For thousands of years people looked the other way as folks made copies of other people’s work – by hand, by printing press, by copier, by disc.

Content Insider #74 - In the DRM, CA Equation, Someone Has to Protect the Consumer

THE Insider

Content Insider #74
In the DRM, CA Equation, Someone Has to Protect the Consumer

"The terminator is out there. It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear." - Klye Reese (Michael Biehn) - The Terminator (1984)

For thousands of years people looked the other way as folks made copies of other people's work - by hand, by printing press, by copier, by disc.

Content producers weren't happy but the U.S. Supreme Court determined there was such a thing as fair use - making a backup copy of content for yourself. That was loosely interpreted to mean you could make a backup copy of your videotape. You could make a copy of an audio tape to CD so you could play on your personal player, in the car, or .

The Internet blossomed and creators found there was a cheap, fast, ultra-profitable means of making, producing and selling their stuff and make a lot of money.

Technology was working for them.

Butthe Internet had two users - them and you!

Stuck in the middle were the delivery folks - hardware, software producers; delivery services -- who also saw a few bucks were possible.

But don't forget the RIAA and MPAA, the people with the lucrative copyrights.

The manacles seemed like a good thing at the start so the go-betweens complied. After all, there is a lot of traction to the idea of protecting intellectual property (IP) from being stolen.

They have spun a very enticing, very convincing storycontent everywhere (Figure 1).

Where you want itwhen you want ithow you want itthe way they want to deliver it!

It was a beautiful new world but as Kyle said"One possible future. From your point of view - I don't know tech stuff."

Who knows even less about tech stuff? The Supreme Court

The RIAA, MPAA found receptive ears so they encouraged the development of terminators that would seek out and destroy illegal content access. The ultra creative PC/CE HW/SW industry went along and developed proprietary formatsencryption codesspecial hardwarespecial rules you should live by.

Fed by the paranoia that everyone is stealing the content the courts chipped away at the old fair use rule. They created a brave new world.

It isn't a world our kid agrees with (and he's no John Connor).

He figures if he buys the content once he should own it. He should be able to move it around from his MP3 player to his cellphone to his notebook PC to the home entertainment center to the car. Anywhereeverywhereanytime. And he should be able to give a copy to his sister if he wants.

And there are millions - if not billions - of John Connors who have the same belief.

Fair pricefair use.

To hell with the terminators!

Since it all seems to start with music, let's start here first:

  • fixed media music $33 B in '05, 5% growth (iSuppli)
  • broadband music $1 B in '05, 100%+ growth
  • mobile $5.3 billion in '05, 30%+ growth
  • CEA (Consumer Electronics Association) found that 32% of the early adopters downloaded while 68% bought the disc
  • iTunes has their shielded music service, Microsoft has theirs, Real has theirs
  • Verizon has theirs, Sprint has theirs, Singular has theirs

Kids who have grown up with computers and the Internet are more digitally-wise than their parents and grandparents to make the security rules, hardware, software. They know how to skirt the heavy-handed encryption.

And they do with blackboxes and little cracker programs.

Sometimes the results are crude. Then they get better. Suddenly it's great.

They beat another terminator.

They pass the weapon along.

Sometimes the solution falls into the hands of a really bad person who wants to make money illegally. But if the RIAA isn't concerned with collateral damage why should the kids worry?

The MPAA saw what happened to the RIAA and they knew they wanted a new, improved terminator. The CSS model didn't last long so they kept demanding newer models.

After all their stuff is special and really great. Everyone wants to copy it and send it around the globe on the Inet!

While 93% of the U.S. internet users know about online video (Online Publishers Association - OPA) only 24% watch once a week and 5% daily. The CEA found that while 30% of the early adopters download video, 70% buy discs.

When it comes to online video users, Ipsos found that 41 million grabbed streaming music videos, 32 million chose video games, 20 million enjoyed movie trailers (not a bad thing is it MPAA?) and 11 million went for TV shows.

This year the Leichtman Research Group estimates about 4% of the U.S. TV viewing will be video on demand (VOD). By 2010 the WW VOD - all sources TV, movies, video clips, curiosity sites - market will be a whopping 60 million subscribers and be worth $12.5 billion (Figure 2).

The result means that by 2010 people will have over 2 TB of home data (Figure 3) they will be storing - audiovideophotoscontent!

If we were the RIAA, MPAA we'd be demanding more protection too!

That's all their stuff right?


Most of the content we have on our system at home (Figure 4) is ours - yours, mine - or free stuff or stuff the RIAA, MPAA encourage you to grab (to sell you more stuff).

In fact, Parks Associates found that the content we have on our HDs is mostly ours anyway:

  • 84% of the respondents said they had digital photos on their drive
  • 59% had music
  • 36% had video clips
  • 26% had personal videos
  • 17% had movies, TV shows

People aren't constantly surfing the net to steal the MPAA's IP (Figure 5). We email. We IM. We text message. We read. We play games.

Despite what the RIAA and MPAA tells the courts, they know it too!

They should they've got the research that tells they what you do, when you do it, where you do it.

It's pretty scary that we volunteer so much information, so willingly (Figure 6). But then we have nothing to hide.

Can we say the same for the people who push for the development of the terminators? Have you ever seen how much the real music creator gets from the sale of a song on a disc? Have you ever studied the creative accounting by MPAA members?

Kids are slackers compared to these folks.

But that doesn't mean content creators don't have rights to payment for their IP. It just has to be fair to the owner and fair to the consumer.

The transportation and delivery folks? Sure. They should be compensated for their serviceonce!

The challenge is that today content - yours, mine, ours, theirs - delivery is complex. It used to be there were distinct channels.

There was video (broadcast, theater, disc). There was the Internet. There was voice (Telco) service. There was mobile phone service.

Today multiplatform, interactive services and content can move across multiple devices and be accessed in multiple ways.

Ownership, usage access, enjoyment has to move just as easily.

That is going to be tough to achieve because:

  • content owners/providers
    • want to minimize piracy
    • want to maximize the number of ways they get paid
  • hardware, software, service providers
    • want to control distribution (and cash flow)
    • want to leverage their business models o want to leverage (hold) customer to minimize churn

In the meantime both sides (all parties) want to limit DRM interoperability, establish their own content rules, reduce or eliminate the consumer's ability to move from platform to platform and optimize their "ownership" of the customer (Figure 7).

While that may sound like an extremely pessimistic forecast, the fact is the consumer (especially the younger, creative generation) will force reason on all parties.

Tellywood will have to focus on eliminating the true pirates and come to a self-agreement that in talking about content consumers have listened to Kyle"You must be stronger than you imagine you can be. You must survive, or I will never exist."

If they don't listen the consumer will simply repeat what Arnold said"I'll be back."

Each time with a bigger, badder terminator eliminator. It's a battle creators and providers can't win!

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