Digital media: Why ministers need to make the right online connections

As the prospect of an economic downturn looms large, there is one shining beacon of media success; but the Government is not clicking the right links.

The mainstream media is a gloomy place at the moment, obsessed with the credit crunch and potential economic downturn. The business press is equally dour, as it predicts the cataclysmic impact on different market sectors. Luckily, there's one part of the media industry where joy is unconfined. The new media industry, rightly for an industry powering the biggest changes in the media landscape since the explosion of commercial TV in the late 1950s, is a gleaming beacon of positivity in UK business.

So why is the Labour government, once so enamoured of all things digital, neglecting the digital media industry? For that's the finding of the first census of the industry, carried out by New Media Age and YouGovCentaur. This is the first in what is to be a quarterly barometer of the digital media industry, and found 93 per cent believing the industry was set for growth in the year ahead, with 55 per cent expecting their own business to be set for substantial growth.

The digital media industry already contributes millions each year to the UK economy – online advertising alone hit £2.8bn last year according to the Internet Advertising Bureau and is set to overtake TV spend next year. You'd imagine Gordon Brown would be overjoyed to see such optimism, especially when he appears to be losing support among in business community.

And yet, the industry doing so much to prop up a faltering economy expresses a worrying lack of confidence in the Government, both in its support for new media businesses and its ability to regulate fairly and efficiently the fast moving sector. Only 31 per cent thought the Government's actions supported the digital media industry. When it came to regulating digital media and the internet, something the Government seems increasingly keen to get involved in, only 33 per cent thought its guidance on child-friendly, online content was clear and 44 per cent said they weren't confident in its ability to legislate around online advertising to children.

To add fuel to the fire, the findings of the Association of Online Publishers found in its annual census this month that 38 per cent of respondents citing government restrictions as a threat to their business. Bear in mind this is a sector that reported a 52 per cent increase in revenues last year, another ray of optimism in a media industry reeling from plummeting ABCs. So what's going wrong? Why is there such disconnect between government and the new media industry?

Having spent the past decade covering the mixed fortunes of online businesses, I have become used to the Government treating it like a wayward teenager; full of promise but dangerously unpredictable and in need of regular humiliation in front of the class. This approach seems to have coalesced under the present government's headline-grabbing approach to the medium.

Exhibit one: The Byron Review. Let's leave aside the choice of a TV psychologist to deliver Brown's national strategy for child safety online. And the GMTV appearance with Gordon Brown sitting cosily on the sofa asking of the internet, "is there proper policing, is there proper safety"? But what we shouldn't ignore is the lack of any real acknowledgement of the huge effort the industry has already put in to ensure the internet is a safe environment for children. The online industry today is a world away from the laissez-faire days of its Wild West beginnings. It has become adept at regulating itself out of the potential troubles thrown up by such a fast-moving industry. So much of what appeared in the Byron Review appeared merely to rehash existing industry thinking and self-regulatory efforts.

It's important to say there was nothing inherently wrong with the outcome of the review, nor its process, (the industry was consulted in its development). But where was the substance?

The industry realises that for the internet to become a mature medium, stronger age controls are needed, with over half of the NMA survey believing they were required in areas such as adult content, gambling and social networks. So, let's look at just one of these areas and how the Government approached it recently.

Days after the launch of the review, it was the turn of the Home Office to wade in to clean up the internet. Finally, newspaper headlines assured worried parents they could relax. Paedophiles were to be banned from social networking sites such as MySpace. This was doubly reassuring as earlier in the week these same parents had been dropping their breakfast spoons with worry on reading Ofcom's report on social networks. The Government-funded regulator found a quarter of 8-11 year olds were on social networking sites aimed at teenagers and adults.

Unfortunately, the Home Office's paedophile strategy simply consisted of forcing offenders to hand over their email address, which would be sent to social networks to block access. This is such a deeply flawed approach and demonstrates the lack of understanding of the internet. No matter that paedophiles have become adept at covering their nefarious tracks online, to set up a new email address takes a matter of minutes. It's not all bad news. There are a number of government initiatives consulting closely with industry to provide the basis for the industry's development. These include the Department of Culture Media and Sport's review of the potential barriers to next generation broadband, and the UK Intellectual Property Office consultation on the follow up to the Government-commissioned Gowers Review of intellectual property.

The problems of an incoherent government strategy stem, in part, from the furious pace of the industry. It takes a long time for ministers and civil servants, to get up to speed, and the industry is frustrated when a reshuffle means months of education can be lost. But the Government must stop trying to grab headlines and celebrate more the huge contribution this sector makes, culturally, economically and educationally, to the UK.

Justin Pearse is editor of New Media Age