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Angel Gambino - 13 November 2008

Platform: Internet | Author: Angel Gambino | Source: NMA magazine | Published: 13.11.08

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Digital businesses are often seen as safe havens from the financial axe, or even a beacon of justified investment for future proofing. But it seems now that they're also experiencing cutbacks as most companies are proclaiming consumer entertainment will be least affected by the downturn.

The last few meetings I've had with VCs have been reassuring, though. While many have said they're pulling back from investing in pure ad-based consumer content businesses, they're still bullish about the...

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... digital entertainment sector. Financing mechanisms for digital content are evolving, while there's increasing demand for less expensive or free content to lower the risk of creative decision-making and commercial return.

We've read a lot of hype about user-generated content over the years. UGC is generally produced and shared as a means of self-expression and therefore very niche. The quality is typically poor because most people don't have the skills or tools to produce high-quality entertainment content. Finally, it's often rife with copyright issues.

It is cheap, though, so if companies like MovieStorm can successfully create tools to inspire amateur creatives, then we might be in a position one day to commission more content directly from audiences. For instance, the Top Gear profile on Bebo run by a few kids generates more traffic than would ever be warranted by investment by Top Gear itself.

There are several platforms now designed to help provide better promotional, distribution, commercial and data management tools, enabling more robust routes to market for aspiring creatives. These platforms are mostly focused on music, but one project, Swarm of Angels, applied fan financing to films. Some of these companies will likely also expand into other entertainment brands and properties.

For more established artists, those who prefer not to sign with labels or publishers or those who have been unable to secure deals, there are a number of businesses trying to offer more lucrative routes to market. Routenote ensures your tracks are sold in the major online shops, such as Amazon and iTunes. Mubito, the fast-growing entertainment platform from Sweden, and its LA competitor Topspin Media focus on creating an end-to-end set of direct-to-consumer tools. Most recently, Trinity Street, which offers similar services, announced a joint venture with Keane and Island Records for the band's website.

Some also help artists to obtain the cash to record in the first place. Sites like SellaBand and SlicethePie allow fans to buy into bands by either investing or buying music that they can then sell on to others.

Despite the state of the economy, there's room for companies appealing to those with a little more money to spend but who don't want a stack of CDs or DVDs sitting around their homes — they want big names and points that convert to decent inheritances for their children.