Are innovation policies leading to more innovative media markets Are innovation policies leading to more innovative media markets? A decade of Spanish experience (2006-2016) Francisco J. Pérez-Latre (perezlatre@unav.es) Alfonso Sánchez-Tabernero (astabernero@unav.es) Media Management Department University of Navarra (Spain)

Closures affected media companies of all kinds MARKET EVOLUTION A market in turmoil Spain has been one of the European countries in which the recession hit hardest since 2007 Closures affected media companies of all kinds Print media declined in terms both of market share and advertising income Online versions were not able to change market dynamics for legacy companies Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

A market in turmoil: single-copy sales 2016 vs 2015 MARKET EVOLUTION A market in turmoil: single-copy sales 2016 vs 2015 Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

Terrestrial television becomes a duopoly after mergers MARKET EVOLUTION A duopoly in TV 2010: Analogue switchoff Terrestrial television becomes a duopoly after mergers National Public TV abandoned the advertising market As of January 2017, Telecinco reaches 28,6 percent audience share (seven channels); Atresmedia, 26,9 percent (six channels) Both companies dominate 85% of advertising Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

Telefonica’s Movistar + after a new merger MARKET EVOLUTION New pay TV players Telefonica’s Movistar + after a new merger Netflix comes to Spain (2015) HBO and Amazon Prime (2016) Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

A SORT OF “NOT CREATIVE DESTRUCTION” The challenge to the industry New market competitors Diminishing advertising expenditures A culture of “news is free” With less resources, some prestigious brands lost quality Most part of new native digital media don’t have professional structures, principles and practices in place Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

A SORT OF “NOT CREATIVE DESTRUCTION” The challenge to the industry: is there a role for policy? Creative destruction revolutionizes economic structures from within, incessantly destroying the old, incessantly creating the new To really “create the new”- both older and new media organizations should be more innovative Find the sources of revenue which allow to “invest in quality” Could policy-makers help to fulfill such goal? Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

Incremental, semi-radical and radical innovation CONCEPTUAL FRAMEWORK Incremental, semi-radical and radical innovation The need for new services and the new business processes that allow them to flourish are considered Creative innovation and service-technology innovation were explored, although we focused more on the last Concepts of incremental, semi-radical and radical innovation have been helpful Conference of the European Media Management Association (EMMA) 2016 Faculty of Arts, Porto University, June 2-5 2016

BUILDING ON OUR WORK ON INNOVATION IN THE LAST 6 YEARS Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

BUILDING ON OUR WORK ON INNOVATION IN THE LAST 6 YEARS Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

RESEARCH QUESTIONS Could regulations and policies be a force to unleash technology-based innovation and entrepreneurship? Is there anything policy and regulation can do to alleviate the perception of risk in markets where there is a need to challenge the status quo and try new things? In Spain, local and national governments have been involved in the industry creating often large public enterprises with offerings in the sector Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

A historical account based on secondary literature. METHODOLOGY A historical account based on secondary literature. A detailed document analysis and close reading of regulations and policies of national and regional government in Spain in a variety of fields It includes but is not limited to broadcasting and telecommunication; digital and mobile development and adoption; entrepreneurship; talent attraction; and the promotion of local media clusters, where governments could play a role Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

PUBLIC POLICIES AND INSTITUTIONS TO PROMOTE INDUSTRY INNOVATION The Ministry of Industry coordinated the work of AETIC (Association of Spanish Electronics, Information and Telephone Technology Companies) and the DTT IMPULSA plan to encourage the digital transition from 2005 Red.es works in the development of the Internet and communication technologies since 2002 “Avanza” (Spanish for “move forward”) is a plan for the development of a knowledge and information society that was established by the Government in 2005 as a consequence of a Senate initiative. 5 billion euros Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

PUBLIC POLICIES AND INSTITUTIONS TO PROMOTE INDUSTRY INNOVATION New laws in 2005, 2010 and 2013 Law of urgent measures for the development of DTT, liberalization of Cable Television and promotion of pluralism (10/2005): designed to help broadcasting sector grow In 2010, a General Law of Audiovisual Communication (LGCA) was signed in order to adapt Spain’s broadcasting sector to the EU Directive 89/552 Law 14/2013 (September 27) supports entrepreneurs and their internationalization Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

PUBLIC POLICIES AND INSTITUTIONS TO PROMOTE INDUSTRY INNOVATION The Ministry of Economy and Competitiveness created CDTI (Centre for the Development of Industrial Technology), a public entity to fund innovation and technology development Creation of technology clusters: Barcelona, Madrid, Basque Country & Navarra are interesting examples A lively debate about a “Google tax” as part of the controversial project of the Law of Intellectual Property The online platform Filmotech was created under the initiative of Spanish producers to fight piracy. Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

PUBLIC POLICIES AND INSTITUTIONS TO PROMOTE INDUSTRY INNOVATION Ministries in charge The Ministry of Economy starts including Competitiveness in its name, assuming research & I+D (2011). A “Digital Agenda” for Spain is approved (2013). The national Government creates the Ministry of Energy, Tourism and Digital Agenda (2016). It is the first time that the Digital Agenda is part of a Cabinet-level position which might signal an increasing political will to develop ICT in the country. Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

DISCUSSION: OUR CRITICISMS A culture of innovation as the goal Governments have been quite active at promoting media industry innovation through regulation. But… The right implementation of laws requires the use of metrics and indicators Most policies focused just on the introduction and mastering of new technology Tools that may produce short-term effects have been used: subsidies to the introduction of new technologies, tax exemptions, measures to decrease bureaucracy, new technical standards… More long-term policies have been neglected: in-depth and lasting change depends on the adoption of a culture of innovation Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

DISCUSSION: OUR CRITICISMS Low levels of concentration but a lack of opportunities for new players Public policies focused on increasing competitiveness by setting limits to competition and fostering Digital Terrestrial Television (DTT) The support of DTT and the accompanying increase in the number of channels available for free have been successful and, in general (being Google in the advertising market the most notable exception), levels of concentration are relatively low However, the analogue switch off has failed to give opportunities to new entrants DISCUSSION: OUR CRITICISMS Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

DISCUSSION: OUR CRITICISMS More policies in telecommunications Actions have favored more innovation in the telecommunications sector than in the media, as public action has been more oriented to technologies than to contents A knot of public initiatives and institutions make the promotion of innovation and entrepreneurship less dynamic and efficient for our industry Foster the growth of stronger media labs and city technology media clusters, following successful international experiences Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

DISCUSSION: FINAL WORDS The road to change The digital transformation entails a need to train the workforce and improve the formation of talent to navigate new market realities The news media industry entrepreneurship problems are part of a larger problem: it is still quite difficult and relatively expensive to create a company and hire people We also recommend policies that facilitate a more entrepreneurial spirit and make entrepreneurs’ lives easier Conference of the European Media Management Association (EMMA) 2017 Gent, May 10-13 2017

THANK YOU AND WE LOOK FORWARD TO ALL YOUR COMMENTS AND SUGGESTIONS! Francisco J. Pérez-Latre @perezlatre (perezlatre@unav.es) Alfonso Sánchez-Tabernero (astabernero@unav.es)