Mediaholic

Readers of this blog know that I am no big fan of DRM and so it is with great pleasure that I can now declare that DRM protected music is a thing of the past. Warner Music Group is the most recent label to drop DRM and Sony BMG, the last one out of the four major label that still sells DRM protected music only, is expected to do so in 2008.

The music industry adopted DRM as a mean to create new business models, and most importantly allow them, even in the age of digital media, to re-sell the same music to consumers over and over again in different formats or for different devices. Yet, the only business model that DRM enabled is the Apple monopolistic model. And so the labels killed DRM in an effort to battle this new monopoly that DRM created. Isn't it funny, they turned to DRM to enable new business models, yet it enabled a new business model for Apple and in the process the labels lost control over both legal and illegal digital music downloads. So now they turn to DRM again (by killing it) hoping to re-gain control over their own business. If only they focused their energy in adding value instead of fighting their customers in court and outside of it...

I am telling you all this because, movies are still mostly DRM protected and one can't help but wonder if the lessons from the music industry can be applied to the movie industry. Unfortunately for us, Apple is not yet a monopoly in movie downloads and so the studios do not feel any pressure to do what the labels are doing. Furthermore, since Apple TV is not taking off, they are not likely to become such a monopoly any time soon. Rest assured however, that some form of delivery of Internet content to the living room will emerge and go to the mainstream eventually and when that happen s it will most likely be DRM protected. If that ends up creating a new monopoly then maybe we will be lucky again and the DRM will be killed by the studios for the same reasons as the labels. If however this DRM scheme will be open, chances are that no single entity will monopolize the legal movie download business and hence the studios will have no incentive to kill DRM.

Of-course I am an optimist and a capitalist, so I believe that DRM for movies will eventually be eliminated as well. The reason is simple, something that does not add value to the customer but rather makes for a bad user experience and in the same time has costs associated with it is a great inefficiency and free markets won't tolerate it for long. What I do not know however, is how exactly this story will unfold, just like I did not know a few years ago how DRM protected music would go away, yet it did happen and it happened for the very same root cause, an intolerable market inefficiency.

While I am a big believer in open mobile networks as a concept that will eventually replace the existing closed ones, I am also realistic enough to know that the path to this future is going to be full of pain and obstacles. So, when Verizon announced that they would open their network to any device and application, I was certain that there was nothing more than marketing buzz here. I then came across this article by TIM O’REILLY, titled Static on the Dream Phone, and I knew I was not the only one feeling that way.

To be fair to Verizaon, I need to explain why I think there is no substance to this announcement. According to Verizon, “devices will be tested and approved in a $20 million state-of-the-art testing lab.” Now let me ask you how long do you think it will take and how much it will cost to get your application or device tested? Surely more than one such test will be needed, and in fact with the rapid releases we see these days for software and device firmware, any single application or device will require dozens of tests every year, assuming Verizon was able to do them fast enough (which I doubt). Therefore it follows that the gatekeeper approach Verizon is currently playing will continue just the same, the only thing that will be more open maybe is the gatekeeping process and of-course your checkbook.