4iP Da Facts - FAQs

[Stuart Cosgrove]

Here are some early stage faqs for any members who want to read more on the principles of the fund. Any follow up comments post theme here

[Stuart Cosgrove]

What is the 4IP Fund?

The 4IP Fund aims to deliver publicly valuable content and services on digital media platforms.

The Fund is a collaboration between Channel 4 and a network of partners across the UK.

C4 has committed up to £20 million to the 4IP fund on a pilot basis in the two years after launch. It will also offer help in kind, including cross-promotion, sales and administrative support.

C4’s commitment has attracted provisional equivalent funding commitments from partner agencies to at least £50 million.

The intention is to work with the partner agencies to recruit digital media commissioning managers to be located across the UK.


Who are your Partners?

Any innovative and ambitious body or organization that can add value to either projects or the principle of the 4IP Fund can contribute.

Broadly the partners fall into four categories – global, regional, strand and project.

Global media partners such as Google, Bebo etc are among the platform partners we are in dialogue with.

Regional development partners are crucial to the principle of co-partner funding. To date a range of key regional partners include Advantage West Midlands, Screen West Midlands, Invest Northern Ireland, Northern Ireland Screen, Scottish Enterprise, Yorkshire Forward and Screen Yorkshire, have all declared an interest and negotiations are in advanced stages.

Strand partners are those participants who wish to pursue a particular strand of activity with the fund. They include for example NESTA, the National Endowment for Science, Technology (Innovation) and the Arts Council of England (Digital Arts).

Project partners – who might be either commercial companies and brands or public sector bodies - are expected to join the fund on a project-by-project basis when ideas, concepts and platforms take greater shape.



How will the fund be managed?

The 4IP Fund will form part of Channel 4’s growing New Media division.

Tom Loosmore has been appointed to head 4IP and reports to Director of New Media and Technology, Jon Gisby. Depending on the size and scale of regional partnership a network of digital commissioning managers will be located across the UK, in for example, Birmingham, Sheffield and Glasgow. Ewan McIntosh has been appointed as Digital Media Manager for Scotland and Northern Ireland and works from Glasgow Channel 4 offices. Other roles have already been advertised.

The fund will be launched throughout October-December 2008 and a dedicated submissions system will go live late September 2008.

Ideas can be brought to the fund by either companies or consortia, directly to the New Media executive or via the Digital Media managers, working regionally.

A steering-group chaired by CEO, Andy Duncan, will involve Jon Gisby, Director of TV and Content, Kevin Lygo, and Director of Nations and Regions, Stuart Cosgrove, who has led partnership and funding negotiations on C4’s behalf. This group will be the main managerial body reporting to the Board of Channel 4 for matters of governance.

For legal, diligence and state-aid issues the regional development agency partners cannot give the money to C4. So funds are being put in place via Special Purpose Vehicles (SPVs). In most cases these are with Screen Agencies who are tasked with developing digital media production and their fund structures are already state-aid compliant.


How will projects be funded?

Projects will be funded through partnership that is the key principle of the fund.

When a project is identified, it will be editorially approved by Channel 4. Projects will normally be supported by a funding/business plan, which when ‘green-lit’ will trigger funding from Channel 4’s 4IP central fund. Then with investment attached, and a clear plan in place, it will be taken to the appropriate global/regional/strand fund for further investment.

This is not a new concept.

The obvious precedent is the Film Production Funds that have helped fund Film4 projects over many years. In fact some regional partners have extended their existing film production funds to include digital media.

Channel 4 will invest in both cash and in-kind. The monetising of our value whether it is platform, cross-promotion or managerial mentoring needs to be demonstrable – we need a ‘rate-card’ of value that quantifies our in-kind support.




Will you fund development?

Yes. In digital media, small sums of money can go a long way. So development funding up to £10k should be available on a light-touch basis, these will be matched in the same spirit by the regional funds. But we are keen to invest only in innovative new media.

What kind of ideas will you approve?

4IP is expressly not a TV fund and it will not be used to fund Channel 4’s core business as a TV broadcaster or to bolster cross platform TV brands. The emphasis is on original new media.

Although we do not want to place restraints around what 4IP can invest in there is expectations that it will be more likely to be projects in, for example, computer-aided social networks, peer-to-peer technologies, mobile media, collaborative knowledge networks, user-generated content and platforms, global to local online journalism or broadcasting, imagined and alternative life networks, interactive learning & leisure etc.

What issues will shape your decisions?

