Report from the Field
This SIIA panel discussion looked at DRM's role in the content market
Content-business insiders filled the audience for "The Truth About Digital Rights Management," a crowded brown-bag lunch session held on September 19 in New York by the Software and Information Industry Association (SIIA). Moderator Lee Greenhouse kicked off the 90-minute panel discussion by promising the participants "a moment of influence and, if not the whole truth ... some of the truths of DRM."
Attendees weren't looking for the revelatory "truth" about DRM. Hype and posturing weren't needed. This was a knowledgeable group that included representatives from content and technology companies, consultants, lawyers, and venture capitalists. They came to hear the word on the street about DRM's application to content-revenue and customer models.
Greenhouse organized a lively and engaging session. He brought together four articulate panelists who are in a position to know the economics of DRM in the content business. Discussion and opinions flowed easily between them as they responded to Greenhouse's probing questions. The panelists were Steve Potash, CEO of OverDrive, a leading e-book service company; Chris North, vice president and general manager of electronic publishing at HarperCollins; Bill Rosenblatt, president of Giant Steps Media and co-author of the Wiley-published Digital Rights Management: Business and Technology; and Bahar Gidwani, CEO of Index Stock Imagery, one of the largest digital stock-image-licensing companies.
E-Books and DRM
North was introduced by Greenhouse as the "poster child of e-books." North explained: "We took our time to get into the market. HarperCollins now has 10 percent of the e-book market share and we are seeing a 15 to 20 percent growth per month in sales of e-books." He added, "HarperCollins e-books include bestsellers from our publishing list, including Nobel Prize-winning authors, self-help books, sex, and mysteries."
North continued: "The reality of DRM in e-books is that it is built into the hardware, and third-party DRM solutions are irrelevant in our business. DRM can be summed up in one sentence: Use as little of it as possible. Even pretty good DRM needs to get better."
For example, customers want and need more "activations" per e-book content purchase. Activations allow readers to access the content on more than one device. Using the example of Microsoft's four activations per e-book reader, North said even that wasn't enough for most customers. E-- book buyers are early adopters. They have lots of devices and want to be able to use their e-books as they move between their home PC, office desktop, laptop, pocket PC, and wireless units.
"We don't have a technology problem. We need to put consumers in the driver's seat," North said. Technology turns off buyers when it makes the purchase difficult. Consumers have definite expectations about using, printing, and copying. The challenge for content providers is to take the longer view and create a market solution that makes the product as easy to use as possible.
"Good control costs money. Publishers have regained their nerve and are charging for content. What haven't evolved are the new business models," said Greenhouse in his introduction. Rosenblatt emphatically concurred in his remarks: "Implementing new business models in the consumer space is hard."
Who will pay for the development of DRM technology and the experimentation with business models? "It is anathema to content companies to subsidize DRM solutions," said Rosenblatt. "Consumer devices and DRM are not going hand in hand." Neither content nor consumer-device manufacturers will pay for implementing DRM in under-$200 consumer devices.
Technology is going to outstrip, outdevelop, and outsmart all rights-management strategies. But most people aren't looking for a way to cheat-they're looking for a way to comply with reasonable business practices and pricing models. …