Introduction
New York, Broadway; New York‚s centre of cinemas, theatres and media provided an appropriate setting for Digital Rights Management Strategies 2004 - an interdisciplinary conference on digital rights management business, technology and legal issues. About 400 representatives from the content industry, technology producers, academics, legislators, etc. came together in New York to discuss about prospects and problems of DRMs, to network over breakfast bagels and tea-biscuits, and to present their newest products. Panelists and participants arrived from all corners of the world, although the US representation was still the strongest.

What follows is a selection of some hot topics at Jupiter DRM Strategies.

From DRMs to DCMLs - Digital content management solutions
While a majority of copyright scholars still discusses DRMs in the first place as a remedy to unauthorised copying and distributing of digital music, texts and other contents, Peter Sargent (Senior Analyst, Jupiter Research) left no doubt that this is a rather outdated and narrow view of reality. Or, to speak with the words of Chris Barlas (Rightscom) , content management is secondary for DRMs. In the first place, DRM is about "Digital Richness Management". This is because rights are complex and must be managed throughout the chain, rights management is a pre-requisite for creating rich multimedia products, and the complexity and volume of rights requires extensive automation of the rights management process.

Peter Sargent explained that, in practice, modern DRM solutions are far more than 'simple' anti-piracy devices. DRMs have grown out to sophisticated all-round content management solutions. As such, DRMs are implemented as basis for a whole range of different and new business models, such as tailor-made service packaged, arranged according to location, language or preferences; sharing, e.g. of medical records or government data; audience tracking and building of strong loyalty bounds with subscribers or the provision of hard to deliver services (e.g. newspapers in the snowy mountains of Canada), and many more. With other words, DRMs can present commercial users with a broad array of functionality to design solutions for the different requirements and challenges of an electronic business environment.

Who pays for DRMs ?
Security and functionality has its price. These were the conclusions from the panel on 'Economics of DRM I: Who Pays for DRM?'. Tsvi Gal (Senior VP and CIO, Warner Music Group), Eric Grab (Technology Architect, DivXNetworks, Inc.) and Talal Shamoon (CEO, Intertrust), under the chair of Bill Rosenblatt (President of Giant Steps, Media Technology Strategies, Managing Editor, DRMWatch.com and organiser of this conference) discussed the question of who pays for the implementation of DRMs. The answer is close at hand: in the end they are the consumers who pay for the costs of more security and functionality. With other words, products and services using DRMs might become more expensive. Less convincing, though, was the argument, that costs could remain 'invisible' to consumers as they formed an integrated part of the service costs. It was also agreed in the course of the conference, that DRM featuring products and services still have to compete with DRM-free offers, and one of the characteristics of the Internet is to offer consumers better options of choice and comparison.

Interoperability
Not less controversial, but also not less important is the question of DRM interoperability. Consequently, a separate section was dedicated to DRMs standards, chaired by Michael Gartenberg (VP & Research Director, Jupiter Research), under the participation of Willms Buhse (Acting Chair, DRM Working Group, Open Mobile Alliance), Leonardo Chiariglione, Ph.D. (President, Digital Media Project), Albhy Galuten (Chairman, Content Reference Forum). The speakers described interoperability of DRM solutions as a crucial factor for the future development and prosperity of this sector.

Interoperability is the ability of two or more systems or components to exchange information and to perform their required functions. Sharing the same hardware or software environment requires that the systems understand each others 'language' or standard. Examples from the pay-TV sector, Microsofts Palladium or of Apple's iPod illustrate that standardisation can have important implications for the information landscape. Users of the Apple iPod are forced to buy music from Apple's own iTunes site. Vice versa, IPod is the only player that supports the FairPlay DRM, and it does not support any of the dominant standards used by competing digital music services, nor does it license for the time being its own format to rivals. The existence or non-existence of standardised solutions, therefore, can decide not only on consumers‚ access to contents, but also about competitors‚ access to consumers.

The present tendency in the legal discussion is to move lightly over difficult ground, and basically leave the matter for the industry to solve. At least Europe is still suffering from its negative experiences from earlier standardisation attempts in digital television (for example its promotion of a common encryption standard for satellite television; Eurocrypt). This and the wish to refrain from imposing standards on the market that soon could be overtaken by technological or economic developments are common arguments against a legal mandate of certain standards, and those arguments seem also to dictate the policy in DRM matters. But, and also this was an outcome of the conference, until now industry representatives failed to suggest any concrete solutions on how to achieve this goal. So far there was only agreement that different forms of interoperability are possible, such as interoperability solutions at a technical level or at a business model level.

