Piracy, patchy broadband hurting online content industry

Piracy, the uneven adoption of broadband and the slow take-up of 3G mobile are all barriers to the growth of Europe's creative online content industries.

The European Commission is predicting revenue from online content will reach €8.3bn within three years. For some industries online content will represent a significant share of total revenue: about 20 per cent for music and 33 per cent for video games.

The long-awaited "digital convergence" is becoming an economic reality, creating great opportunities for Europe's consumers, content providers and technology industries, said Viviane Reding, commissioner for information society and media.

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But a number of barriers need to be dealt with first, the EC warned. For example its research has Europe trailing the US in developing interactive fixed broadband services, and Japan and Korea in developing mobile services.

One of the most obvious roadblocks is connectivity - while broadband is spreading quickly and consumer take-up is enthusiastic, differences between European countries remain. For mobile services, the roadblocks include the slow uptake of 3G in Europe, and the confusing pricing and structure of data tariffs.

Piracy is siphoning off potential revenue and deterring media companies from putting content online, the EC warned. It said efficient DRM systems to manage and protect digital content are "necessary for a secure and sustainable rollout of digital distribution", but warned a lack of interoperability or standardisation in DRM may hinder digital content services and devices in the long term.

Other issues slowing demand include a lack of specialised skills in media companies and the cost of digitisation of content.

It said: "As the market matures, evolving business practises will remove some obstacles but others may require measures from industry and EU legislation to provide legal certainty for consumers, content providers and the hardware industry."