Business model issues for the audiovisual sector [email_address] IBBT-SMIT, Pleinlaan 9, 1050 Brussel
<ul><li>A) OBSERVATIONS </li></ul><ul><li>B) EXPLANATIONS </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050...
<ul><li>SOME BASIC OBSERVATIONS </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Evolution physical vs. digital sales (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Rough projection physical vs. digital (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Piracy (Ofcom 2008) (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Illegal downloads <ul><li>P2P: Bittorrent has replaced Napster, Limewire, Kazaa, etc … </li></ul><ul><li>Over http: downlo...
Piracy also follows hit behaviour (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Even free content is ‘pirated’ (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Content industrie <ul><li>SMPTE Broadcast flag: For digital TV </li></ul><ul><li>CSS (Content Scramble System): DVD-CCA </...
Content industrie <ul><li>SMPTE Broadcast flag: For digital TV </li></ul><ul><li>CSS (Content Scramble System): DVD-CCA </...
(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Free streaming dominates
(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Legal and economical arguments thicken <ul><li>“ Intellectual and artistic property rights are every bit as important as t...
<ul><li>B) EXPLANATIONS </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Explosion in supply & demand (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel DEMAND Quantity Price SUPPLY D...
From the traditional value chain… (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
To value  networks: modular value network (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Google value network (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Telecom value network (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Strategic reasons for DRM <ul><li>Each industrial actor attempts to control the value stream of its ecosystem </li></ul><u...
Creators and aggregators most afraid for digitalization  <ul><li>Bron: Telco2.net 2007 managersenquête </li></ul>(c) 2009 ...
<ul><li>CONCLUSION: </li></ul><ul><li>DRM Business Motives  </li></ul><ul><li>& Revenue models </li></ul>(c) 2009 - Olivie...
1 st  pro memorie: Revenue mechanisms for online digitale content <ul><li>Three basic mechanisms: </li></ul><ul><ul><li>Di...
2 nd  pro memorie: Media consumer generations according to IBM <ul><li>‘ Massive Passives’ </li></ul><ul><ul><li>Older dem...
2 nd  pro memorie: Better approach ::  Technology and age agnostic variables <ul><li>Product category </li></ul><ul><ul><l...
Introducing supply & demand <ul><li>Collectability  &  Sensitivity </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaa...
Zones of risk and opportunity DRM (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
Traditional revenue models INDIRECT REVENUE MODEL (Advertising based) DIRECT REVENUE MODEL (Pay per use) (c) 2009 - Olivie...
Adapting the digital content portfolio (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel Move? Product bundle...
<ul><li>Requests anyone? </li></ul>Olivier Braet IBBT-SMIT (V.U.B.) Pleinlaan 9, 1050 Brussel olivier.braet@vub.ac.be
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  • Mijn restaurant, Hotel Westende, Temptation Island, Now that’s what I call Music 72.
  • Olivier Braet: Business model issues voor de audiovisuele sector

    1. 1. Business model issues for the audiovisual sector [email_address] IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    2. 2. <ul><li>A) OBSERVATIONS </li></ul><ul><li>B) EXPLANATIONS </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    3. 3. <ul><li>SOME BASIC OBSERVATIONS </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    4. 4. Evolution physical vs. digital sales (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    5. 5. Rough projection physical vs. digital (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    6. 6. Piracy (Ofcom 2008) (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    7. 7. Illegal downloads <ul><li>P2P: Bittorrent has replaced Napster, Limewire, Kazaa, etc … </li></ul><ul><li>Over http: downloadfora, blogs, google </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    8. 8. Piracy also follows hit behaviour (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    9. 9. Even free content is ‘pirated’ (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    10. 10. Content industrie <ul><li>SMPTE Broadcast flag: For digital TV </li></ul><ul><li>CSS (Content Scramble System): DVD-CCA </li></ul><ul><li>AACS(LA) (Advanced Access Content System(Licensing Administrator)): For HD-DVD / Blue-Ray </li></ul><ul><li>IP Targeting (Case: hotspotshield) </li></ul>Connectiviteitsindustrie <ul><li>Deep Packet Inspection </li></ul><ul><li>Traffic shaping (packet prioritization) </li></ul><ul><li>OMA DRM: Mobile world </li></ul><ul><li>OSF: Broadcasting world (DVB consortium) </li></ul><ul><li>18 Crypt: Broadcasting world (DVB consortium) </li></ul>Software industrie <ul><li>Windows Media DRM (BBC iPlayer); Apple Fairplay; Helix DRM; Adobe Flash DRM </li></ul><ul><li>Protected Video Path (PVP) </li></ul><ul><li>Contentguard (XrML) </li></ul><ul><li>DReaM </li></ul>Consumenten electronica <ul><li>HDCP for HDMI </li></ul><ul><li>DTCP </li></ul><ul><li>Proprietary PVR techniques </li></ul>Proliferation of Digital Rights Management (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    11. 11. Content industrie <ul><li>SMPTE Broadcast flag: For digital TV </li></ul><ul><li>CSS (Content Scramble System): DVD-CCA </li></ul><ul><li>AACS(LA) (Advanced Access Content System(Licensing Administrator)): For HD-DVD / Blue-Ray </li></ul><ul><li>IP Targeting (Case: hotspotshield) </li></ul>Connectiviteitsindustrie <ul><li>Deep Packet Inspection </li></ul><ul><li>Traffic shaping (packet prioritization) </li></ul><ul><li>OMA DRM: Mobile world </li></ul><ul><li>OSF: Broadcasting world (DVB consortium) </li></ul><ul><li>18 Crypt: Broadcasting world (DVB consortium) </li></ul>Software industrie <ul><li>Windows Media DRM (BBC iPlayer); Apple Fairplay; Helix DRM; Adobe Flash DRM </li></ul><ul><li>Protected Video Path (PVP) </li></ul><ul><li>Contentguard (XrML) </li></ul><ul><li>DReaM </li></ul>Consumenten electronica <ul><li>HDCP for HDMI </li></ul><ul><li>DTCP </li></ul><ul><li>Proprietary PVR techniques </li></ul>Proliferation of Digital Rights Management (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    12. 12. (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    13. 13. Free streaming dominates
