Contribution to Digital Media Manifesto discussion

by Leonardo Chiariglione

on behalf of some experts attending the 65th MPEG meeting in Trondheim

Background

During the 65th MPEG meeting in Trondheim a group of 15 experts discussed the Digital Media Project (DMP).

There was agreement that the initiative was worth supporting and that one study case should be carried out and the result contributed to the Digital Media Manifesto (DMM) reflector.

The study considers the issues generated by the "Content Distribution" use case, i.e. "distribution of digital audio and audio-visual content across the value chain".

Although important differentiating elements exist between different content types, at this stage there is merit in an analysis that is agnostic of the specific content type.

The views represented in the slides are those of the experts and do not necessarily reflect their employers’ opinions.

Table of content

  1. Matching demand and supply
  2. Hurdles in deciding digital content distribution
  3. Conflict of expectations
  4. Bit delivery
  5. Value chain player remuneration
  6. Interoperability of content flowing through the system
  7. Issues in different content protection systems
  8. Deployment costs
  9. Compliance
  10. Technology Licensing

1. Matching demand and supply (Marc Gauvin)

Digital Media change the capability of suppliers to provide and end user to access content

Tension between embracing new paradigms with their unknowns/promises and adapting old ones

"Matching demand and supply" is mostly about the former

Supply/Demand Before and After

Consequences of Changes

Producer Strategic Advantage

Hard to Secure and Sustain Market Advantage

Mobility of Value

Conclusions

2. Hurdles in deciding digital content distribution

Beware that there is so much at stake that companies may be reluctant to try aggressive ideas

What is the problem

The vision of the Digital Media Project entails a re-shaping of the business environment that goes beyond mere evolution. This project is stated in terms that explicitly go beyond mere incremental progress, say from tape to disc based media. In these terms, a transition from physical to digital media has consequences that have no parallel within the physical world. The consequences inherently carry global impact, and fundamentally change both legal and business relationships between stakeholders. This lies behind debates such as ‘bits must be free’, the consideration of software and business process patenting, and the nature of copyright.

Stakeholders in this future include powerful industry sectors and consumer groups, each holding very high ambitions to see that their interests are advanced, or at the least are not destroyed, by the structural changes at hand. These interest groups are backed up by various laws, shareholders, and national interests that are often brought into conflict by the rollout of digital media and the global scope of the Internet.

Examples

Example: Patent Licensing

Companies and individual entrepreneurs see the potential value of crucial patents, and are unwilling to relinquish these on generous terms. On the contrary many entities are aggressively filing new patents especially in areas of software and business methods

Example: Content Rights

Authors and other rightsholders see great potential for exploiting their works in new ways and seek to ensure they retain their exclusive rights

Example: Legislative Agenda

There is no doubt that legislation is out of step with technology in several areas. Powerful groups seek to influence the amendment of the legislation in their favour, and have so much at stake that progress is painful

Example: Content protection & rules

Much at stake agreeing a fixed solution, better agree a framework but how do you implement this (maybe java VM)

Importance of the issue

The scale and scope of what is at stake engenders a particularly difficult environment for experiment and compromise, when the rise or fall of global business and enterprise hangs on the results. The very scale of the Digital Media Project is itself an impediment to rapid or experimental adoption. It will be essential to find ways to allow industry space to experiment in ways that do not expose them to excessive risk. This may not be easy and no solution is presently clear.

It is unrealistic to expect these underlying dislocations to be amended within a short period, and it is unrealistic to expect that stakeholders will irresponsibly relinquish their own interests. Time is required to ensure the adoption of any new technology.

CD 10 yrs

MP3 10 yrs

IEEE floating point – took 10 years to complete!

Time is certainly required to see the wide adoption and support for something as complex as MPEG technologies. Especially as there are many compromises to be made in terms of technology licensing, patenting, access to rights in content etc.

Benefits from solving the problem

Reduction of perceived unacceptable risk to stakeholder interests

Better progress and compromise within underlying political and legal discussion

More scope for stakeholders to experiment with new business models

Conflict of expectations

What use consumers expect do of the content

What use rights holders expect will be made of their content

What support players on the value chain can provide to the expectations of both

Use Case - 1

Consumer purchases Music CD

She can play it on

She can play it in

Use Case - 2

Consumer purchases CD

She can

Consumer expects to enjoy the same benefits in the digital domain, even when the content is no longer fixed to the medium.

Consumer Expectations

Ease of Use of Technology

Replicate Use Patterns from Analogue World

Hurdles to Consumer Expectations

Education – How to use new technology

Value Proposition – Does the consumer feel that they have received a fair bundle of benefits for the price charged.

Legal – Will the consumer be able to exercise all of their legal rights having to do with their use and disposition of the digital media.

Hurdles to Technology Providers

ROI – Technology providers must get a return on their investment in R&D and product development. Therefore, new technology is not brought to market immediately.

