In the context of successfully commercialising new generation multimedia services, a conventional wisdom in the telecommunications industry is that 'content is king'. This may be an irrefutable industry maxim, but the realisation has also dawned that managing access to content probably has equal majesty.

Failure to control access to, and distribution of, content in an appropriate manner threatens to blow big holes in service providers' revenue streams, or deter its owners from making content available in the first place. And we are talking very big bucks here. Citing Frost & Sullivan figures a recent Mobile Entertainment Forum (MEF) circular warned, for example, that the lack of effective Digital Rights Management (DRM) in Europe's mobile market alone would cost the region €3.5 billion this year, or over half the estimated annual turnover of the European mobile entertainment industry. Meantime, in what it styled a conservative estimate, the International Intellectual Property Alliance calculated that the global losses attributed to content piracy in 2005 amounted to between US$30 billion and US$35 billion, adding "…not counting significant losses due to Internet piracy, for which meaningful estimates are not yet available."

In general DRM systems, sometimes termed (erroneously in the view of some experts) Electronic Copyright Management Systems (ECMSs), seek to manage access to content, restricting it to individuals or organisations that are entitled by payment or affiliation to have access, and disbarring those that aren't. Content can take many different forms. Included are ring-tones, music, games, information, news, analysis, software, applications, video clips, TV programming and films, and even enterprise e-mail, information and applications, and other business-specific digital assets.

From a technology point of view, there are a number of approaches to cracking the DRM nut. Included are: restricting access by the encryption of content such that it is able only to be decrypted by authorised users; limiting the number of devices content can be accessed on or number of times it can be accessed; imposing a forward 'lock' to prevent onward transmission of content; or withholding access until the user has registered with the content owner or publisher. While not proofing content against duplication, 'digital watermarking' is useful in keeping tabs on what happens to content, and providing the basis for legal action if a violation of rights is detected.

As will be very evident, not all DRM solutions have stood the test of time in terms of their technical ability to restrict access to, and consumption of, content to legitimate users. There are also well known examples of particular solutions that have had rather unfortunate and unforeseen side effects. A case in point involved Sony BMG embedding in some of its music CDs a DRM program that secretly loaded onto the user's PC, and subsequently exposed some machines to security vulnerabilities.

Particular technologies aside, there are some major logistical and organisational challenges involved in the successful deployment of DRM solutions in online or on-air content delivery businesses. Many of these result from the circumstance that modern content delivery chains are more and more multi-tenanted, and some now have the potential to involve content owners, content aggregators, network owners, service providers, terminal manufacturers, the DRM solutions provider, and end users. All of these have to amicably buy into the chosen scheme, and it's obviously necessary that any concerns the end user has about fair usage and privacy are addressed. Indeed, there may sometimes be a direct conflict of interest between the first and the last named groups in the above theoretical delivery chain. A prime concern of the content owners is that they are appropriately recompensed for their content and that the content will be effectively protected against misuse. The latter may impose what are considered to be unacceptable restrictions on the end users.

The GSM mobile industry offers a useful insight into the difficulty of keeping all parties in the content delivery chain happy, although in this case the differences that surfaced mainly concerned the membership of the GSM Association (GSMA) of wireless operators and the technology platform patent licensing organisation MPEG LA, and involved a proposed licensing scheme for use of the Open Mobile Alliance (OMA) Digital Rights Management (DRM) 1.0 specification.

The origins of the falling out go back to January 2005 when the US-headquartered MPEG LA announced that an initial group of essential patent holders, including ContentGuard Holdings Inc, Intertrust Technologies Corp, Matsushita Electric Industrial Co Ltd, Koninklijke Philips Electronics NV and Sony Corporation had reached tentative agreement on the terms of a joint patent portfolio licence to be offered by MPEG LA for use of the OMA DRM 1.0 specification. Under the original proposed licence, royalty rates for patents essential to OMA DRM 1.0 in connection with products that had OMA DRM 1.0 functionality or OMA DRM 1.0 and OMA DRM 2.0 functionality would be:

• US$1.00 per device (payable by the party that offers the device to an end user);
• and 1% of any transaction in which an end user pays for delivery of a digital asset employing OMA 1.0 (payable by the service provider)

Reflecting what it said was widespread operator discontent with these proposals in March of that year the GSMA announced that it had begun a review of alternative mechanisms for protecting the ownership and managing the use of wireless content, while GSMA ceo and board member Rob Conway described the suggested regime as 'impractical, excessive and short-sighted'.

"Based on frank responses from operators throughout the world, our board understands that members are being 'forced away' from the OMA DRM standards by this unworkable licensing scheme," added Craig Ehrlich, chairman of the GSMA. "In order to provide the services and content which their customers desire, operators will have no option but to take their own routes toward implementing proprietary DRM solutions. These solutions may have lower licensing costs, but will ultimately introduce problems for customers when roaming, changing networks or exchanging content with other users."

Although MPEG LA subsequently lowered its proposed fees, agreement with the GSMA was not forthcoming.

The Frost & Sullivan market research company reckons that IPR-related royalty issues have constrained growth in the mobile DRM markets. It argues that, for example, industry fragmentation due to a lack of clarity over OMA DRM 2.0 implementation royalty rates is compelling mobile operators to implement readily available proprietary DRM solutions.

