Share the Wealth
By Peggy Anne Salz, Mon Nov 08 08:00:00 GMT 2004

EMI is leading the charge to transform the nightmare scenario of superdistribution - users circulating content without paying for it - into a lucrative business model.

Previously, Digital Rights Management (DRM) was about keeping honest users honest. Content protection - not promotion - was the focus, and companies rushed to develop DRM solutions and technologies to prevent users from sharing content with their peers. To stem confusion the Open Mobile Alliance agreed on OMA DRM 1.0 - a DRM standard designed with 2G phones and low-cost content in mind. Earlier this year OMA released version 2.0 of the standard, designed for feature phones that can also play and store high-resolution audio and video.

This stringent approach to DRM has the buy-in of major media companies because it protects music downloads and video clips from unauthorized distribution. But it also ignores user requirements to control and use this content as they like – including the freedom to access it, port it and distribute it among their peers and across a number of devices and platforms. To create a sustainable mobile content offering operators and content rights owners have to control, protect and charge for content. But they must also fulfil user demands for a seamless customer experience – and the freedom to share.

Against this backdrop, superdistribution is gaining traction, and the business model media companies once considered taboo is now poised to go mainstream.

But it’s one thing to bend to customer demand – it’s another to craft it. Clever companies recognize superdistribution can help them reach new customers - and raise revenues. “Right now, DRM is about protection, but in the future it’s about CRM (Customer Relationship Management),” argues Andreas Spechtler, director of Sony Network Services.

By adopting a more flexible approach to DRM companies can encourage users to share content and then track that content as it makes its way to other users and across a range of devices. Ultimately, the value of that information far outweighs the price of allowing users to use content as they like, Spechtler says. The Sony StreamMan service - which recently launched in Finland and is set to launch in a “major European country in 1Q2005” - is more about access than ownership.

For this reason, the service is currently protected with a simple forward-lock mechanism supplied by Beep Science. Beep’s technology also allows users to share content between devices, or transfer files from an old device to a new one without having to download new licenses or content objects. Moving forward the focus will be on “allowing users to port the music channels they create” across other devices, Spechtler says. In this scenario he believes DRM is key to “creating and supporting mobile communities around music channels users distribute when they play DJ with their friends.”

EMI gets kudos for its breakthrough DRM approach. Rather than penalize users who pass around music to their peers, its mobile music service will reward them. The pilot, slated to begin with an unnamed UK operator, will allow users to send songs to their peers, who will then be able to preview a track several times to decide if they wish to buy it. A DRM wrapper on the content will cause the track to expire and disappear from the device if not purchased within a set time frame.

Ted Cohen, EMI SVP, believes users who pass around music after paying for it are basically recruiting new fans for the label – and should get something in return in the form exclusive access, free downloads or even cash. While he’s tight-lipped about the service details, he’s very vocal about the future role of DRM. It should “empower and not criminalize” users, and should allow the user “fluid use of content” across devices. Cohen, widely regarded as the “pope of digital music,” is the first to evangelize about the need to stop policing users and promote community. More should listen.

An interesting twist comes from SDC, a Swiss provider of multi-device DRM solutions. It allows users to share music with their peers and only encrypts around 80% of each track. About every 20 seconds there is a 5-second gap in the music, so users who want to have the whole song have to purchase a license. SDC’s technology also provides operators and record labels with a new revenue opportunity: They can replace the gaps in the download with a commercial message. Granted it may not appeal to everyone, but it’s easy to imagine sponsored downloads and short commercials for new artists.

Looking ahead, usability will be the critical issue for DRM. Content protection will need to take a back seat to user requirements for a seamless and enjoyable user experience. Users who feel inhibited in how they access and use their content, will vote with their feet. (Consider the argument of Cory Dotorow, who warns DRM is more than an affront to users; it’s a business model doomed to failure.) Besides, EMI shows it pays to give users the freedom to do with content what they like. Users are potential market-makers and can spread the word about a cool new artist or song more quickly and credibly than any corporate campaign. Word-of-mouth has always been the most effective form of advertising – why should it be any different in the mobile space?