Major changes are taking place in how digital content is produced, but Irish producers still lag behind, writes Haydn Shaughnessy.

How well prepared is Ireland to take advantage of changes in the way digital content (video, writing, photography, art, culture) is produced and distributed? According to the new theory of online content, "The Long Tail", that could be the most critical economic and cultural question yet to be asked by policymakers.

So to the theory. Developed by US writer Chris Andersen and published last year in the book The Long Tail, it states that audiences are fragmenting to the point where major blockbuster works (music, movies and TV programmes) are disappearing. "The Long Tail" means that while the blockbuster is dying, content production in the future will be economically viable with ultra-small audiences. But is there evidence to support this claim?

The music industry used to produce 11 blockbuster albums per $100 million in sales. That was the case in 1966 and again in 1987. Today, it produces only five per $100 million (€76 million) in sales. Music sales overall though are not necessarily in decline. The inference is that more people are buying an ever wider range of music.

This year, Warner Entertainment announced major layoffs from their movie production studios and the reason is that audiences for movies are getting harder to find. That's not to say that they have disappeared, but they might now buy a movie on DVD, see it in a cinema, be content with clips on the internet, or download a two-minute episode to their mobile phone.

In the music and film industries, the eagerness to consume is alive and well. It's just that the form in which content is presented and the audiences who find it are both changing.

"The ease and cost of content production and the ability to distribute it quickly and cheaply will continue to drive this trend," says Tom Corcoran, who runs the ARC Labs research and innovation centre at Waterford Institute of Technology. However, he adds a note of caution.

"In general, whether it's content or software, there's really a sense of missing the boat in Ireland." It's a view endorsed, not surprisingly, by those trying to develop new Irish content.

Cheap and plentiful content presents opportunities, but it is not without problems. There is another aspect of this dramatic shift in the cultural industries and it's what economists are beginning to call "freeconomics". The cost of producing blogs by the million, video or online art and then distributing them is so trivial that the vast majority of producers are forced to give their content away.

The future of who produces the writing, video, games or interactive environments that will absorb the time and attention of people for the coming decade is being decided - and not by a commission that awards a broadcast licence, a multinational that decides to set up a new studio in Ireland or by an RTÉ talent show. The answer lies in the free flow of ideas and in who can make the new economics of content work.

In the Irish, US and British TV markets, where audiences are falling, there is concern about these new ways of earning income, particularly product placement, such as advertisers buying the right to place their products within shows.

For example, the mobile version of TV series Prison Break is sponsored by Toyota and its stars drive a Prius. On the NBC series Medium from earlier this year, the show's writers had to place three references to the movie Memoirs of a Geisha in one half-hour episode.

In the US, product placement was up 84 per cent in the past year, so the problem is becoming more widespread. But it is a way for TV stations to continue to earn revenues from advertisers, even as audiences decline.

Xolo.tv is run by Gabe Macintyre and Marc Van Woudenberg in Amsterdam. Gabe and Marc produced a series of video blogs earlier this year for car manufacturer BMW and for Coca-Cola.

On the internet, Xolo and BMW have taken the concept of product placement so far that the problem seems to have disappeared. The video blogs that Xolo produce for BMW cover the fashionable mini-Cooper. These "v-blogs" are aimed squarely at an audience that is big on fashion and short on cultural nuances.

"On a creative level, we were free to do what we wanted," says Marc, who describes this form of content as direct advertising.

What Xolo has achieved is to convince brands such as Coca-Cola, another client, and BMW to facilitate a creative team, knowing that the result will advance the brand without being a traditional advert.The brand spends, the team creates.

The Mini v-blogs are a combination of creative content produced as the director wishes to produce them and a brand extension for the company paying the bill. The idea of an advertisement disappears and nor is it sponsorship.

Marc and Gabe talk about it as the brand "facilitating" content. Most importantly, from a business point of view, Xolo now employ 20 people developing online video services for multinationals and it's all happened within a year.

Elsewhere, cross-disciplinary teams of content producers are creating new genres. At Reinventing Television, they've been creating live video webcasts from multiple locations, a technique also used by Digital Magic in Italy.

It's like a chat show where the couch is in five different places. In San Francisco, Iron Sink Media have created what they call relationship content or television-type programmes with a strong emphasis on audiences communicating with the major characters through the web or on mobile phones.

It's a new genre made possible by broadband communications.

These shows or programmes will rarely attract a mainstream audience, but according to Bernie Goldbach, lecturer in media writing skills, at Tipperary Technology Institute, many of the students he teaches have their eye on fame and fortune of the blockbuster variety.

"If given a choice, most want to hit the big time and not bother with loads of little transactions in the Long Tail," says Bernie.

Tom Corcoran adds that an entrepreneurial Irish response to the new world of content has been slow in coming. "What's holding Ireland back is the lack of broadband connectivity at the right price. There's a surprising amount of broadband options available, but in the US you buy a connection at $19.95 (€15.20) a month, compared to $30-$35 here for half the speed."

A sleepy attitude to broadband connectivity, he argues, seems to be curtailing web entrepreneurs, but Setanta and Channel 6 have proved successful on traditional terrestrial television. That may be part of the problem. Many innovative web and mobile content services are struggling to find support, with the result that Ireland is not registering on the radar abroad as a base for producing novel web content.

It's a point endorsed by Iolo Jones who runs narrowstep.com, an Anglo-American provider of TV services on the internet.

"It's surprising how slow smaller TV markets such as Ireland and Wales have been at picking up on the use of alternative distribution." By that he means using broadband instead of broadcast. "Especially considering the global market, it seems very slow to develop."

Jones has around 140 new, unique television channels running on his service, ranging from Land Rover TV to cycling TV and sailing TV.

At least one part of the problem comes down to reconciling the aspirations of producers with the new economics of content - being able to produce at ultra-low cost and being able to support content with corporate advertising and sponsorship.

Fergus Burns, an ex-Microsoft executive in Ireland, runs a novel advertising company, Nooked, based in Sligo. Nooked allows companies to use their own content such as blogs to deliver advertising messages in what are known as RSS feeds. These are text ads syndicated across the web. The detail is less important than Burns's message.

"Technology is not the issue. Technology will fade into the background. There is no leadership in innovation, no willingness to try anything new. It's a huge business problem and it's only going to get worse," he believes.

Louder Voice is a new content service under development in west Cork. Its founder, Conor O'Neill, wrote on his blog, Argolon.com, after visiting a venture capitalist in Dublin: "They were not interested at all in any kind of investment. It turns out that not only do they not get involved in early-stage tech investment, but they have made zero tech investments since the dotcom crash."

XOLO.TV, which relies little on advanced technologies, is funded by business angels and by venture capitalists. "We're talking of course to BMW, to Coca-Cola, banks, recruitment agencies, electronics companies, movie distributors . . . these companies really see the future," says Van Woudenberg.

However you look at it though it does seem that in Ireland the opportunity exists in a form that's difficult for funders, sponsors, advertisers and content producers to bring together in an intuitive way.

A general lack of awareness about these new content opportunities and what it takes to make them work among venture capitalists and corporate sponsors, combined with an unwillingness among the Irish businesses community to embrace new thinking is a recipe for stagnation.

It needs somebody to move the mountain. They already did in the Netherlands.