Innovations 2006 Analysis: Industry watchers agree that the issue of digital rights management software will continue to trouble the multimedia content distribution market as the sector gains momentum.Editor's Note: This story is part of Innovations 2006, a continuing series of stories from the reporters and editors of Ziff Davis Internet. Instead of the usual mile-high look at the year ahead, these articles examine particular technologies and markets in transition, including what's in store for them.
Paul Cho thinks that digital rights management software is a pretty silly idea.
The 26-year-old graduate student said he doesn't consider himself to be any sort of computer genius but he's still "pretty sure" that he could get a digital copy of almost any song he wants to hear without paying for it. While Cho maintains that he doesn't purposely go down the illegal route, unlike many other students he's met, he said it's not very hard to find someone who knows how to get what you want, especially if you're willing to pay for it.
The chief purpose of DRM tools—protecting multimedia content from trading hands without barriers—as it did on the file-sharing networks of yesteryear, actually makes it less likely that Cho will give his cash to recording companies via legal channels, he said. As a business post-grad at Boston College, Cho said he understands why content publishing and distribution companies need to defend themselves against piracy, but he also contends that being exposed to new music for free is exactly the thing that makes him most likely to buy it.
"You have to see the challenge from a business perspective, but when people give me copies of stuff they have, in mixes of different songs or something, that makes it far more likely for me to go out and buy a whole CD, that's why I buy most of the music I buy," Cho said. "There has to be a better way for these companies to protect themselves and catch the criminals without making the average person pay for it."
In truth, Cho said he doesn't typically run into too many problems using his Sony Walkman MP3 player with the various online music services he uses, including RealNetworks' Inc.'s Rhapsody subscription package and downloads from eMusic.com. But Cho has run into problems with friends in trying share tunes among their various audio systems.
As he's able to afford more personal electronics gear and digital content services, Cho said, he fears that unnecessary complexity will be the only result of having to integrate too many DRM standards from too many vendors.
"I understand why these companies want to try to protect themselves," he said. "But, it also makes me angry because it seems like they're just trying to make more money off people who actually pays for their stuff, which just stinks."
The recent rootkit security debacle related to DRM technology embedded on music CDs sold by Sony provided perhaps the worst case scenario for consumers like Cho, who want to continue to do business with the entertainment and electronics companies as they always have, with a minimum of interference. Not only did the Sony programs present an obstacle for users hoping to copy their tunes into any format they choose, the software secretly implanted itself on people's computers where it collected personal information and created other potential security loopholes.
Click here to read more about problems with Sony's DRM rootkit.
The average American consumer may have only a passing familiarity with DRM software, but as the variety of channels for delivery of digital content continues to explode, and device makers and content providers launch their own counter-piracy efforts, people buying those products will be forced to educate themselves. Experts say that 2006 is unlikely to be the year when industry players reach any sort of consensus on standardizing DRM guidelines and contend that the user experience is likely to suffer as a result.
According to content market researchers RNCOS, in Delhi, India, the DRM-oriented online music market for Europe and North America is expected to exceed $2.18 billion by 2008, up from only $275 million in 2004. Some believe that market would grow much faster without the current flavors of DRM.
Next Page: Apple and Microsoft have no incentive to make improvements.
Many industry watchers believe that industry giants Microsoft Corp. and Apple Computer Inc., which support their own proprietary DRM standards and provide a lion's share of the software used to play digital content on personal computers and portable multimedia players, have no incentive to help make things better.
In fact, since their dominating market positions may make it less likely that other DRM efforts will gain momentum if consumers choose to stick to one platform or the other, said market analysts, the big players may decide to make their products even harder to integrate with other standards.
"The prognosis is pretty bad for the next year, with Microsoft and Apple competing with their standards on the PC and portable devices, and something different coming for mobile phones and cable, and then an additional layer of DRM on the content itself," said Ted Schadler, analyst with Forrester Research, in Cambridge, Mass. "Consumers aren't going to see things get much easier anytime soon; if someone asked me to paint a picture, the outlook would be pretty bleak."
