Triumph of the Small

Two events this week are worth considering in light of one another. First, on Monday, while most of the industry enjoyed the last day of the Easter break, well-respected and long established Scottish independent developer Denki was forced to announce that it was restructuring, with the loss of a number of positions. The reason was simple - one of the studio's games, Quarrel, has failed to attract a publishing partner despite extremely positive feedback from those who have seen it.

The game undoubtedly has commercial potential, but it's a word game, and publishers aren't keen to take a risk on that type of game at present. Denki MD Colin Anderson was unequivocal and blunt in his assessment of the problem - the firm made the error of targeting consumers with its game, rather than creating something tailored to the desires of publishers.

"If you're an independent developer, and you're not selling games directly to customers yet, start worrying," he said in a post on the developer's website, "because this industry is changing beyond all recognition."

A few short days later and hundreds of miles further south, the British House of Commons passed the deeply controversial Digital Economy Bill after a mere handful of hours of scrutiny by MPs. Minor victories were won by campaigners against the bill, including the removal of a hated clause related to orphaned works, but the most worrying aspects - including provision to allow sites accused of hosting infringing material to be blocked from the UK, and further provision to disconnect users accused of infringement - remain intact.

It's a deeply flawed bill, a document which contains a number of solid, good ideas but which has not been debated, scrutinised or considered sufficiently to become law, especially given its astonishingly powerful and wide-ranging provisions. The common refrain from the supporters of the bill within the traditional media industry has been, "but we have to do something!" - which seems to suggest that doing totally the wrong thing is better than doing nothing, a frankly baffling position.

A full discussion of the issues with the bill is beyond the scope of this column; but one of the serious, underlying problems with the Digital Economy Bill is simply that it legislates primarily for a market in which copyright and intellectual property resides with a handful of powerful, monolithic companies who can afford to take the kind of expensive actions against illegal downloaders and their enablers outlined in the bill.

As Denki's problems earlier in the week starkly illustrate, this is not where our economy is moving. The upside of the company's present difficulties is that when Quarrel is released, it will probably belong to Denki and Denki alone. If it is successful, its profits will be returned to the company that created it, and not shared with (or simply skimmed off by) a publisher acting as financier and middle-man.

Publishers, of course, serve an important role in the industry - several important roles, in fact. Even with manufacturing dying out and distribution becoming an increasingly commoditised function, areas like finance, marketing and PR are generally not handled terribly well by small developers, and they're all absolutely vital to the success of a product. They're also, however, inherently portable skills. There are plenty of experts in those fields floating around the industry, many of them actively seeking opportunities to work with small, innovative developers - some even working for free on the basis of a later share in the spoils.

This isn't to say, of course, that publishers and blockbusters costing tens of millions to develop are going to disappear, any more than the rise of cheaply produced YouTube hits has prevented the success of Avatar - but it still speaks of a future in which important IP is vastly more widely distributed than it has been in the past. As more creators learn ways to capitalise on their IP while still retaining the rights to it, and new paths to market open the doors to success to a far wider range of creative teams and people, valuable IP will be increasingly decentralised.

The implications are absolutely vast. The success of platforms may well be decided by just how well they respond to this new industry model. Those with low barriers to entry, such as the PC, Facebook, the iPhone and their ilk will become the breeding grounds for innovation, attracting many developers with risky, clever ideas, with the gamers who pursue those ideas inevitably following. The comparatively high barriers to entry of services like PlayStation Store and Xbox Live Arcade will need to be reconsidered - or risk those platforms becoming places where the games everyone else was playing six months ago on Facebook or their phones ends up, which is surely not what Sony or Microsoft would want.

Perhaps unsurprisingly, vested interests in the existing media businesses have no desire to see this transition continue. A world in which valuable IP and culture is owned by a vast range of individual creators is not, after all, what companies like Disney, News Corp, Time Warner, Viacom and Sony have been spending their billions on building. One can forgive them for feeling like the rise of digital culture is pulling the rug out from under their expensively shod feet.

Arrogantly, they also assume that this is a transition which can be stopped - not by embracing new business models and placing themselves at the heart of them, but rather by jealously protecting the existing markets. The Digital Economy Bill is a good example of such retrograde thinking, designed as it is to allow large, powerful corporations the power to defend their copyrights with little consideration for smaller companies or individuals (who are, of course, disproportionately affected by copyright infringement and thus deserving of more protection, not less), and even less consideration for the complexity of copyright law itself.

The latter point is important. As we've seen in the USA, where the less draconian DMCA has been in law for some time, media firms are happy to use their newfound copyright superpowers to chilling effect on smaller creators of content, steamrollering over such concepts as fair use or parody and issuing "takedown" demands left, right and centre. Once the Digital Economy Bill becomes law, it is only a matter of time before creative individuals and small firms find themselves subject to spurious, abusive legal actions from large media conglomerates who regard everything from parody to homage as copyright theft, to whom "remix culture" is simply another word for "crime spree", and for whom "injunction first, ask questions later" is a valid business strategy, not a damning criticism.

Yet despite the chilling effect this legislation will have, it won't accomplish anything. Trying to force a generation that has dipped its toes into the seas of content afforded by YouTube, MySpace, Facebook and the wider Internet to go back to consuming media solely from the carefully controlled and lidded sippy-cup of the media conglomerates is like trying to push toothpaste back into a tube. Blockbuster games, albums and films will continue to be profitable for as long as people consume media - but an important and growing portion of the world's media spend is going to bypass big media and instead go straight to those creators of IP who are innovative, clever and talented enough to use digital media to their full advantage.

Publishing executives may lose sleep over the dollars slipping through their fingers on services like YouTube, Kongregate, NewGrounds, Steam or MySpace. They may rage over the idea that some of those content creators are standing on their shoulders, forgetting the giants upon whose shoulders the media business itself stands. They may even influence our shallow, venal politicians with their star power and heavy wallets, leading to the hasty passing of bad laws designed to wrap old, broken business models in cotton wool and protect them from the nasty future. None of those things will stop the fact that for creators and consumers, the two groups of people who truly matter in what are, after all, called the Creative Industries, these changes are positive, desired - and inevitable.