Why new media is not trending in F1

No single event staged over the last ten years better illustrates the enormous disconnect existing between Formula 1 and new media than does Monday's (night) Daytona 500, postponed by around 30 hours from Sunday due to inclement weather.

While NASCAR regularly comes in for stick from the F1 fraternity on the basis that stock car drivers don't race in rain (conveniently overlooking the fact that last June around 100,000 Canadians thought that of F1 pilots), that its technology is antiquated, running until this year on carburettors, (conveniently overlooking the fact that F1's V8s are rooted in the last century, well beyond current NASCAR stock blockers) and that full yellows and course cars are deployed to 'spice the show' (!), there is no doubt NASCAR does an awful lot right when it comes to wooing (and, crucially, retaining) its fan base.

Yes, bum-on-seat and eyeball numbers have dropped of late, while Detroit's debt restructuring period briefly made the White House NASCAR's biggest sponsor, yet the flagship round of this uniquely North American series still pulled an audience of 30m despite running on a workday evening and US time zones complicating matters. More impressively, NASCAR does so 40 weekends a year - double F1's schedule.

It was, though, an incident in the midst of the race which really drove home the difference between F1 and NASCAR.

During the red flag period in the wake of a fire resulting from former F1 star Juan-Pablo Montoya's wild ride (no surprise here) straight into the back of a highly visible, bright yellow track dryer truck, Brad Keselowski snapped pictures of the conflagration on his smartphone as he passed by.

Then, during the subsequent red flag period the 28-year-old tweeted his driver's eye view of the incident to followers across the world. Immediately the TV commentary team remarked about the Michigan driver's tweet, having received it as followers, his circle soared by over 130,000!

Given NASCAR's obsession with safety - no bad thing, it must be said - and strident legislation against use of the use of such devices while behind a wheel, there were many present at the oval on a beach in Florida who believed fervently Keselowski would be relieved of his racing credentials for at least a year.

But, no: NASCAR officials endorsed Keselowski's antics, while fellow competitors just shook their heads, with second-placed driver Dale Earnhardt Jr, whose father died in this race 11 years ago, telling reporters, "That's how Brad is. That's what he makes, and what he enjoys. I thought it pretty funny."

Now, contrast that with a tweet from then-Lotus (reserve) third driver Luiz Razia, composed during last year's Japanese Grand Prix Drivers' Briefing. The Brazilian was severely reprimanded for daring to snap a pic of a snoring Michael Schumacher, then broadcast same to 4000-odd, mainly South American followers. Of course, Twitter allowing retweeting, the sight of a slumbering seven-time champion reached tens of thousands of users within mere seconds...

However, the Keselowski case is just the tip of the new media iceberg, with other social networking sites further illustrating the depth of F1's aversion to new media.

Taking Montoya's crash as example, footage of the incident is freely available on Youtube in no less than ten postings, whereas Formula One Management employs a team which demands that Youtube remove FOM material on copyright grounds.

While it is universally accepted that Formula 1 commercial rights holder FOM, which was effectively gifted the lease to exploit the sport's intellectual property for over a century, holds the radio/TV concession, it is less known that the CRH, fronted by Bernie Ecclestone, who sold the rights to capital venture house CVC in a complex deal, controls the full electronic media rights to F1 grands prix in terms of an agreement struck in the mid-nineties between CRH and governing body FIA.

Thus the CRH has reason to believe that every single byte of data emanating from the paddock, whether photograph, race report, mobile call, text message or tweet, falls under its jurisdiction, and can therefore be controlled by it.

Brad Keselowski © LAT

However, SMS became an accepted form of communication well after the original FIA/FOM deal was signed, with Chad Hurley dreaming up Youtube as a means of distributing video footage of a private dinner party to five couples in his social circle ten years later.

In fact, back in 1996 mobile phone users sent an average of 0.4 text messages per month; digital photography had not yet taken off; F1 media centres resounded to the clatter of Alpina typewriters; and the internet was a mythical ether-based ring used by college professors to swap exotic chemical formulae.

In fact, even at the turn of the millennium it was not uncommon to see hacks heaving heavy laptops about telephone booths before sticking cords into said computers, invariably via some or other adapter.

Thus it can be argued that radio/TV were the only electronic media channels included at the time of signing - movie footage was then shot in celluloid - and that the term excluded all other platforms simply as they, like Twitter and Youtube, were (at least) a decade away.

Still, FOM has since done little to embrace new media, with, for example, search for 'FOM' on Twitter throwing up various accounts incorporating the acronym, but derived from such as 'Friends of Mine' and 'Focussed Online Marketing'. Given that it cost FOM millions in legal battles and subsequent purchase consideration to acquire the domain formula1.com - which does have a Twitter 'handle' - and various F1 trademarks, it seems a strange oversight.

However, even here the FOM-owned portal has hardly been over-active, having tweeted 3000 messages since the start versus, say, 9000 messages broadcast by CaterhamF1 in its short life. Clearly Formula One Management has some catching up/on to do.

