ALA releases "tip sheet" on DRM

The American Library Association's Digital Content Working Group has released a "tip sheet" on DRM. This is intended to be the first in a series of "tip sheets" on topics of interest to the library community. The  "tip sheet" explains DRM in layman's terms, but overall, it takes a fairly anti-DRM approach to the topic.

Unglue.it is struggling to find backers for public-domain eBook crowdfunding

On TeleRead, Chris Matthews writes about Unglue.it, a new website that uses crowdfunding in order to fund making new and out-of-print titles available for free, without DRM. Matthews read a very enthusiastic article about Unglue.it at the site BoingBoing, but when he dug into the story, he found that it was far less positive. BoingBoing wrote that one of the site's participants, Joseph Nassise, dropped the funding goal for his book Riverwatch from $25,000 to $15,000 in order to make the campaign successful. Matthews learned that the reason he did so was because the campaign was far below his target, and even after dropping the funding goal on June 12th, he failed to achieve it by the deadline.

The three "active projects" on the site, as of this writing, are at 8%, 1% and 2% of their goals. Only one title, a "classic" out-of-print title called Oral Literature in Africa, has made its goal so far, and that's likely because there's still a strong market in used copies of the book.

The only way that Unglue.it can succeed is if it can attract major authors who are willing to put titles that have reverted to them into the public domain for a flat fee. There's very little interest in paying to put relatively unknown works into the public domain, especially when some of those works (such as Riverwatch) are already available as inexpensive eBooks. Most authors would rather see their out-of-print titles go back into print in order to earn more royalties.

DRM: The product that (almost) nobody wants

A few years ago, I was an industry analyst covering the IPTV (Internet Protocol Television) industry--the video delivery technology used by Verizon (FiOS) and AT&T (U-Verse) in the U.S., and many other companies worldwide. One of the hardware segments of IPTV that I tracked was Digital Rights Management (DRM). When I came on-board, the retiring analyst whom I replaced warned me that the DRM vendors would probably cause me ten times as much grief as those in any other segment. He was right.

DRM is an unusual business: The companies that demand that DRM be used aren't the ones that pay for it. You can't distribute television shows or movies from any of the major television networks or studios unless you have an acceptable DRM system in place. The same is true if you want to distribute eBooks from most of the major publishers (O'Reilly is the biggest exception...in fact, O'Reilly demands that its eBooks be distributed without DRM.)

The movie studios, television networks and publishers often specify which DRM systems are acceptable, but they don't pay for them. That cost is borne by cable and IPTV operators, over-the-top video distributors (such as Netflix and Amazon) and eBook distributors. For their part, cable and IPTV operators have their own conditional access systems, and a nearly foolproof way of keeping unauthorized users from getting their content--in the worst case, they can send out a truck and disconnect the pirates from their network. However, that's not good enough for the movie studios and television networks, who want to make sure that their content can not only not be viewed by the wrong people, but that it also can't be copied.

Over-the-top video and eBook distributors are less concerned about piracy than they are about making their services extremely easy to use, in order to stimulate sales. They already require usernames and passwords in order to download content, which helps to insure that only those customers who are authorized to access their content can get it. They want DRM, but they don't want it to make their services hard for average consumers to use. The more hoops that consumers have to jump through in order to purchase, download and use content, the less likely it is that consumers will continue purchasing from those vendors.

Apple and Amazon developed their own DRM systems, which were designed to protect content while making access as easy as possible for consumers. Most other companies don't have the ability to develop their own DRM systems, and that's where third-party vendors come in. Content distributors want the cheapest DRM systems they can get that are acceptable to their content suppliers, because DRM adds no value for the consumer (it actually subtracts value), and it adds cost for distributors while offering little or no value. The only parties that it serves are the content providers, who don't pay for the DRM systems, implement them or deal with customer complaints.

This has created a field of third-party DRM vendors who are fairly paranoid. DRM vendors regularly compete on price, but some companies have chosen other approaches. Widevine, which was acquired in 2010 by Google, had several patents on its DRM technology and would threaten (and sometimes file) patent infringement lawsuits against competitors who were undercutting it on price. Widevine used the same tactics against market research and industry analyst companies that didn't report on the company the way that it wanted, or that put its competitors in a positive light. In the case of the company I worked for, Widevine demanded that we lower the installation counts that we had compiled for some of its competitors. When we refused to do so, it threatened to file suit against us. We easily could have prevailed in any litigation (simply going public with their threat would have been sufficient to destroy their credibility), but the owner of my company caved in and removed Widevine's name from our report, replacing it with "Anonymous". Shortly after, Widevine signed a consulting contract with us, hoping to have more influence over our reporting. When a subsequent report had installation counts for competitors that Widevine disagreed with, they again threatened to file suit, and my company's owner again caved into their demands. I demanded that the company take my name off the report and resigned shortly after, because I didn't want my reputation to be sullied. 

