DIGITAL RIGHTS MANAGEMENT: Unlocking the value of content

Importance of DRM to publishers

• It has been forecast that digital downloads of texts will represent 13% of all books sold online by 2004. Rising broadband connectivity, increasingly sophisticated digital rights management (DRM) technology and internet users coupled with the popularity of peer-to-peer file-sharing networks and the standardisation of eBook content format indicate that publishers should be investigating DRM solutions if they are to capitalise on the growing market for digital content.

Services offered

• There are two main types of player in the DRM commerce chain: packaging and encryption providers and clearing house providers.
• Packaging and encryption players provide the secure containers in which content and data is passed around the chain.
• Clearing houses handle transactions between an end-user and a publisher or distributor. They also track usage of the publisher?s content.
• Clearing houses often form partnerships with packaging and encryption players to offer end-to-end solutions to publishers.

Publisher business models

• DRM solutions allow publishers of digital content to be flexible with the payment models they offer to their customers.
• The ability to track how users buy and use content, enables publishers to experiment with different digital content business models.

DRM provider business models

• Both the packaging and encryption players and the clearing houses take a cut of each transaction between the end-user and the publisher or distributor.
• Other revenue streams include consultancy and one-off fees for initial back-office integration.
• DRM providers handle huge amounts of data about customer identity, buying and usage patterns. Who owns this data, and who may aggregate and make money from it, is not yet clear.

Benefits to publishers

• DRM solutions protect intellectual property, allow the creation of new revenue models, and the opportunity to re-sell content in a variety of packages.
• Offering a range of purchase models and access options in addition to superdistribution of content (customers passing paid-for files between themselves) may attract new business.
• Publishers can provide customers with a more tailored service thanks to content usage data provided by clearing houses and the ability to offer individual prices to different sets of customers.

Issues to consider

• It is vital to consider how important digital distribution of content is to your business, and the readiness of your customer base before opting for a DRM solution.
• The amount of preparation required and resources available to implement a DRM solution should be taken into account.
• DRM offerings should be assessed for their user-friendliness, the potential effect on the existing customer relationship and the control that the partner(s) chosen may exert over the development of new products.
• Publishers should take into account the sensitivity surrounding the use of customer data and ensure that they do not infringe privacy guidelines.