DRM, Digital Content, and the Consumer Experience: More Lessons Learned from the Music Industry (2010 Edition)
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DRM, Digital Content, and the Consumer Experience: More Lessons Learned from the Music Industry (2010 Edition)

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As the market for e-books and mobile content grows, publishers are turning to DRM to protect content without fully contemplating the impact these DRM decisions have on their customers and the ...

As the market for e-books and mobile content grows, publishers are turning to DRM to protect content without fully contemplating the impact these DRM decisions have on their customers and the marketplace for digital content.

This session will examine the mistakes made by the music industry and lessons that publishers can learn from those mistakes.

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DRM, Digital Content, and the Consumer Experience: More Lessons Learned from the Music Industry (2010 Edition) Presentation Transcript

  • 1. DRM, Digital Content, and the Consumer Experience More Lessons Learned from the Music Industry By Kirk Biglione kirkb@medialoper.com twitter: @kirkbiglione #tocdrm
  • 2. The future of all media is still digital
  • 3. Media companies are challenged by the transition
  • 4. Everyone says the same thing
  • 5. “We don’t want to make the same mistakes the music industry made”
  • 6. But what were those mistakes?
  • 7. First, some history
  • 8. Back in the 90’s things were great
  • 9. Consumers loved CDs
  • 10. CD Sales (in millions) 1,000 750 500 250 0 93 94 95 96 97 98 99 19 19 19 19 19 19 19 Source: RIAA
  • 11. Digital content distribution was not on the agenda
  • 12. Historically, consumers bought what they were told
  • 13. A funny thing happened on the way to the 21st century
  • 14. Consumers are now content creators, publishers, and distributors
  • 15. The recording industry was not prepared for the 21st century consumer
  • 16. As a result, they made some mistakes
  • 17. Mistake: Mistaking consumer demand for piracy
  • 18. The music industry has long battled piracy
  • 19. A new kind of pirate
  • 20. Modern pirates are media samplers, tastemakers, and marketers
  • 21. Digital Music Sales 1,000 750 500 250 0 1997 1998 1999 2000 2001 2002 Source: RIAA
  • 22. Speaking of consumer demand
  • 23. Ever try to buy a Thomas Pynchon ebook?
  • 24. Forget the iPod moment
  • 25. What about a CD moment?
  • 26. Mistake: Declaring war on digital
  • 27. Diamond Rio • MP3 becomes portable. • A clear sign of things to come. • The RIAA sues.
  • 28. “We filed this lawsuit because unchecked piracy on the Internet threatens the development of a legitimate marketplace that consumers want” - RIAA Statement on the Diamond Rio lawsuit June 1999
  • 29. Actually, consumers wanted digital music
  • 30. Two years later Apple introduced the iPod
  • 31. Lesson: Digital is inevitable
  • 32. Mistake: Litigation as a business model (this only works if you’re a lawyer)
  • 33. RIAA Lawsuits • Dozens of file sharing networks • 17,587 consumers lawsuits • 4,553 pre-litigation settlement letters
  • 34. A 12 year old girl
  • 35. A family without a computer
  • 36. A dead person
  • 37. CD Sales (in millions) 1,000 750 500 250 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: RIAA
  • 38. Lesson: Litigation won’t stop the future
  • 39. Mistake: Assuming DRM must be the answer
  • 40. DRM Myth vs. Reality
  • 41. Myth: DRM prevents piracy
  • 42. Reality: Piracy requires just one physical copy
  • 43. Example: Harry Potter and the Media Pirates
  • 44. Harry Potter Distribution Print 400 million + Official eBooks 0 Pirated eBooks Unknown
  • 45. Are you training digital consumers to be pirates?
  • 46. Myth: DRM free = free
  • 47. Reality: Consumers will pay for DRM-free content
  • 48. Myth: DRM keeps honest consumers honest
  • 49. Reality: DRM often turns honest consumers into hackers