Another company, NDS (owned by News Corporation) refused to give us any numbers for its installed base, but after each report we issued, they would complain loudly that our numbers were inaccurate. When we said that we would be glad to adjust the numbers if they gave us installed base numbers that we could confirm, they said that they were under no obligation to give us any information. Given that they were unwilling to provide any evidence to support their complaints, we stuck with our numbers.

In short, DRM is a product that (almost) nobody wants, where the companies that want it don't pay for it, and most of the companies that are forced to pay for it don't really want it. That would be enough to make just about anyone a little paranoid.

Does content in the cloud mean the end of DRM?

Two days ago, I wrote about The Digital Entertainment Content Ecosystem's (DECE) Ultraviolet DRM initiative. More than 60 content, distribution, consumer electronics, DRM and services companies have joined DECE to build a uniform DRM-neutral platform for controlling content access and making content available to multiple devices.

Ultraviolet is based on the premise that consumers will purchase physical media--CDs, DVDs and Blu-Ray discs--and will want to play the content stored on that media on a variety of devices. Today, consumers can "rip" content to hard drives and personal media players. That's illegal under the U.S. Digital Millennium Copyright Act (DMCA) if they circumvent any security systems in order to copy the content, but it's fairly easy to do. As I understand Ultraviolet, when consumers purchase a Blu-Ray disc (for example), they will be able to access a copy of the movie on the disc in an online "digital locker", and download that movie to personal computers and portable media players using the DRM system supported by each device. Ultraviolet will prohibit customers from making more copies or using the content on more devices than they're entitled to.

Ultraviolet is a way to keep most consumers from making copies of digital content themselves, but it primarily makes sense in a "physical media" world, or at least a world where every device requires its own local copy of content. However, we're moving to a streaming environment, where consumers increasingly never touch a piece of physical media and instead stream content from the cloud. Netflix, Amazon, Rhapsody, Microsoft's Zune Pass, Pandora and other services are based on this streamed, monthly subscription model. Apple is widely rumored to be planning to launch its own cloud-based subscription service later this year.

With streamed content, must less is needed in the way of DRM. A partial or complete copy of each song or movie is streamed to each authorized device while it's being played, but the copy is temporary ("ephemeral") and is deleted when the viewing or listening session ends. The biggest downside of streaming is that a high-speed connection is required while viewing or listening to the content. That makes it unusable on most airplanes and in other places with no broadband wireless Internet service. However, the range of places without service, and devices without at least a WiFi connection, is getting smaller every day.

By the time Ultraviolet gets fully defined and commercially implemented, it will probably be made obsolete by streaming media. As for the heavyweight DRM schemes that Ultraviolet is designed to simplify, they're likely to be replaced by authentication and encryption systems that are easier to implement, more standardized and more compatible across devices. The new DRM standard is likely to be a HTML5-compliant browser or its equivalent.

DECE's Ultraviolet: Still invisible to the naked eye

The Digital Entertainment Content Ecosystem, a consortium of 60 video content, distribution and DRM companies including Sony, Time Warner, News Corporation, NBC Universal, Paramount, Comcast and Cox, has announced Ultraviolet, the new brand name for DECE's initiative. Today, consumers have to deal with a thicket of different DRM schemes; content that works on one device might not work on another one, and their rights for using the same content on multiple devices can differ dramatically. Ultraviolet's goal is to smooth over the differences, so that consumers have uniform rules for how they can access and use content on multiple devices.

Consortia are inherently slow at making decisions, and with so many different members with different technology and agendas, DECE has been very slow to arrive at an architecture that its members can actually implement. In fact, there are still no finalized technical specifications, only a trademark and a set of goals. Also, the promise of universal interoperability is only a promise unless everyone buys in, and Apple and Disney have opted out of the DECE consortium in order to develop their own platform.

The odds for Ultraviolet's success, when it's finally defined, aren't great. Streaming content, which is inherently stored in the cloud and doesn't require the same level of DRM as content that's intended for local storage, is taking over in video, which is DECE's primary target. Ultraviolet is likely to be irrelevant by the time that DECE completes its specifications.

Disappearing DRM and other thoughts

Note: The opinions expressed in the following posting are mine, and not those of any of my former, current or future clients or employers.