    14. 14. (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    15. 15. (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    16. 16. Legal and economical arguments thicken <ul><li>“ Intellectual and artistic property rights are every bit as important as the rights of ownership to physical property. It is no less wrong to steal a film recording than it is to steal a teenager’s laptop.” </li></ul><ul><ul><li>But stealing a laptop is zero-sum; stealing a digital song or movie is not. </li></ul></ul><ul><li>Argument from efficiency : “Without enforceable artistic property rights, there is no incentive to produce.” </li></ul><ul><ul><li>Empirically unproven </li></ul></ul><ul><li>Argument from justice : “Taking something for nothing, without permission, and with no compensation for the person who created and owns it, is wrong.” </li></ul><ul><ul><li>But creating does not imply ownership, nor is there a right to maximize income. </li></ul></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    17. 17. <ul><li>B) EXPLANATIONS </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    18. 18. Explosion in supply & demand (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel DEMAND Quantity Price SUPPLY Democratization of digital production expands media supply… … equilibrium price of media drops to below zero € 0 Source: Umair Haque
    19. 19. From the traditional value chain… (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    20. 20. To value networks: modular value network (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    21. 21. Google value network (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    22. 22. Telecom value network (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    23. 23. Strategic reasons for DRM <ul><li>Each industrial actor attempts to control the value stream of its ecosystem </li></ul><ul><ul><li>Content aggregators want to maintain traditional revenue model </li></ul></ul><ul><ul><li>ISPs are worried about broadband consumption </li></ul></ul><ul><ul><li>Software providers strive for platform dominance </li></ul></ul><ul><ul><li>Consumer Electronics manufacturers aim for hardware profit margin </li></ul></ul><ul><li>The higher in the value chain, the greater the fear for canibalisation. Biggest fear: Exchanging analog Euros for online cents. </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    24. 24. Creators and aggregators most afraid for digitalization <ul><li>Bron: Telco2.net 2007 managersenquête </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    25. 25. <ul><li>CONCLUSION: </li></ul><ul><li>DRM Business Motives </li></ul><ul><li>& Revenue models </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    26. 26. 1 st pro memorie: Revenue mechanisms for online digitale content <ul><li>Three basic mechanisms: </li></ul><ul><ul><li>Direct revenue model </li></ul></ul><ul><ul><ul><li>“ Pay-per-item” (iTunes 68%, AmazonMP3 5%) </li></ul></ul></ul><ul><ul><ul><li>Subscriptions (license model: Rhapsody 2,5%) </li></ul></ul></ul><ul><ul><li>Advertising based revenue model </li></ul></ul><ul><ul><ul><li>Free-to-air </li></ul></ul></ul><ul><ul><ul><li>Product placement; merchandising </li></ul></ul></ul><ul><ul><li>Rights clearance </li></ul></ul><ul><ul><ul><li>http://fairplaycalculator.nl/ </li></ul></ul></ul><ul><ul><li>Public broadcaster subsidies </li></ul></ul><ul><li>… and combinations of the above. </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    27. 27. 2 nd pro memorie: Media consumer generations according to IBM <ul><li>‘ Massive Passives’ </li></ul><ul><ul><li>Older demographic </li></ul></ul><ul><ul><li>Prime Time TV; “lean back” </li></ul></ul><ul><li>‘ Gadgetiers’ </li></ul><ul><ul><li>Younger professionals </li></ul></ul><ul><ul><li>Focus on ease of use (iTunes, PVR) </li></ul></ul><ul><li>‘ Kool Kids’ </li></ul><ul><ul><li>Children, teenagers, students </li></ul></ul><ul><ul><li>Multitaskers; Circumvent protections (download, rip and share) </li></ul></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    28. 28. 2 nd pro memorie: Better approach :: Technology and age agnostic variables <ul><li>Product category </li></ul><ul><ul><li>Do not treat ‘music’ or ‘books’ etc. as single content forms </li></ul></ul><ul><ul><li>Sort according to repeat use value </li></ul></ul><ul><li>User groups </li></ul><ul><ul><li>Do not treat age cohorts as groups with same technological competences </li></ul></ul><ul><ul><li>Sort according to technology knowledgeability & sensitivity </li></ul></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    29. 29. Introducing supply & demand <ul><li>Collectability & Sensitivity </li></ul>(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    30. 30. Zones of risk and opportunity DRM (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    31. 31. Traditional revenue models INDIRECT REVENUE MODEL (Advertising based) DIRECT REVENUE MODEL (Pay per use) (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel
    32. 32. Adapting the digital content portfolio (c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel Move? Product bundles DIRECT REVENUE MODEL INDIRECT REVENUE MODEL
    33. 33. <ul><li>Requests anyone? </li></ul>Olivier Braet IBBT-SMIT (V.U.B.) Pleinlaan 9, 1050 Brussel olivier.braet@vub.ac.be

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