Legal – Functionality that new and existing technology provides the consumer the ability to ignore certain legal restrictions but simultaneously have certain of their legal rights ignored as well.

Ease of Use – New technology to address the expectations of both Consumers and Rights Holders frequently requires more than merely turning on the product - Registration, authentication, updating SW, etc.

What Rights Holders Expect from Technology and CE Vendors

Current model (i.e. Outright purchase)

Future models

Digital Sleeping Policemen

The expectations of Consumers and Rights holders collide when

4. Bit delivery

Digital delivery is the main driver in the change of content supply/access relationship

We are far from exploiting the capabilities of digital delivery channels

There are cases where delivery channel upgrades

5. Value chain player remuneration

Distribution of content follows a Value Chain. Each link has a specific ROLE and adds a specific VALUE.

2 problems can be identified:

Consequences

Action Item: We should look at the ideal value chain and map it against the existing one.

6. Interoperability of content flowing through the system

Content distribution implies that content will flow across different players on the value network.

These players often rely on proprietary elements for the purpose of retaining a level of control of their business, leading to forms of restriction of content flow across the value chain

Translation/adaptation/conversion is always possible but at a cost that may negatively affect the economic viability of the distribution system

Insufficient interoperability is of particular concern in the end user domain because it may affect the cost of consumption device and the end user experience (e.g. ease of use, functionality, possibility to distribute content on multiple devices, etc.)

Interoperability dilemma

Voluntary investment drives creation of enough number of interoperable platforms.

Benefit of interoperability only became notable after two or more platforms reaches massive use.

Investors do not have motivation for interoperability between different platforms.

In the communication industry, some connectivity are obligation of service operators.

Appropriate technology, potentially combined with supporting legislation may insure the content accessibility among the different terminal.

No appropriate combination of technology and legislation is identified so far.

7. Issues in different content protection systems

Music Retailer A users DRM C for online music delivery services.

Music Retailer B users DRM D for online music delivery services.

Consequences:

Devices that want to play music from both A and B have to either (i) support both C and D or (ii) get agreement from C or D to transform packaged content from one system to the other.

Option (i) adds cost in hardware or software footprint, licensing fees and risk management.

Option (ii) is difficult to secure because C and D see risks to their own security and possibly a poor customer experience as permissions can not be perfectly mapped between systems.

Further, if A wishes to transfer its allegiance to D, it is forced to re-package all content prepared for C into a new delivery format. These switching costs make competition between C and D less "perfect".

The alternative – a single protection system

Movie Studios decide individually to adopt a new optical disc format carrying movies for end user consumption. They also adopt a single DRM system.

Although this creates a de facto monopoly for both the format licensors and the DRM providers, the bargaining power of the studios (individually) is sufficient to ensure a fair market price for each.

Logo-compliance rules means that all discs play in all players (within legally permissible territorial constraints).

Consequences:

The product becomes the most rapidly adopted consumer product of all time.

Analysis

User benefits can be optimised by one or more of:

minimising the impact of supporting several systems for instance by ensuring that different content protection systems fit into a common framework

ensuring that different content protection systems have well understood ways of sharing trust so that content delivered using one system can be transformed to be consumed on a device supporting only another system

ensuring that a single supplier is not able to exert monopoly power.

Benefits

Experience shows that the end-user will not adopt (in volume) products where there are confusions and uncertainties about compatibility and playability (e.g., Betamax vs. VHS).

Solving the problems of incompatibility between different content protection systems will enhance the attractiveness of digital media delivery systems and ensure that "critical mass" is achieved more quickly.

8. Deployment costs

Horizontal market

Market driven devices

Every manufacturer can build products

Distribution and maintenance typically through retail

Competition will drive costs down

Generic device must meet horizontal market requirement

May become more complex /expensive

Vertical market

Dedicated devices
Device manufacturing and distribution controlled by service provider
Does not come for free

Dedicated solution simpler/cheaper than generic one

Issue

Market evolution

Small vertical markets may not achieve critical mass
No mass deployment

Little device costs erosion

Lowest possible costs provide best opportunity for market take off

Generic devices in principle best suited, but…
Cost difference between generic and dedicated has to be low

Functionality must be sufficiently rich

9. Compliance

Content distribution involves a complex system where different players, bound by legal/business agreements and assisted by different technologies, operate to achieve the goals of the distribution

Compliance provides players on the value chain with the means to verify that each player operates according to the agreed rules

Compliance can be assesses at

Legal level

Business terms levels

Technical level

A typical case is end user device compliance

Traditionally MPEG has worked on technical compliance (i.e. means to verify that an encoder produces syntactically correct bitstreams and that a decoder is capable of decoding test bitstreams

In case of protected content compliance is a more demanding problem (even considering just the technical aspects of compliance)

10. Technology Licensing

Ability to deploy standards based products dependent on licensing of "essential" patents

Examples

Success

Issues