Music industry leads charge in battle against piracy
Nathan Lynch 31 Aug 2001
The Complinet
With 3G networks opening up the possibility of widespread wireless P2P song-sharing (à la Napster), analysts have urged the "Big 5" record companies to take the reins and ensure that revenue flows with the music.
A single Digital Rights Management (DRM) system will be central to ensuring that users pay for music delivered via the mobile internet, say analysts at Gartner. However, P J McNealy, a senior analyst for GartnerG2, warns that it may take as long as three years for this coordinated approach to emerge.
A new report by Gartner, titled Digital Copyright Law: Protect Content - and Consumers, says the lack of a single DRM system is "alienating consumers and stalling the economics" of the wireless music industry.
The report says the "Big 5" record labels - Universal, Sony, BMG, EMI and Warner Music – are each working in isolation, when what the industry needs is an umbrella DRM solution.
"Until there is a de facto standard for DRM, consumers won't line up to buy services," McNealy said. "Digital distribution needs to be brain-dead simple for consumers, and any DRM solution deployed should work with all music software and hardware. In order for this to happen, the 'Big 5' need to work together, and that doesn't look hopeful before 2002."
If the experience in the fixed internet market is anything to go by, consumers will need serious encouragement - even pampering - to move toward paid online music.
In June of this year, GartnerG2 surveyed the music listening habits of 156m American adult internet users. The study found that nearly 50 per cent of those polled still listened to CDs on their PCs; but 25 per cent downloaded their music from the internet. Only 6 per cent had actually purchased digital music downloads in the last 3 months.
These figures underline the impact that P2P file sharing (personified by Napster) has had on the online music industry. With the wireless internet, all the same rules will apply. The only difference is that operators will at least receive data revenues when pirated songs are transferred over the mobile internet.
However, the integration of MP3 players into consumer mobile phones opens up the potential to avoid even these charges. Users can store MP3s that they've downloaded via the internet on flash memory sticks and play them for free on their handsets.
The only way to prevent this situation is to secure content with DRM. One of the leading DRM platforms is the Intertrust "Rights|System", which is supported by Adobe, Bertelsmann-DWS and Nokia.
The Intertrust-secured content comes in a container called a "digi-box," which essentially encrypts the file to anyone but the content owner. When content providers package a song, they can apply certain rules to it, which govern the usage rights (for instance one listen, one month, or full ownership).
Andrew Robins, European marketing manager for Intertrust, said with DRM the music industry can take advantage of the viral nature of P2P networks. For instance, users can receive free content in return for passing songs on to other paying customers.
"This will be important for mobile devices once 3G comes along and they become a primary way to acquire content," Robins said. "This is where it gets interesting because of what we call 'super distribution': an incentive to consumers to pass on content to peers who may pay for it as well. In this instance, the original rights holder will win the next piece of content for free. It is effectively turning consumers into distributors."
So P2P isn't all bad for the music industry. In fact, managed properly, it could be the ultimate in free marketing and distribution.
According to Mike McGuire, research director for GartnerG2, the next few years will be critical for the industry – and will also serve as an example of how other types of content can be delivered.
"What happens with the music industry's adoption of DRM technologies will serve as a leading indicator for other types of content such as movies, video games, and print," McGuire said. "More importantly, DRM implementations for each will have an enormous impact in getting consumers to shift from buying products - CDs, tapes, and books - to buying these content types as services - be they subscriptions or pay-per-download." |
