I was interviewed (by e-mail) for a project that preferred to remain undisclosed, on the future of secure content distribution. Enclosed are the (slightly modified) questions and answers.
Q: What factors will influence the growth rate of digitally distributed content? What are the current barriers to increased adoption of digitally distributed content?
A: Digitally distributed content is here. Most people I know do not use CDs. Moreover, CDs also fall in the category of digitally distributed content (the pre-loaded case). The problem is not that there is no digital content distribution, but that there is no such distribution that protects the revenue stream of the record labels, who happen to be the most powerful entities in the arena. The barriers today for distribution schemes that protect the revenue of the record labels are as follows:
1. User experience: People are used to downloading and transferring content to MP3 players. Some are not used to purchasing and to messing up with DRM restrictions.
2. User benefits: At the end of the day, the protected means for content distribution offer much less than what the user gets today: all content, on all devices, and, for the dishonest users, for free. It is difficult to drive end users into a change that has absolutely no benefits for them in comparison to the current state.
3. Fragmentation: There are too many distribution systems that do not necessarily inter-operate. The biggest hurdle is of having different schemes for different mediums; a situation that is completely different from the much better state today of unprotected content. Today, a user can download, for pay, one MP3, and use it on the PC, on the stereo, in the car, and on the go. A lot of effort will be required to provide such a streamlined and intuitive user experience with DRM schemes.
4. Some people are not used to paying for digital content. Education will be required.
Q: Is there/will there be a market for content distributed on pre-loaded memory devices like memory cards?
A: There is a market, of course. Pre-loaded content is especially appealing to the “no hassle” fans who do not care to sit and download but prefer to just buy it wrapped. Another market would be the ones who desire to retain the shopping experience of music, e.g., going to the music shop with friends, listening, discussing, and actually picking something off a shelf and having it packed for them to take home, and to show off to friends (as an apparatus) later. Pre-loaded content is also appealing for the gifting use-case. Finally, there are the ones who do not have a network connection, or who do not like to use a PC, but I foresee this sector to diminish over the next years.
Q: What is the market like for consumer content download (video, music, etc)? Is portability of content important (i.e., via removable memory cards)?
A: Portability of content is essential, with a removable card or without. Users are accustomed to consuming content in many scenarios and to content that goes with them. A new distribution system that will not support this use-case may not take off.
Q: How does DRM fit in the picture?
A: Today, DRM is deemed essential to secure the revenue stream that is involved in digital content distribution. Digital content distribution (without DRM) is already here, just that we (or, at least, the record labels), do not like the mode in which it is done. DRM is a collective name for technologies that limit the use that users can make of content they possess. Such technologies may thus enable some of the stakeholders of digital content distribution to make more money out of it. This is the role of DRM. Generally speaking, any form of digital content distribution will prevail, as long as it benefits the end users; at least in their perception of it. Any form of digital content distribution that does not benefit the users will eventually fail, even if it takes several years, in favor of a form which does. The DRM we know often calls for functionality that vanishes many of the benefits that uses like in digital content distribution, including benefits that count as “fair use”. It is thus harder to push DRM down users throats. Moreover, the technological basis of most DRM solutions is questionable (see paper), which makes it uncertain that the technology will even deliver on its promise. Notwithstanding, DRM is a viable approach on which a lot of effort is being spent.
Q: What key functionality and pricing level would you expect from a digital content distribution medium for it to be attractive to use?
A: The pricing shall probably be lower than of purchased content today. Content is distributed digitally today, both to legal users and to dishonest users (who consume pirated content for free). Users of both types enjoy great versatility of content consumption, as mentioned above, because content is in an open format. Honest (paying) users will not agree to pay more for the same user experience they get from unprotected content today. Dishonest users, who pay close to zero today, will probably agree to pay some amount of money for legality, but will refuse to pay the full amounts required for content today (otherwise, they would not have become illegal in the first place). The understanding that is necessary is that the addition of DRM into the content distribution is not likely to improve the user experience beyond what it is now (for users of both types), so users are not likely to agree to bear the cost of it.
Q: Do you think that the mobile content world will stick with a closed approach (meaning subscribers can purchase content only through their operator), or will it move to an open approach (anyone can sell, and the operators are only the mediators)?
A: Operators make every effort to remain at the core of high level service provisioning. Nonetheless, such centralization is contradictory to the open nature of the information highway, and to the globally-desired approach of net-neutrality of connectivity providers. I therefore anticipate that sooner or later network operators will be network operators. They will, of course, provide higher level services, but will not exercise exclusivity in such undertakings.
Q: What are the issues and challenges surrounding such distribution models (security, DRM, etc)?
A: Every distribution model that involves the user experiencing something against his will (paying, watching ads, etc.) will require protection against users who would try to avoid that price. Securing content is an enormous challenge that today’s platforms are not entirely suitable for. This may be one of the biggest challenges. As long as platforms cannot protect against their own users, all schemes will have to be beneficial to the users, to the extent that the users will prefer using them over not. Platforms that can protect against their own users are not only difficult to do right, but also raise yet harder questions way beyond technology.