The ABI Research company in its recent 'Mobile DRM Market Analysis and Forecasts', believes the high prices set by MPEG LA precipitated lengthy negotiations with operators. ABI says that the resulting delay created an opportunity for proprietary DRM vendors, and that mobile operators such as Sprint, Verizon, Telus Mobility and the Vodafone subsidiary SFR all deployed services using proprietary DRM solutions. According to ABI Verizon uses Microsoft DRM for its V CAST service; Sprint uses Groove Mobile's proprietary solution; and Vodafone, while flirting with the OMA specification, has also used DRM from Secure Digital Container (SDC). And in May 2006 NTT DoCoMo Inc announced a collaboration to incorporate Microsoft Windows Media technologies, including Windows Media Digital Rights Management 10 for portable devices, in the Japanese company's 3G FOMA handsets, starting with the F902iS model to be launched this summer. A month earlier Microsoft said Windows Media® DRM had been broadly licensed and was deployed by more than 100 content services on hundreds of different devices.

According to the MEF, to stem the levels of revenue loss it cites above it's necessary for the value of mobile content to be protected through open and interoperable DRM while ensuring that the ability to share content is not restricted through proprietary solutions.

"For many media owners, the decisions to move into the mobile arena are being taken because of high profit expectations resulting from consumer demand, but also adequate rights protection and secure devices. The instinctive reaction is to try to bar consumers from sharing content, but by imposing cumbersome restrictions or by recommending proprietary solutions, the industry at large risks impairing the consumer experience and ultimately stunting the market," judges MEF chair Patrick Parodi.

Interestingly, and perhaps counter-intuitively, ABI Research takes a rather different view to the MEF, concluding that the mobile operators' efforts to harness an open DRM standard from the outset were misplaced. "This is a classic example of what not to do when trying to nurture a new market," argues Vamsi Sistla, ABI Research's director, Broadband and Multimedia Research. "It is misguided to pursue an open standard solution in a brand-new market. A better time is after a few years, when the market is disjointed, the competition has changed, and companies can collaborate to benefit from economies of scale. Right now, operators are focusing on their ability to monetise this trend and get their solutions to the market sooner than their competitors."

"Any emerging technology should find its way into the market by the trial and error of multiple solutions," adds Sistla. "Early in a market's development, companies whose proprietary solutions don't rely on external integration are often more successful than those that must agree with other players in the sector." ABI instances Apple's iPod/iTunes, with its tight, exclusive vertical integration and 80% market share, as a good example of what can be achieved with proprietary solutions.

Forecasts from Informa Telecoms & Media released at the Mobile Entertainment Market (MEM) 2006 conference in London, suggest that mobile games, music and TV and video will be worth a cool US$25.9 billion by 2011. It's quite difficult to get a handle on the present and future value of the counterpart wireline online content market although, if experts such as Infonetics Research are correct, it's probably not going to be less than that for mobile. The Infonetics' 'IPTV Equipment, Services, and Subscribers' report, for example, suggests that global service revenue for just IPTV will be worth US$38 billion in 2009.

According to media research company Screen Digest and specialist DRM consultancy Rightscom, one priority for the online Internet video industry lies in developing effective digital 'download-to-own' services that mimic the DVD business model that has generated billions of dollars of profit for movie studios and broadcasters.

Screen Digest says that download-to-own business model, sometimes called 'electronic sell-through' or 'digital retail', allows companies to charge a higher price (and hence extract a better profit margin) than other forms of video-on-demand. The company notes that pioneering examples of such Internet services include Movielink - a joint venture founded by a group of the largest Hollywood studios - the new UK venture recently announced by Universal Studios and new entrant LoveFilm, and the German In2Movies offering being established by Warner Bros.

"This year will be the first year that Internet video delivery really starts to take off. Powered by DRM technologies, the telcos and big Internet players, together with hungry new Internet start-ups, will challenge the traditional gatekeepers," comments Chris Barlas of the Rightscom consultancy and joint author of Screen Digest's report 'Digital Rights Management and New Entertainment Business Models'. "The fact that DRM was discussed at the recent World Economic Forum in Davos underlines its critical importance".

"Digital download-to-own is the new Holy Grail of the film and TV industry as it fights to respond to the twin challenges of piracy and new market entrants," adds Ben Keen, chief analyst of Screen Digest. "However, the consumer must be at the centre of all new strategies and DRM systems that are not sufficiently flexible are doomed to failure."

So, by this reckoning, the end user is also part of the royal family along with content and DRM. END.

An increasingly vocal section of society is firmly opposed to the basic idea of DRM, some using the same acronym but styling it rather 'Digital Restriction Management', or worse. A number of efforts to organise opposition to DRM are on-going. For example, DefectiveByDesign.org, a campaign of the Free Software Foundation (FSF), styles itself a "…broad-based, anti-DRM movement that is targeting big media, unhelpful manufacturers and DRM distributors". Its website says it aims to make all manufacturers wary about bringing their DRM-enabled products to market and that the campaign aims to identify 'defective' products. And here, on the same website, is president of the FSF Richard Stallman: "The motive for DRM schemes is to increase profits for those who impose them, but their profit is a side issue when millions of people's freedom is at stake; desire for profit, though not wrong in itself, cannot justify denying the public control over its technology. Defending freedom means thwarting DRM."

Bang to rights, so to speak… END

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