INDUSTRY ANALYSIS
DRM Needs to Work On Time, Every Time

Now that media companies are exploring Web distribution models and using new technologies, a great deal is being discussed about who controls what when it comes to content. Digital rights management (DRM) has its advocates and detractors, but some type of gateway for the management and monetization of content appears inevitable.

Business development officers at content-owner studios want a platform that has almost no royalty to it, and is ubiquitous. If you're a technologist, or if you're a company that needs royalties for your technology platform, you probably want to create a great technology platform that you can charge a royalty for, and potentially gain lock-in from. DRM is increasingly essential to both, but users need to be cajoled and not turned off by difficulty or mistrust in access and privileges.

At the least, regardless of the DRM stakes, the Web distribution of rich, digital content needs to work -- on time, every time. You can't charge for tickets for trains that don't arrive, or that only limp into an empty station hours overdue.

Tackling Monetization

In the Internet media landscape all business models are up for grabs, but how do businesses manage their complexity of Web distribution and monetization? To find out, I spoke with Tim Napoleon, media and entertainment product line director for Akami Technologies.

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Listen to the discussion (31:23 minutes).

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Here are some excerpts:

Gardner: Tell us a little about the state of Web commerce, and why DRM is such an important topic today?

Napoleon: Digital rights management is doing well. It's alive and healthy. There was a general concern a few years back that the consumers wouldn't adapt to paper-media-type experience online, and I think the ubiquitous nature of the iPod has proved that wrong. There are a lot of other great devices that are coming out, or have come out, with really solid content protection schemes in place that the studios are comfortable with.

Gardner: One of the things I've heard from listeners, users of content, is, "Wow, there seems to be so many of these DRM approaches, do we need a different one for every media company, for every modality? Shouldn't there be some standards?" What is the state of standardization, or at least some de facto industry accepted approaches, with DRM?

Napoleon: If you're a consumer, basically you want your favorite artist, music, title, in whatever format that you want it, wherever you want it, whether that's on your TV, your PC or your iPod. There has been a willingness we've seen from consumers to pay for the same media across multiple platforms. It's not uncommon for someone to buy the DVD as well as the iTunes download, as well as to go to the Web site and watch the episode online.

All these different vehicles and delivery mechanisms aren't necessarily taking money out of the studio's pocket. They're actually creating an additive effect. We're seeing an overall trend. As you make this media more convenient and more usable, consumers are in a consumption pattern, and if consumption is going up, they're using more of this media.

No Inventory Guesswork

Gardner: In order for end users to enjoy this ability to access content through their Internet protocol, packet-driven pipe -- that might be their broadband connection -- a lot has to happen behind the scenes in order for the people who produce and distribute content to feel comfortable about it. And you're trying to bring that to the table.

Napoleon: My sound byte there is: How long does it take to do a live event on the Web? Well, it takes about 10 years and 10 minutes. It takes you about 10 years to learn everything you need to know to do it, and about 10 minutes to actually do it. The learning curve is definitely something that Akamai can assist with when you want to monetize and bring your content online.

Gardner: Once we've crossed this threshold of putting in a technological capability to allow companies to adhere to the contracts and their service-level agreements (SLAs), what is possible in terms of new types of subscription? What's on the horizon for new models of media distribution, entertainment, and business?

Napoleon: Studios have heart palpitations when they have to know how many DVDs to press, or how much physical inventory to create. With online and a scaleable system -- that's variable capacity from Akamai -- you can scale it all up to billions of users, if you need to. You don't have the physical cost of pressing a disk or having to forecast inventory. You never run out of it. A consumer never goes to a store that doesn't have the title they want to rent. The opposite benefit is that you don't have a warehouse full of disks on your balance sheet account.

You've got just the right amount of inventory. It's probably the one business issue that this solves better than anything for the studios -- having the ability to get into the hands of consumers hot content, and also capture a fragment of the market with maybe just a little bit of content. In the past, the distribution pipeline for projects that might not be mainstream didn't find a voice.

People often call us the long tail of content, but really it's having unlimited inventory and the ability to really let the consumers self-select from a very large library and filter that down to exactly what they're interested in, and then order it. That's just making people order and buy more media.

For more insights on DRM, listen to the discussion.

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Dana Gardner is president and principal analyst at Interarbor Solutions, which tracks trends, delivers forecasts, and interprets the competitive landscape of enterprise applications and software infrastructure markets for clients. He also produces BriefingsDirect sponsored podcasts. Disclosure: Akamai Technologies is a sponsor of BriefingsDirect business productivity podcasts.

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