  • 50. Myth: DRM enables a marketplace for digital content
  • 51. Reality: DRM shapes the marketplace for digital content
  • 52. Case Study: Microsoft PlaysForSure
  • 53. Widely Licensed • Archos • Nokia • Cingular • Palm • Cowon • Pioneer • Creative Labs • Philips • Denon • Roku • Digitrex • RCA • D-Link • Samsung • Ericsson • SanDisk • Insignia • Sonos • iriver • Sony • Kyocera • Toshiba • Motorola Source: wikipedia
  • 54. Content Providers • AOL MusicNow • Wal-Mart Music Downloads • Musicmatch Jukebox • Yahoo! Music Unlimited • Ruckus Network • Spiralfrog • PassAlong Networks • MTV URGE • Rhapsody • MSN Music • iMesh • Musicmatch Jukebox • BearShare Source: wikipedia
  • 55. By any metric PlaysForSure was the “standard” DRM for music
  • 56. iTunes didn’t stand a chance
  • 57. And then...
  • 58. PFS Content Providers • AOL MusicNow (closed) • Wal-Mart Music Downloads (switched to MP3) • Musicmatch Jukebox (closed) • Yahoo! Music Unlimited • Ruckus Network (closed) (closed) • PassAlong Networks (closed) • Spiralfrog (closed) • Rhapsody (switched to MP3) • MTV URGE (closed) • iMesh (switched to MP3) • MSN Music (closed) • BearShare (switched to MP3) • Musicmatch Jukebox (closed) Source: wikipedia
  • 59. How did this happen? • Consumer lust: iPod was THE mp3 player • iPods and iTunes provided superior consumer experience • iPods weren’t PlaysForSure compatible
  • 60. “We were just grateful that someone was selling online. The problem is, he [Steve Jobs] became the gatekeeper. We make a lot of money from him, and suddenly you’re wearing golden handcuffs.” - Doug Morris, CEO, Universal Music Group Wired, December 2007
  • 61. Case Study: Adobe Content Server
  • 62. Widely Licensed • Aluratek, Inc. • Hanlin • Astak • IREX Technologies • Barnes & Noble • Lbook • BeBook • Neolux • Bookeen • Onyx • COOL-ER • Sony Reader • Elonex • Many to more come...
  • 63. Content Providers • Barnes & Noble • Sony • Books on Board • Waterstone’s • eBooks.com • & Many more... • Fictionwise • Harlequin • Kobo
  • 64. Kindle doesn’t stand a chance
  • 65. Oh, there’s one more thing
  • 66. Meet ePub vs. ePub
  • 67. How will this story end?
  • 68. Amazon follows the Apple Playbook
  • 69. And extends it
  • 70. Kindle Everywhere
  • 71. What Consumers Want
  • 72. Anyway, Anyhow, Anywhere I Choose
  • 73. eBook Consumer Preferences • Reasonable pricing • Wide selection • Interoperable, preferably DRM-free Source: IDPF Survey of eBook consumers
  • 74. Modern consumers always get what they want
  • 75. DMCA did not end circumvention
  • 76. Top Search Phrases at Medialoper.com “How do I remove DRM” “How do I transfer DVDs to an iPod” “How do I burn iTunes videos to DVD”
  • 77. Why not sell consumers what they want?
  • 78. “By standing still, or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find. As a result, of course, consumers won”. - Edgar Bronfman, CEO, Warner Music Group November 2007
  • 79. Questions?
  • 80. Photo Credits too many cds - Tim / frumbert http://www.flickr.com/photos/frumbert/198714112/ Cassette - Wikipedia ttp://en.wikipedia.org/wiki/Compact_audio_cassette 8 Track - Wikipedia http://en.wikipedia.org/wiki/Stereo_8 45 rpm - Wikipedia http://en.wikipedia.org/wiki/45_RPM Internet & Tacos - dro!d http://www.flickr.com/photos/lecates/454787692/ T' Jolly Roger, aye. - Nick Humphries http://www.flickr.com/photos/nickhumphries/1405653435/ Pirate fry,Yaarrrrr! - Lazy_Lightning http://www.flickr.com/photos/drienne/1408143205/ A Year's Work - Jürgen Fauth / muckster http://www.flickr.com/photos/muckster/348090465/ DRM - Noah Hall / rebopper http://www.flickr.com/photos/71715246@N00/521723595/ Orwell & DRM http://www.flickr.com/photos/jbonnain/523672080/ A lock on my door - Frank Loohuis / Almighty Photography http://www.flickr.com/photos/frankloohuis/1249246740/ Bomberos - Stefan Sonntag / zerega http://www.flickr.com/photos/zerega/1029076197/ Nesting Dolls - Andy Ihnatko / andyi http://www.flickr.com/photos/andyi/482006549/