DRM differences could cost billions of dollars

Posted on 14 Jun 2006 at 17:13

Entertainment companies risk losing hundreds of billions of dollars of potential income and the future of dozens of promising digital markets are at risk unless they can resolve differences over DRM, according to research firm iSuppli.

The firm says that the success or otherwise of DRM technologies - both copy protection and conditional access systems - will determine the development and growth of digital content for both home entertainment and mobile platforms. But, it says, disagreements between the companies and industries over how DRM should be implemented are currently hampering growth.

'When it comes to DRM , conflicting interests abound, both among industries and among companies,' says Mark Kirstein, vice president of multimedia content and services for iSuppli. 'The diversity of interests in DRM has resulted in a competitive deadlock regarding interoperability.'

Without agreement, he argues, a situation will emerge where content will be restricted to a limited choice of playback devices,

'Lack of DRM interoperability is emerging as a major issue that will continue to grow in importance as digital media markets expand. Indeed, the industry's vision of enabling all digital content to be played on any device in any location is at risk due to DRM interoperability issues,' he says.

Kirstein cites Apple's proprietary Fairplay DRM for its iTunes music service as an example of the strategic implications of DRM. Its refusal to license the technology both restricts interoperability and locks the customer into the iPod/iTunes platform, he argues

'This is good for Apple for now, because it keeps customers in the fold, and it gives the company a distinct edge versus competitors,' he says. 'However, using a proprietary DRM raises the risk of undermining the long-term customer experience and inhibiting the broader market.'

Kirstein's DRM whitepaper - Digital Rights Management and Conditional Access: Keys to the Digital Content Kingdom - can be downloaded from isuppli.com/whitepapers.

Author: Simon Aughton