It's hard to know whether the music industry is winning its war on Internet piracy these days. On one hand, the U.S. Recording Industry Association of America and the Europe-based International Federation of the Phonographic Industry have had several recent court rulings go against them in their efforts to go directly after swappers. This did more to earn them a reputation as corporate heavies than copyright owners trying to protect their artistic property from theft.
On the other hand, a Pew Internet & American Life Project poll found that the number of U.S. Internet users who downloaded music had actually dropped from 35 million in Q1 2003 to about 18 million by Dec., 2003. Meanwhile, the user base of leading platform KaZaa shrank by 15% while Grokster's declined 59%.
How much of that is due to legal action isn't clear. The same Pew study indicated that while file-swapping downloads were down, traffic at new, authorized online music download services like iTunes was on the rise. Indeed, the success of iTunes has spawned a wave of other download sites. SoundScan, the service that tallies record sales in the U.S., included a category for Internet downloads--called "digital tracks"--for the first time in its year-end industry sales report, logging 19.2 million downloads from 29 June to 28 December 2003.
WIRELESS MUSIC
What does all this have to do with the wireless industry? Plenty. For one thing, music is seen as one of the next key content applications for next-gen mobile data services, but only if the music industry feels that it can enter the mobile space without running into a wireless version of the piracy problems it already faces with fixed-line broadband. The RIAA is nervous about the unauthorized proliferation possibilities of services like Xingtone that allow users to make MP3 ringtones out of recorded music they already own.
Meanwhile, owners of content such as games and video clips are keen to deliver their wares to mobile users, but are wary of piracy and "revenue leakage" issues that result from unauthorized downloading or even forwarding of content.
That is why digital rights management (DRM) is likely to become a mainstream practice in mobile over the next year or two, says Chen Diing-yu, marketing director for broadband and reach media services at HP. "The revenue loss from ringtone piracy is pretty significant, and this will be even more contentious for video content," he says.
Mitch Lazar, vice president of wireless and emerging technology at Turner International, agrees. "DRM is a control issue that we really haven't figured out yet, except for Korea and Japan, and it's something we have to address," says Lazar, whose company provides branded content from pay-TV channels like CNN and Cartoon Network to wireless operators worldwide.
The wireless industry is not unaware of this. Indeed, it's been working on the DRM issue for some time. DRM technologies for mobile content are commercially available and continue to evolve and improve. They're also becoming increasingly standardized. More than 55 handsets currently support the original OMA-DRM 1.0 standard from the Open Mobile Alliance, which issued its second DRM standard last month. Meanwhile, Nokia, Panasonic, RealNetworks, Samsung and Warner Bros Studios have set up the Content Management Administrator (CMLA), a central licensing and compliance framework for the OMA-DRM standard to speed up adoption.
MOVING MAINSTREAM
"Achieving cross-industry alignment on interoperability and implementation of consistency issues is crucial to making innovative digital media services a reality," Pertti Korhonen, Nokia's CTO and senior vice president of technology platforms, said in a statement announcing the CMLA's recent launch. "The common basis will considerably speed the multi-vendor introduction of interoperable media-enabled products, from mobile devices and consumer electronics to PC media players."
However, while DRM is expected by many to become mainstream in the mobile arena this year, others aren't so sure. The standards front isn't quite unified just yet, while adoption is costly and will take time as operators and content owners alike work out how to implement DRM effectively, as well as whose responsibility it is to keep content safe.
"The appliance is a very important part of the chain," says Chen. "If there's no standard for managing DRM, there's a potential risk from the client because you have to be able to support all these different standards, and that becomes very unwieldy to manage."
OMA-DRM 1.0 provides for three basic DRM functions, such as forward lock (which prevents users from forwarding any content they download to another device) and "combined delivery" (in which users download content along with an encryption key or "ticket" that controls the amount of usage of the content).
Industry sources have already raised skeptical eyebrows at the CMLA's timetable, which intends to "have agreements available for device makers, service providers and content participants in the first half of 2004, with a toolkit including encryption 'keys' delivered by the end of 2004."
One potential problem is that the CMLA schedule may not necessarily be in sync with vendors' timetables for adoption. Qualcomm, for example, has been taking its time in implementing OMA-DRM 1.0. Microsoft, which is angling to be a major player in the mobile OS space, has yet to announce any upcoming products supporting OMA-DRM despite being an OMA member.
FAST FACTS: DRM: Who needs it and why
Device vendors:
* Will weigh cost and liability of DRM implementation (materials, engineering complexity and cost)
* See availability of compelling content as a way to increase high-end handset sales
* See DRM system at risk from rogue or negligent products (detrimental to trust)
Service providers:
* Will use content to maximize profits
* Will ensure content released only to compliant devices
* Do not want liability for faulty implementations
Content providers
* Will not release digital content without adequate protection and secure devices
* Seek to maximize content availability (need for interoperable solutions)
* Rely on legal means to protect against bad implementations
Source: CMLA
DRM from the ground up
One issue facing mobile operators in implementing DRM capabilities into their networks is the amount of time and money needed to invest in a DRM system. Just how much time and money is required depends on a number of things, such as service goals, content partner strategies and the state of the legacy network. One factor that operators should be aware of in any case, warns Chen Diing-yu, marketing director for broadband and reach media services at HP, is that DRM is more than just an add-on to the system.
"DRM needs to be integrated within the overall infrastructure framework, otherwise it's not very useful," he says. "It's a process of events that authenticates the user to make sure you are who you say you are, and then uses that to deliver content with your legally purchased rights, no more, no less."
The problem, he continues, is that if the system fails during a transaction--for example, the connection drops out, the server goes down, or the phone battery goes dead--that process is interrupted.
"But by then, you've already agreed to pay for it. If you have a simple DRM mechanism, it may not know there was a disruption and won't allow you to re-download the content without paying again, or it won't allow you to re-use it," Chen says. "Building a DRM system as part of the whole process makes sure it can deal with those kinds of glitches. If it's integrated into the content delivery platform, the system can see and make sure that you get what you pay for, and that the service is consistent."
The object for mobile operators wanting to offer wireless content, he says, is to invest in a service delivery platform that allows any content provider to come into that service environment and deliver its content service, with all the billing, provisioning and DRM mechanisms already provided. Operators don't necessarily need to scrap their legacy billing systems, but they do have to make sure that system is flexible enough to support pricing and packaging options and define different types of content services.
"If I put my service in your environment, I expect to be paid, so there has to be a mechanism there to split revenues, and price and bundle content my way," says Chen.
He points out that this is not an insignificant undertaking for operators. "It can take anywhere between three and nine months, depending on the complexity."
However, it's a necessary expense for any operator serious about bringing in third-party content providers, if the fixed-line Internet is any indication.
