned paper – and that means that a charge can be levied.

As a news consumer I have no interest in plugging paid for media, but as part of the telemedia industry I do – we need new payment models for content to be developed so that our billing tools can be put in to play. My biggest fear is that the News International experiment, that will end in no one reading the Times online in my view, will put consumers off paying altogether for online news content and we will have lost a huge revenue stream opportunity.