The continuing dispute over digital rights management comes to another head shortly as Amazon joins the ranks of online digital distribution. As the argument heats up in regards to Amazon’s interest in a DRM-free pure MP3 format the fingers can be pointed in any number of ways to the history of digital downloads and interoperability. The concept at this stage in adoption might be nothing more than a pipe dream.
Interoperability depends the sharing of platforms between distributors. Considering the nature of competition between major players Apple, Real Networks and Microsoft in the software world it is difficult to imagine a fluid partnership resulting in interoperability. Their players represent a major aspect of their overall business model and cross-licensing the proprietary technology is highly unlikely. The underlying content management in file creation at the core of the interoperability argument represents a level of differentiation for each of the entertainment player platforms meaning a loss of competitive edge with a shared file management system. Beyond the content management systems inclusive in these programs, there is the user-interface themselves. The competition between the three and that of Limewire for desktop downloads of the programs themselves is fierce. These programs are the product by which these companies directly reach the consumer and why these companies are likely not to engage in sharing their underlying technology.
In addition to the programs themselves, all three companies also oversee storefronts which are connected to the programs. These storefronts, although not the primary financial forum for any of the companies, is an important leverage for them with the consumer. Consumers are drawn to not one those three storefronts but competition by that of Napster, Snocap/Myspace, Vcast, eMusic, to name but a few. For many of the major players, keeping the underlying technology proprietary it helps drive traffic to their sites and ensures their ability to secure legal content from entertainment sources.
Furthermore, many companies operate either exclusive relationships or sell their own devices. The devises represent another major component in the companies incomes. Building systems linking devices to their programs and storefronts as an ecosystem is a major component in the devise manufactures. Those without the underlying software and storefronts have not competed as well as those with them thus far and the devises represent greater financial assets than even the combination of the software and storefronts for any of the companies involved.
The Entertainment Industry
For the entertainment industry, especially record labels, they missed a major opportunity to set the tone for interoperability early on. When the use of online content began in the late 1990s the labels did not force a standard for interoperability between program platforms and in the early 2000s with early storefronts standards for interoperability when licensing the content. Rather, there was a desire to dissuade the consumer from utilizing technology and when it became impossible to stop consumer usage the race to provide controlled content was more about controlled monitization with a handful of players / storefronts and not a continuity in the end-user experience. Had the licensing at the time been tied to interoperability and a standard digital rights management system rather than the piecemeal approach that was used the results might be different.
Record labels also disagree in how to present the content. Some opt for completely closed-technology ecosystems without regard to interoperability. Others favor the growing call for interoperability but cannot agree on the underlying system-structure for the platforms. The latest is a growing interest in open-system pure-MP3, DRM-free offerings. However, among the four remaining majors and a number of the more influential independent labels the disagreement between the best approach for offering content is not consistent. This discrepancy not only sends mixed signals to the technology providers and storefronts deteriorating the need for compatibility. It also confuses even well-informed consumers as to what might be the best way to experience online content.
Consumers initially embraced online content before it was officially offered and since that time in the mid-1990s have yet to derive a consistent experience, moving from one platform and offering type to another, at times illegally and at times legally.
For most consumers, their content is derived from ripping their existing CDs and via file sharing. Much of the content is in the form of pure-MP3s thus not limiting the use regardless of the player or devise. Interoperability is not an issue in these cases.Nor is it an issue for the consumers existing in the Apple ecosystem. ITunes is the dominant storefront and the average consumer is using an iPod as their player for these files and therefore not subject to interoperability issues in their daily life. Finally, the average devise consists of less than five percent purchased music despite the millions of files sold thus far, meaning unless you are changing platforms you have little to worry about in your overall music catalogue as a consumer regardless of your point of purchase. Due to this phenomenon there is little call from consumers for interoperability, despite what the entertainment industry is currently discussing.
Consumers advocacy groups and governments throughout the world have put little to no pressure on content owners, devise manufacturers and platform and storefront owners to extricate functional interoperability because it is not an underlying issue for the consumer currently. If it was truly detrimental to the consumer to have closed ecosystems, competing formats, etc. there would be greater response from all to force interoperability.
Defining the Future
Competing formats has played a role in entertainment from the early days. Many of these issues resolved themselves over time as either eventual partnerships and lisencing allowed continuity or either a dominant format or several parallel formats were adopted by the consumer (or a combination of all of the above). Some simple examples include radio frequencies, record speeds, video cassette formats, compact disc formats, computing platforms, gaming consoles, etc.
The future will be held in part by a combination of the parties involved as well as new entrants. As mobile content offerings expand with the proliferation of WiFi /WiMAX and broadband, integrated streaming and satellite offerings, new storefronts, more devises, etc. all converge on the entertainment industry interoperability will work itself out based on consumer adoption thus forcing compatibility. Only in rare instances will a company sacrifice even larger growth in order to maintain the current exceedingly high level of exclusivity currently maintained by the current incarnation of the industry. To derive deeper penetration with new player / platform combinations, content usage, etc. it will require a bit of bending of the incompatibility. Only time will tell how these possibilities will work out.
The Amazon foray into the storefront world provides a major retailer’s insight into consumer needs and an integration of retailing beyond that of any of the current offerings catering to both traditional and online offerings. If there is a way to bundle varying combinations of single track downloads and full-length CDs in a way that the consumer is encouraged to take advantage of the combinations this could become a very interesting experiment. If in Amazon’s overwhelming online store it is able to also leverage downloadable video and DVD offerings to pure audio offerings, and / or integrate aspects of ringtones, wallpapers and other digital assets into its recommendation system or paired purchase offerings it would set a new precedent in entertainment retailing.
For the time being, just their presence in the download world is already sending ripples through the community and after a couple of financial quarters of earnings by downloads there should be a firmer understanding of the impact, although determining the effect of DRM free via Amazon is nearly impossible due to the lack of a control and the varying approaches of the different content contributors. Interoperability will probably not be the traffic driver as much as Amazon’s ability to leverage its already enormous constomer base as a retailer