The DRM Strategies Conference organised by Bill Rosenblatt and Jupiter is one of the few major industry events on Digital Rights Management. This year the conference took place in New York from July 27-28.

Unlike other DRM conferences, the DRM Strategies Conference is focused on business issues. Political, legal and societal questions like “What rights should consumers and content owners have?”, “Are specific features of DRM compatible with copyright law?” or “What should the government do?”, which make up a significant part of more general conference programs and which frequently lead to passionate discussions, played only a minor role. They were mostly restricted to a panel on the implications of the US Supreme Court’s decision on the P2P file sharing service Grokster. With the Electronic Frontier Foundation’s Fred von Lohmann participating, however, the discussion on panel and floor contributed enough passion for two conference days.

The focus on business issues provided rather interesting information about the state of the market for DRM technology – insights that often get lost in conferences with a broader focus on societal aspects. Especially when compared with the wants and needs of consumers – as presented on the conference based on the INDICARE consumer survey (Dufft et al. 2005) on the conference – these lessons can help to better understand why DRM systems have certain capabilities and lack others or why they develop in certain directions and not in others.

Many open issues – especially about intellectual property
Generally, the presentations and discussions on most panels gave the impression of an industry with many question marks and many open issues. Most issues discussed at the conference were not totally new. Problems of DRM like missing interoperability or intellectual property issues related to DRM technology, for example, are well-known to the industry. It’s only that nobody came up with a solution yet.

This was shown very well in a panel on DRM and intellectual property. INDICARE has already reported about the efforts by MPEG LA to combine many different IP claims into a single patent pool license for the OMA DRM (Wichmann 2005). However, so far these efforts have not led to a solution accepted by all parties involved (see also Bohn 2005a).

So it is quite likely, the panellists thought, that the current state of uncertainty for implementers of DRM systems persists. And the risk from this uncertainty may well be quite significant: One panellist estimated the average total cost of a lawsuit in the DRM field to be around 2 million US $. While DRM opponents might welcome such a situation, since it is likely to slow down the spread of DRM systems, it also has a downside: new services for consumers, where some party insists on DRM being used, might not be introduced.

Market-driven standardisation towards Microsoft DRM technology?
In the end there might be a laughing third party, as another panellist pointed out: Microsoft. Many technology companies have already agreements with Microsoft in place, which cover the use of Microsoft’s intellectual property. For them it might be easier to simply settle on Microsoft technology for DRM than taking the risk of getting sued when using other technology. So there might be a market-driven standardisation towards Microsoft DRM technology. Microsoft spends significant money on licensing IP from others and is therefore able to offer the users of its technology indemnity against any infringement lawsuits. One panellist even concluded that clearing IP rights and indemnifying technology users might become the future raison d’être of large technology companies.

However, while such a market-driven standardisation might make life easier for smaller technology companies and also for consumers, it is unclear – to say the least – whether they benefit in the long run from such a strong position of a single company. While DRM solutions that build on a common set of technology will tend to be more interoperable – and consumers want that, as the INDICARE survey has shown –, there tends to be more innovation in a system characterised by different technological approaches.

Sobering state of the e-book industry
This dilemma was also illustrated in a panel on e-books, another topic recently covered by INDICARE (Bohn 2005b). The market for electronic books never lived up to early expectations, and nobody on the panel had the hope that this might change any time soon. It is still a rather small market with an annual turnover of 10 million US $ per year, as the International Digital Publishing Forum (cf. sources) estimates.

The coexistence of several different, not interoperable e-book standards was pointed out as one reason for this situation, as this makes e-books rather unattractive. One candidate for a market-driven standard might haven been Adobe with its omnipresent Adobe Acrobat Reader. However, Adobe decided at the end of last year that enterprise DRM would be a more interesting market and discontinued its Adobe Content Server, a product used by several publishers of protected electronic texts. One panellist saw this as another blow to the market for electronic text documents. It also shows quite well that market-driven standardisation may well fail if the single party able to drive it decides that the pastures are greener elsewhere.

Enterprise DRM figured prominently
Enterprise DRM figured prominently at the conference, which was divided into sessions of general interest, a DRM tutorial, a media section and an enterprise DRM section. One impression from the conference was that several DRM companies place their bets on the increasing use of DRM systems in the enterprise. Many vendors pointed out that the requirements of the Sarbanes Oxley Act (SOX) (cf. sources) could best be met by enterprise DRM solutions. (The act requires companies, among other things, to make sure that only authorised persons have access to sensitive financial company information.)

However, it is clear that for DRM systems being able to protect spreadsheet or text documents throughout their use in companies have to be part of the basic IT infrastructure of a company. If this protection is supposed to cover also partners, it has to be compatible with their infrastructure, too. Again this makes Microsoft and very few other large software companies obvious candidates for providing this infrastructure. Many of the smaller enterprise DRM vendors presenting at the conference are therefore cooperating with Microsoft.

This strong position of Microsoft in the enterprise DRM sector might also have consequences for consumers. As basic DRM functionality is part of future Windows operating systems, also consumers’ PCs will be equipped with this functionality. So technology providers for consumer solutions will have another incentive to use the Microsoft DRM functionality as basis for their solutions.

Bottom line
The conference showed very well that theoretical DRM concepts and consumers’ wishes about DRM functionality are one thing. The penetration of DRM technology in the market is quite another one. There are many influencing factors: technical requirements like the need to have DRM systems integrated in the basic IT infrastructure, strategic considerations by vendors about which areas of DRM to focus on, or battles about intellectual property. Settling all the involved issues is a tedious task taking a long time.

Putting all these things together leads to the rather sober conclusion that well-functioning interoperable DRM systems as requested by consumers are probably not soon to come.


About the author: Thorsten Wichmann is founder and managing director of Berlecon Research and member of the INDICARE project team. He has been working on a variety of IT and mobile topics during the recent years. Contact: +49 30 2852960,

Status: first posted 26/08/05; licensed under Creative Commons