Given this background it was somewhat of a surprise to hear suggestions by some that the Tata Communications/FOM partnership announced as last week's column went to press (in the ether) as 'The deal that changes Formula 1 forever'.

Bernie Ecclestone © LAT

Yes, the deal, using Tata's Global Network, will change broadcasting of F1 worldwide, but only because the sport is still steeped in satellite broadcasting technology, which require signals to 'bounce' about 70,000 kilometres before returning to earth to hit TV stations. TGN will also host formula1.com.

TGN will reduce costs at both ends through reduced freight of broadcast equipment, plus increase reliability of transmissions while creating savings during event overruns (such as last year's four-hour Montreal marathon), when broadcasters purchased additional satellite time PDQ).

Broadcast lag will be reduced, but will the second or saved really make a salient difference? At present TGN, a mixed network of (mainly) sub-marine cables comprising a mix of fibre optic and copper core stretching around the globe, has a delay of around 220 milliseconds -the speed of a striking cobra - on data transmission between, say, London and Tokyo.

Thus 'lag' saved versus satellite transmissions makes as good as no difference in this application. After all, do Japanese fans really care that British viewers know the outcome in Silverstone a quarter of second earlier?

During his launch speech Tata Communications CEO Vinod Kumar spoke of an audience reach by formula1.com of between four and seven million viewers during grands prix weekends, thus stressing the need for a reliable infrastructure. To put that into perspective, consider that last month Reuters disclosed that Youtube streams four billion videos every day - a three thousand-fold increase over F1's best efforts (and rising), and that on a daily basis!

So, yes, the TGN deal - officially termed 'association' not 'sponsorship' as alleged by self-styled analysts - will change the face of F1 broadcasting (but hardly forever), but the burning question is whether the partnership will change the deal for fans. Here the answer is: it has the potential to do so, but the benefits are unlikely to trickle down anytime soon. Much of F1's business model would need to change dramatically for the full potential to be realised.

Tata's press blurb goes onto state: 'This long-term deal with Tata Communications, providing fixed line connectivity, opens the door for endless possibilities, way beyond what satellites can do, including broadcasting F1 on the internet, for interactivity between audience and the broadcaster at the circuit.'

At present F1 has three main revenue streams making up its billion dollar annual turnover - broadcasting income, race hosting fees and sundry, the latter mainly through licensing deals, hospitality, and trackside signage - with the streams having an approximate 42,5/42,5/15 split. First-named is further split 80/20 between TV/radio - with last-named being largely unaffected by the Tata deal, for stations predominantly transfer voice via commercial internet.

Equally race hosting and sundry steams are unaffected, so the main concern here is 80% of 42.5% of that US$1bn (at present), namely around $340m in income, which is in any event split 50/50 (at present) with 12 teams, and likely to rise to 70/30 under the new Concorde Agreement which should bind F1's three players (FIA/FOM/teams) from next January.

At present FOM distributes race weekend footage to around 200 broadcasters globally, who in turn hold F1's TV rights for their respective territories. Many of these are on long-term contracts and in turn hold long-term sponsor or broadcaster partner contracts, with punitive break clauses in both instances.

In order to maximise that potential - and technically footage could be brought directly from the circuit to a computer or smart TV near you without hitch - FOM would first need to bypass its existing broadcast base.

Thus FOM would need to create payment systems - no issue in these days of Paypal and such like - but incurring the wrath of his present customers could prove a risk too far. Forget not that at the turn of century Ecclestone's six-channel digital pay-per-view TV system bombed spectacularly after fans steadfastly refused to shell out for premium transmissions - no doubt fuelling the octogenarian's phobia towards new-fangled media...

Then, one of the beauty of the current distribution system is its commentary format: not only do fans receive broadcasts (mainly) in their mother tongues, but German commentators add colour about their compatriots; the Britons about Lewis Hamilton/Jenson Button; the Japanese about Kamui Kobayashi; etc. To maintain (fee-paying) viewer interest FOM would need to offer at least the same service, if not better - adding considerably to the complexity.

Will Tata's deal with the FOM signal a new wave in F1 information provision? © LAT

Finally, a primary financial attraction of the present platform for broadcasters is their ability to fund transmissions through the sale of commercial messages, whether during free2air or PPV transmission - which stream could prove difficult for FOM to replicate, certainly in the short term. Again, all a matter of time.

In the final analysis, the Tata deal does have the potential to change the face of F1 broadcasting, but realising that potential will not only take years, but be riddled with commercial risks along the way - and here the question is whether 81-year-old Ecclestone and his capital vulture, er, sorry, venture partners will prove willing to risk when they already have an extremely comfortable little earner.

So, yes, the potential is there - but so, too, do Twitter and Youtube hold vast potential for F1. Either would be cheaper and easier to implement immediately, while better serving fans' needs in the short terms. However, it is probably the latter that makes them unattractive to the powers-that-be...