Mobile platforms
Mobile platforms and DRMs were another topic discussed in New York. The panel 'DRM Markets I: Mobile and Wireless Content' of Willms Buhse (Head of Products and Marketing, CoreMedia), Josh Hug (Development Manager, DRM and Applications, RealNetworks, Inc.), Ralph Simon (Chair, Mobile Entertainment Forum Americas), chaired by Azita Arvani, President, Arvani Group examined the potential of DRMs in mobile markets. The speakers agreed that one "natural" strategic advantage of mobile platforms in digital content markets was the already existing service provider-subscriber relationships, as well as the fact that consumers are already used to paying for content and (value added) services. In addition, the business model of mobile network operators has already led to the necessary infrastructure for individual client management and billing. To this extent, operators of mobile platforms can benefit from long-standing experience with selling services directly to individual subscribers, and ensuring that only authorised subscribers benefit from certain services (as opposed to e.g. the broadcasting media that were characterised by the one-to-many distribution of services to a not further defined, anonymous audience). But apparently also the mobile industry still has to find attractive business models for selling acutal content to consumers. The provision of higher value content such as songtunes, music, video and streaming were named as promising sectors for future business activities. One important target group of these markets are the YAFs: Young, Active and Funseeking people. Superdistribution was another important key word in this context, as well as time-dated distribution and mobile equipment with pre-installed contents.

With this emphasis on content distribution, it is obvious that DRMs can be, and already are, of importance also for the mobile industry. And because mobile markets were described as still nascent in nature, they can probably benefit from the experiences made so far by the Internet content industry. The more so, since the mobile industry will probably be confronted with problems already known from the online industry (napsterisation, piracy, viruses, etc.). And also for the mobile sector, the issue of standardisation plays a prominent role. Among the things that were unclear was the question of who should push standardisation: mobile phone producers, network operators, government, or standardisation bodies?

DRMs and consumers
The issue of DRMs and consumers was one of the re-occurring topics of the conference. And again, it was interesting to note the different angles from which the consumer issue was discussed by representatives from the legal and the business world. In the legal discussion, DRMs are genuinely seen as a tool to individualise and personalise consumer-service providers relationship. Because DRMs manage the distribution of contents to individual consumers, it is argued, they are often designed in a way to identify and individually authorise single consumers, and thereby to break with the anonymity of the world wide web. The consequence is, so Chris Barlas (Rightscom), that DRMs pave the way for "work and rule based relationships", i.e. specified contractual usage terms for different users or user groups. In contrast, industry representatives made repeatedly the point that, ideally, consumers should not be even aware that DRMs are used. Willms Buhse (Head of Products and Marketing, CoreMedia) referred to the need for DRMs being "unobstrusive".

It was interesting to note that no representatives of consumer organisations or other institutions representing the consumer side were present at the conference. Invisible also were interest groups representing the interests of consumers as citizens in access to information services and infrastructure under affordable, reasonable conditions, and under conditions that respect further public interest objectives. It was unclear whether this lack of representation was due to a conceptual failure of the organisers of the conference or the lacking awareness of consumer and citizens interest groups? Did the organisers perceived consumers still first and foremost as buyers and subscribers that are not more interested in DRMs than they are in the different transistors and technical specifications in their television or settop box? Or was it because the majority of consumer organisations has not yet recognised the impact of DRMs on the rights of individuals, both as consumers and as citizens, and still consider the safety of garden chairs and microwaves their prime battlefield (important issues, too - no doubt about that)?

It was even more interesting to note that some of the conference participants clearly welcomed this situation. As Josh Hug, Development Manager at RealNetworks, Inc. put it: "Consumers are not represented here, perhaps that is good. They do not have to be. They have already enough power."

Do they? The quote might highlight the tensions and the level of insecurity on the side of (among others) the content industry. Similarly, the number of open questions signalled the lack of experience with and knowledge of the consumer perspective. Todd Chanko (Jupiter Research) identified in his presentation "Creating successful DRM-enabled business models" a number of key questions, namely: How can media companies take advantage of consumer attitudes toward content ownership and copying? What are examples of DRM-enabled business models? How elastic is pricing for DRM-protected content? Some other key questions that were raised during the conference were:

  • How much choice do consumers want (if they want choice at all)?
  • How to demonstrate added value to consume?
  • How apart are seller and customer preferences?
  • Managing consumers‚ experience: what do consumers want/expect from content, services?
  • How to get users to accept DRMs?
  • What do consumers value more: interoperability, stability, continuity or innovation, rapid technological progress?

The search for finding answers to all these questions might very well fill the agenda of a - still to be organised - conference on its own.

One conclusion to take home from this conference is that the functionality and application of DRMs reaches further than being simple anti-piracy devices, and that DRMs as a basis for a whole range of new models for marketing and distributing information have the potential to impact information markets and society to a far greater extent than commonly recognised. DRM Strategies was not the last conference of this kind.

Reference
Further information can be found at the conference page

About the author: Natali Helberger is senior project researcher at the Institute for Information Law, University of Amsterdam. She specialises in the regulation of converging media- and communications markets, electronic control of access to information and the interface between technique, media and intellectual property law.
Contact: + 31 20 525 3646, helberge@jur.uva.nl,

Status: first posted 24/06/04; included in INDICARE Monitor Vol. 1, No 1, 25 June 2004; licensed under Creative Commons;
URL: http://www.indicare.org/tiki-read_article.php?articleId=19