Six key questions will frame decision-making:

• Does the proposal make innovative and creative use of new media platforms?

• What are the needs and benefits of the proposal?

• Will the project attract partnerships funding

• Will the proposal exist on C4 platforms, or is it principally based on external platforms and technologies?

• Does it benefit from monetised ‘value’ either through the C4 brand, its management or its promotional marketing?

• Is the proposal to be funded as a ‘project’ or as a ‘business?’


So you might consider funding businesses?

If a proposal is sufficiently compelling then start-up funding or working capital could be made available, so yes 4IP can invest in businesses. In fact, several regional partners have invited Channel 4 to participate in existing Seed Fund and Co-investment fund vehicles. In this context, the regional funds expect to share risk and reward on a parri-passu basis, and also take equity in companies.

Understandably, if 4IP funds a business rather than a project it is subject to more rigorous diligence.

4IP is also plugging in to angel network with the intention to launch a 4Angels network which can further enhance value to new start-ups.


What deals are on offer?

Flexibility is important and deals will be on a project-by-project basis. Each fully-commissioned project is likely to have its own character, and its own mix of partners.

It is unlikely that a standard document could cover all eventualities, in what will often be uncharted creative territory. Only a small number of commissioned companies will come from traditional television production. 4IP will be working with companies from a range of different creative disciplines and cultures: interactive learning, digital design, viral marketing, games, software design and technology.

A framework agreement is being produced and regional partners are working on their own framework agreements, in order to deliver on their various fiscal obligations to central government or Europe.

The Regional Dimension?

The fund has a strong regional component and although it is not a perfect solution Channel 4 will use the existing Ofcom guidelines on regional qualification as a broad guide to investment with regional partners. They are follows:

In order to count towards the regional production productions must meet two out of the following three criteria:
The production company must have a substantive business and production based in the UK outside the M25. A base will be taken to be substantive if it is the usual place of employment of executives managing the regional business, of senior personnel involved in the production in question, and of senior personnel involved in seeking programme commissions;
At least 70% of the production budget (excluding the cost of on-screen talent, archive material and copyright costs) must be spent in the UK outside the M25; and
At least 50% of the production talent (i.e. not on-screen talent) by cost must have their usual place of employment in the UK outside the M25. Freelancers without a usual place of employment outside the M25 will nonetheless count for this purpose if they live outside the M25.
For our partners the first of those criteria a qualifying business base is essential.

What is the timescale and progress to date?

We announced 4IP at Channel 4’s Next on 4 Launch in March and will launch the fund in 2008. There has been significant progress. To reach or exceed our £50m target we have progressed agreements with at least 10 different agencies and are in dialogue with others. The door is not closed.

Birmingham has already been confirmed as the first UK commissioning hub through a partnership with the regional screen agency and Advantage West Midlands. A regional launch-dinner has taken place.

We are already some way towards recruiting core staff and are planning a regional roads how focussing on key partner areas.

We envisage 4IP to be fully operational by the end of 2008.



Further Comments

Launching the 4IP fund, Channel 4 CEO Andy Duncan commented:

“We believe the launch of the 4IP fund is a bold statement of Channel 4’s intention to help galvanise the public realm online and reinvent public service broadcasting for a generation that simply does not watch television in the way previous generations did.”

Jon Gisby Director of New Media added:

“Channel 4 has always prided itself on nurturing new talent and the 4IP fund will build on that tradition, investing in a new creative generation and pushing the boundaries on new platforms. Channel 4 has the right culture of experiment and partnership and, the necessary scale to make an impactful public contribution in digital media.”

Stuart Cosgrove Director of Nations and Regions concluded:

“Extending our commissioning reach through 4IP represents a sea change for Channel 4 and a significant boost to our efforts to bolster an independent, creative production sector outside London.”


Links

A dedicated 4iP site is at www.4iP.org.
An unofficial social network for Scotland and Northern Ireland is at
www.38minutes.co.uk

[Stuart Cosgrove]

At the start of last week, Channel 4 announced a significant cost reduction initiative. This reflects the long term changes in media industry business models, and the more immediate impact of a down turn in advertising revenues.

At the end of last week, Ofcom announced its next stage of its PSB review, acknowledging the urgency of finding a funding settlement for Channel 4, and re-enforcing the importance of Channel 4’s multi-platform future.

And finally, Tom Loosemore arrived on Monday to take over the reins of 4iP and ensure we open for business later this month.

Each of these is worth some commentary.