Despite that dreary prediction, a number of different technology providers are working to promote alternatives to DRM software. One company getting some attention for its approach is Navio Systems Inc., which was recently selected by the World Economic Forum as a 2006 Technology Pioneer for its DRM-free digital content e-commerce software.
Navio's system, which is designed for music companies, mobile carriers and other content providers, eschews DRM in favor of a transactional system which sells customers "digital rights" with which they can buy audio files. That content comes delivered in a file that allows end users to share their music, but the system promises to prevent people from making their content available to other file-sharing networks.
Stefan Roever, chief executive of the Cupertino, Calif.-based company, said that his firm's approach balances the rights of consumers with the safeguards needed to protect digital content.
"A rights-based approach fundamentally gives consumers more value so they can buy content for their collection, not for a specific device," Roever said. "Those rights can be defined to allow consumption of content on a broad range of devices, so that users don't need to worry about formats, backups or device synchronization."
In addition to making consumers' lives easier, Roever believes Navio's system will benefit content providers by offering incentives tied to buying more digital rights and having greater opportunity to package different types of content together, such as music and mobile device ring tones.
Another company looking to lure consumers with what promises to be a less restrictive format for moving their content between different types of services and devices is Linspire, which launched its Oboe digital music storage service earlier this month. The system offers customers unlimited storage for $39.95 per year along with the ability for users to move music from their Oboe "digital locker" to just about any type of device.
One problems with Oboe, however, is that DRM tools such as the ones attached by Apple to content sold via its iTunes download service don't allow people to access that material using the Linspire application. Linspire Chief Executive Michael Robertson, who founded music-sharing site MP3.com before joining the open source software maker, agrees that recording companies and other content providers are making a mistake by letting someone like Apple decide how their content is protected.
In addition to his belief that DRM discourages people from using new services and devices altogether by creating unnecessary complexity, Robertson said that content providers could increase their profits by discouraging pricing models such as iTunes' 99-cents-per-tune business and charging consumers more money for less restricted formats.
"I ask people, if I gave you the option of buying a digitally restricted song for a dollar or a complete unprotected album in digital locker that will work on any device for a bit more, most people choose the latter," he said. "That's my message to the industry, instead of giving customer fewer rights, give them more rights, and charge more money."
"File sharing will never stop, but I think people ask the wrong question about discouraging that sort of behavior," Robertson said. "It's not about protecting the content; it's about what strategy makes content providers the most money; the whole reason that we're in this crazy DRM world is because [companies in the market today] look at it from the side of protection."
Next Page: RealNetworks addresses the issue from two sides.
Another company with a great deal at stake regarding the future development of DRM is Seattle-based RealNetworks Inc., which must address the issue from both sides of its business, as a multimedia player application provider and a vendor of consumer content services including Rhapsody. The company has its own DRM software that is used in its Rhapsody-to-Go application, which allows a customer to transfer their music files from a computer to mobile devices that accept Microsoft's Janus rights protection standard.
Karim Meghji, RealNetworks' vice president of music services and software, conceded that much work needs to be done to improve DRM, but he believes that progress is being made by those with consumers' best interests at heart. He said that Real is trying to use the knowledge it gained in working to establish its RealPlayer multimedia software in the PC market to better its content protection efforts. The company has also launched Harmony, a DRM translation system meant to allow consumers to securely transfer the digital music they purchase from Real and others supporting the platform to portable music devices.
One of the things that Meghji believes will change DRM standards for the better, short of establishing an industry standard that is supported by both major players and smaller firms, is if companies controlling the most popular platforms open up their guidelines so that other firms can better integrate their own products and services with those tools.
"Our approach is very much about trying to minimize the impact of DRM itself from a consumer perspective," said Meghji. "Closed complexity like we have today isn't in anyone's best interest. The solution might be what a lot of people are backing, a single standard format adopted by the industry, or interoperability between different vendor DRMs."
"No matter which route we take, making progress starts with a need for industry to come together and realize that fragmentation essentially limits overall growth of the business for everyone," Meghji said. "Unfortunately, that's an uphill battle to fight because the leading companies today aren't seeing any reason to open their systems up; as long as that continues to be the case, moving forward will be a long row to hoe."
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