I've long believed that Digital Rights Management (DRM) is a hopeless battle. DRM penalizes the legal, honest customers who purchase content and want to do the right thing. If a hacker is committed, he or she can break any DRM, given enough time and resources. Even if cracking a DRM system is illegal in one country (as the DMCA makes it in the U.S.,) it can usually be cracked legally (or illegally) in another country, and then the cracking software, content that's been unlocked, or both, can get freely distributed around the world. Companies almost never get a positive return on investment from DRM: Distributors are forced to implement it by their content suppliers, and they bear the costs. Content producers can dictate what kinds of DRM are acceptable but rarely bear the costs.

Nevertheless, many content producers and distributors demand that DRM be used. My opinion is that there are ways to make DRM less onerous and less risky for consumers while giving content adequate protection. Consider one problem: Company A sells content to producers that is protected with its own DRM system. Then, a couple of years down the road, Company A goes out of business, is acquired by another company that's no longer interested in the DRM system, or decides to stop distributing content. When customers have problems with the DRM system (for example, they want to move their content library to another machine, or they've had a system problem and need to reauthorize their existing library,) there's no one there to help them. The library of content that they might have spent hundreds or even thousands of dollars on is now worthless.

Or, consider a slight modification to the first case: Company A licenses a DRM system from Company B, and Company B goes out of business. Yes, Company A most likely required Company B to put a copy of its DRM software in an escrow account to cover just such an situation, but that doesn't mean that Company A will be able to support and maintain the DRM system by itself. Company A may still be in business but be unable to fix problems in the DRM for its customers.

One way to address these problems would be to create what I call "disappearing DRM." This would be a DRM system for downloaded content that is automatically disabled after a given period of time, perhaps 24 to 36 months. The greatest risk for piracy is when an eBook, music recording or movie is current. Most popular books and music have gone to the backlist or catalog by the time 24 to 36 months elapses. With disappearing DRM, content could be freely archived, copied and moved from device to device once the time limit expires. That way, if the content or DRM vendor goes out of business, is acquired or loses interest, purchased content would still be usable.

DRM is a necessary evil for encouraging distribution of digital media by major publishers, but there are many ways that it could be made more transparent, more convenient and less dangerous for consumers. A disappearing DRM system would be one of them.

The keys to media aggregation success

Not too long ago, I wrote about a new wave of disintermediation, but I've realized that consumers don't inherently dislike middlemen; in fact, they appreciate them if they aggregate content. For an aggregator to be successful, however, it has to:

1. Have a comprehensive selection of content
2. Be easy to use
3. Its prices (if it sells goods and services) don't have to be the lowest, but they must be reasonable

The first key is to have a comprehensive selection of content. Record companies learned years ago that consumers won't shop in stores where they can only get one or two companies' music. They want a big selection. That was why Apple didn't launch its iTunes Store until it had signed distribution deals with all of the biggest record companies.

The second key is ease of use. There were plenty of online music sites before iTunes, but they were hard to use and imposed draconian DRM schemes on users. The motion picture companies had the same problems with their early attempts at making movies available over the Internet.

The final key is reasonable pricing. Early on, record companies tried to demand more money for digital downloads than they did for CDs, and they tried to force consumers to purchase entire albums rather than single tracks. Apple sold them on the idea of a fixed price per track and discounted prices for entire albums.  Now, Amazon is rewriting the pricing model for eBooks by selling almost all its titles for $9.99 or less.

Apple was the first company to get all three keys right, with the iTunes Store. Tight integration of iPods and iTunes helped the company get the ease-of-use part right. Amazon learned from Apple and implemented a similar model with the Kindle, which also gets all three keys right but is somewhat vulnerable due to the technical and ease-of-use limitations of the Kindle itself.

On the video/movies side, YouTube leads by far in the free content space. Hulu has gotten the ease-of-use key right and has the biggest selection of legitimate content from the US television networks, but many users are frustrated by convoluted policies that make episodes available for only a limited amount of time or restrict the number of episodes available. Netflix and Amazon are both working to make more movies and television shows available for immediate viewing, but they're not there yet, and both their ease-of-use and pricing models are "works in progress".

TiVo and Roku are both positioning themselves as "super-aggregators", in that they already offer access to both Netflix's and Amazon's libraries, plus content from an expanding number of producers and aggregators. TiVo got ease-of-use right a long time ago, but its Achilles' heel is its monthly service charge. Roku's user interface is less mature, but it doesn't charge a monthly fee to use its set-top boxes. However, its weakness is that its set-top boxes are only sold direct, not through outlets such as Best Buy and Wal-Mart. Without high-volume outlets, Roku will always be playing catch-up with its better-distributed competitors.

In music, Apple has locked up a dominant position, and Amazon is well on its way to doing the same thing in eBooks. In video, television and movies, however, the only truly dominant player, YouTube, is free. It's far from certain that YouTube can maintain its dominance once it starts to charge for access to some content, which is widely rumored to occur in 2010. For these media, the field is still wide open.