First, it’s been suggested that Channel 4’s commitment to 4iP is being reduced. This is categorically not the case. 4iP remains a strategic priority, and it remains our intention to spend around £20m during the next three years. That said, we have not yet confirmed our budget for 2009, and we may need to phase some of our plans differently. But that’s a pragmatic response to the severity and suddenness of the current economic turbulence.

Second, Ofcom’s PSB review document contained some interesting perspectives for what 4iP is setting out to do. Their recent consumer research suggested that there is a problem in discovering new content online. Specifically, respondents “felt that when using the internet the likelihood of having their views challenged or their knowledge expanded ‘by chance’ was minimal.” Channel 4 is proud of its heritage in broadcasting in bringing new talent, ideas and perspectives to audiences, and challenging them to see the world differently. We are passionately interested in exploring how we can continue to do this on new platforms, in a world in which millions of people can create and share content which has public value. Cracking this problem would be one of the most profound contributions 4iP could make.

And finally, Tom’s arrival is long overdue. We’ve focused most of our attention so far on the partnerships, operations and processes which will ensure 4iP’s success. It’s great to have Tom on board to lead the project, and he’s already galvanising our thinking on creativity and commissioning.
All the pieces of the puzzle are now coming together, and we’ll be open for business later this month. Better crack on then.

[Stuart Cosgrove]

As we launch 4iP, we know that one of the key questions on people’s minds is going to be the issue of rights – who owns what, how long for, what is given away and so on. Particularly because Channel 4 has traditionally worked in the field of television, which is subject to its own particular terms of trade, we thought it would be useful to detail some of our current thinking on how we imagine 4iP will operate in relation to IP rights.

At the outset, it is important to note that 4iP is intended as a pilot – a fund that will allow us to experiment and innovate with new forms of content – and new business models. We envisage 4iP investing in a wide range of different content, platforms and tools – all of which we expect to have different needs and requirements. These ambitions, and the rapid and ever-changing development of business models in the sector, require us to have maximum flexibility in our operations - so that we can develop relationships according to the specific needs of individual projects. We therefore plan to approach the issue of rights on a project-by-project basis, rather than adopting standard terms for all deals.

We think there are many reasons why this approach is appropriate for 4iP at the moment. A fundamental principle of 4iP is that it is not a television fund – and the power structures that have framed television production do not apply in the world of digital media. For example, we are competing with the world’s largest players in the supply of compelling new media content – without any protection of spectrum scarcity or other barriers to market entry. We therefore clearly do not have the same advantageous market position that terrestrial broadcasters have always held in television – and which the television terms of trade are designed to protect producers against.

The nature of the content is also different – new media content involves the creation of ‘product’ with hugely variable lives and potential for use. It is therefore much more difficult to designate clear ‘primary’ and ‘secondary’ windows to this type of content than television programmes.

The business models in this sector are also starkly different to the relationship between production costs and advertising sales that we are familiar with in television. Advertising, sponsorship and subscription revenues are elusive or are of changeable currency in new media – this unpredictability highlights the need to have a flexible approach to our commercial deals.

The diversity of approaches to rights in the web 2.0 world also has significant implications for 4iP – whereas the TV commissioning model is based around a rights-owning culture, much content created for the web is influenced by open-source, creative commons, social networking and alternative forms of IP ownership. This means that many 4iP suppliers are likely to have different, and sometimes competing, conceptions of what rights ownership should mean - and we must be flexible enough to respond to this.

Finally, another fundamental principle of 4iP that will affect our rights deals is that we are keen for all projects to be partner-rich, to ensure that we can get as much value and exposure out of 4iP projects as possible. It is therefore highly likely that deals will involve multiple parties – including Regional Development Agencies and other public and private bodies, who will inevitably all have their own approaches and requirements regarding rights.

We are currently developing some standard Terms and Conditions for 4iP projects that will reflect certain high-level principles – and we will make these available on this website. We know that discussions on rights will be close to the heart of many people pitching ideas to 4iP, and we know that in a competitive market we need to ensure that our terms are attractive to suppliers - so we imagine that the IP provisions in these Terms and Conditions will form the starting point for discussion and negotiation - and we are open to considering and developing a whole range of business models according to the individual requirements of specific projects. At the heart of 4iP is a commitment to experimentation, innovation and exploration, and therefore we believe that ensuring we are flexible enough to explore the benefits and challenges of new business models will be central to our success.

[Stuart Cosgrove]

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