Digital Rights Management Media and Entertainment
“Makers of MP3 players and their follow-ons fear their emerging business will be quashed if studios are successful in finding ways to foil users who rip files off their CDs or obtain them from still-thriving Napsterlike peer-to-peer Web services, such as Morpheus.” Source - Media revolution dawns, but for whom? Bad blood between studios, OEMs colors consumer show, Electronic Engineering Times; Manhasset; Jan 14, 2002; Rick Merritt;
Overview • Copyrights in general • Difference between non-digital and digital • Digital problems and successful models • Music and Video Industry Analysis • Conclusions
Copyrights in General • A most basic right – It comes before free speech and before freedom of religion in the constitution • Music or book – legally protected so business structure exists so that royalties flow to creator(s) • Innovations – patent protected • Software – license protected (technology enabled) • OS – controlled at distribution point • Dollar bill or poker chip– legal and there is a technological standard
Non Digital vs. Digital • Reproduction costs and distribution costs • A CD is easy copy but hard to distribute • A famous signature is easy to distribute but hard to copy • DIGITAL IS BOTH EASY TO COPY AND EASY TO DISTRIBUTE
The Problem with Digital • Piracy is largely a factor of ease and convenience • CD copying vs. P2P • Legal and technology failing so far • Example - Napster-like P2P networks
Digital Media • Examples of companies getting digital media to work? • Examples of business models/strategies in general? • Reprise – Is there a consensus about Morpheus (or other P2P’s) prospects?
Ellusionist.com • Leveraging digital • Content is an infomercial • Samples given away • Updates build loyalty • Revenues • Can purchase and even download the videos online • Concerns about rights?
Textbook vs. Reality • Things are not quite as simple as the book makes them out to be
Music and Video Entertainment • Total Singles and Full-Length Album Shipments Reduce Considerably • LP, Cassette and CD single units shipped to the U.S. market decreased by 38.3 percent at mid-year 2001, representing a $70 million dollar value. • “A preliminary survey of tech savvy online music enthusiasts recently conducted for the RIAA showed that nearly one out of two consumers surveyed downloaded in the past month and nearly 70 percent burned the music they downloaded. All of this activity continues to show the passion of the consumer for music and the need for both legal protection and legitimate alternatives,” concluded Rosen. • Situation can get worse for the music and video entertainment industries.
Music and Video • Broadcast (programming) • Licensing and advertisements provide revenue • Broadcaster is intermediary between creators and customers • View/Listen on demand • Replay or Option value • Unit sales provides revenue • Aggregator is intermediary
Internet Distribution • Tremendous opportunity for efficient distribution with wide reach • Like other Internet models, impulse buys and ease of purchase are benefits • Can increase value of advertising • A legitimate aggregator is necessary
Internet Distribution - Problems • However, this is the primary area of piracy issues • Where do they arise? • Record something with replay/option value • Distribution is not from a single source (e.g. P2P networks) • “Textbook” suggestions don’t apply
Music and Video Conclusion • Music and Video content be protected by legal and/or technology. • No business model alone is going to circumvent this in anytime near the near future. • Thereby, in a regulated environment, aggregators will sell original content and P2P (like Morpheus, etc.) will distribute non-copyrighted material (public domain, freeware, etc.)
Digital Rights Management Conclusion • Digital opens up new opportunities for reach and efficient distribution • Content that can be broken up, is time-sensitive, or can be broadcasted live can take mitigate rights concerns and actually take advantage of the medium with its business models • For some content, legal and technology must pay a role, as they always have.