Digital media firms adapt to the new market reality

If you want two signs of how much the digital media business has metamorphosed in the past three years: consider its size and the terminology it uses.

The just-published Digital Media Services Directory, published by Digital Media Intelligence, is a guide to both. The directory runs to 127 pages (which in itself might surprise a few people) and lists a range of companies across the whole digital media sector.

And I mean the whole sector - you will find Nevada Tele.com, Accenture, IBM, RTÉ, Apple, and NewsTalk 106 in among small specialised companies such as Aardvark Digital Media, Brown Bag Films, Frontend.com and Web Intellect.

The way in which people now seem to refer to certain kinds of digital media work - most specifically, that involved in creating, advising on, and integrating services with Web pages, has completely changed.

Four years ago, at the height of the tech and internet boom, the term "Web design company" was the catch-all term. The Republic was full of them, some with growing international reputations. The Government was making noises about this sector being perhaps a growth area for the State.

Now nobody seems to want to be called a Web design company. In the directory, the term doesn't feature at all as a category, clearly being a bit too dotcom tainted. Instead, such firms seem to fall into what the guide calls "consultancy", "digital design" and "Web services". Fair enough.

But terminology is a fairly benign indicator of change. A grimmer sign of the tough times we've seen in the past three years is the shrinkage in size of the companies that would once have fallen into the Web design company catchment area.

At the end of 1999, the Republic boasted around a dozen firms with employees numbering close to, or more than, 100 people. Many of those had multiple offices based around the globe, from London to New York to Paris. Some were preparing for initial public offerings.

Suffice to say that most of those larger firms folded during the first months of the downturn. Not because they were necessarily poorly run (although a couple would have raised eyebrows). Some could easily have taken on multinational challengers at the Web game, and without the global smackdown, should have gone on other successes with smart design, products and services.

But the big Web companies had too much mass when the need arose to downsize fast. Margins were always narrow in the business (despite the belief I encounter all the time that such services are overinflated in price - just try hiring separately good graphic designers, software engineers, html whizzes and business consultants and you'll understand why professional Web work costs). The big companies had to meet big payrolls, pay rents that had rocketed in areas like Dublin's city centre, and scramble for the sudden and steep fall-off in projects. That did the bulk of them in.

Now, leafing through the directory, I see that most of the companies doing Web work are really, really small - back to the three- to 12-person range, with most seeming to come in at around seven to 10 people. Some of the medium-sized Web companies that have survived are much smaller and leaner than they were in 2000. But most of the names, tellingly, are new - little start-ups that didn't even exist at that time.

On the other hand - and this is a more heartening note - the directory astounds with the sheer range and capabilities of its listed companies.

The State has a growing and varied digital media industry that includes digital animators, film and television post-production houses, Web services, e-learning, software development, games development, mobile services and more.

Some of these showed up for the O2 Digital Media Conference last week, held at UCD. It's the second year for the conference, organised by the same people who publish the directory, and the intention in both years has been to get people together from across the industry to talk about what needs to be done to develop the sector.

Last year, a useful report came out of the event and was sent off to various bodies and powers that be. This year, one could see by the smaller size of the audience and the greater focus of sessions that people don't feel as pressing a need to push an agenda, but perhaps more a need to talk shop, trade experiences, and start building an industry profile. According to organisers, that's what next year's conference will likely address.

Of course, one could argue that there's less interest in the area, or less enthusiasm, but that's not what I sense at all. Consider two extremes.

On the grassroots side, one can look at the small but energetic group of digital technology artists, researchers and practitioners associated with the Dublin Art and Technology Association (www.data.ie) and the Darklight Digital Festival (www.darklight-filmfestival.com).

At a recent DATA Saturday conference in the Liberties that I attended, artists from Britain and the US showed digital works, and several panels discussed art, technology, digital media, and everything in between. The Darklights people have held other notable events too - truly exceptional was a conference in which the main speaker was prominent Stanford University lawyer (and digerati favourite) Lawrence Lessig.

Such events attract the younger, cutting edge of digital media - and show there's plenty of youthful energy ready to be poured into the Republic's digital media sector. Which invokes the other extreme: Government and semi-state support for developing the digital media industry, which they see as one of the more promising economic niches in the State. We've already seen a few studies, bits of policy, a chunk of speechifying, and the steadying of the Digital Hub project with a tech-industry chief executive and a more commercial focus.

Now we need to see some real action. If the State truly sees this sector as a key part of economic strategy, it must show some leadership and coherent strategy - and talk to the industry. While various bodies and various politicians talk about the potential of digital media, people in the sector say few of those are talking directly to them. A prime example?

No one I know in the industry has any idea what the State's intentions - or even broad ideas - are in relation to the Liberties Digital Hub. If there are real intentions behind the State's talk, the Government needs to open the information flow between Leinster House, the appropriate semi-states, and the digital media industry at large.

klillington@irish-times.ie

Karlin's tech weblog: http://radio.weblogs.com/0103966/