When we started organising the second INDICARE workshop with e-payment being the intended focus, we thought we would be in a difficult situation, since from the technical point of view e-payment has hardly anything do with DRM. However, we quickly found out that from the consumers’ point of view the situation is very different. Consumers do not really bother about technical details, at least they do not wish to. Instead, they are looking for easy-to-discover and easy-to-use services, which provide them with a new experience of consuming digital content in fascinating ways.

Thus recruiting the intended number of a dozen speakers and the optimal number of a half century of attendees for the workshop held in the excitingly modern informatics building of the Budapest University of Technology and Economics was not a difficult task at all.

The workshop was organised around four thematic blocks: "e-payment technology", "service providers on DRM", "content providers in motion" and "business models for consumer satisfaction". Below I attempt to give a very brief coverage on what in my view were the interesting conclusions. Interestingly enough, consumer issues came up in more cases than expected.

E-Payment technology
The first block of presentations was organised around technical questions of e-payment. Traditional e-payment solutions have been in use on the Internet for years, so there is not much current development in that area. However, with the expansion of the mobile market, and with handheld devices making it into our pockets, a transition to m-payment is taking place. This will be even truer as mobile devices open up new opportunities like near-field communication and the use of smart-card-based security.

Risto Sipilä talked about new touch-based services based on near-field communication, the so-called Radio Frequency Identification (RFID) technology. As opposed to remote payments, near-field communication is based on locality, where new types of point of sale (POS) terminals will accept e-cash or tickets (e.g. cinema tickets) directly from the consumer’s mobile phone without having to connect to the mobile network. The speaker underlined two very important aspects when developing new mobile services: on the one hand ease of use was very important, from easy-to-use terminal (phone) user interfaces through easy service discovery to convenient payment methods. On the other hand, besides user friendliness he urged for open technologies and open standards.

Péter Papolczy talked about SEMOPS (Secure Mobile Payment Service), a research project funded under the 6th Framework Programme for Information Society Technologies of the European Union. SEMOPS is a new concept for a real-time payment service, which can be implemented across a variety of mobile devices or other handsets, over different data carriers and for a large spectrum of payment amounts. SEMOPS is differentiated from other e-payment services by its consumer-centric design. It provides consumers as Papolczy claimed with unprecedented flexibility, while also ensuring privacy. SEMOPS combines consumer anonymity with refundability. This is a quite new approach to e-payment, since so far in every widespread solution the consumer has been traceable.

Service providers on DRM
In the second block of presentations two speakers brought forward their views on the provider side of e-payment and DRM. The first of them, Pál Miletics, who came from a major mobile service provider, presented facts and figures about the mobile telephony market and the mobile market in general. In his view, customers demand services for information access, content download, ticket purchase, parking payment, or ordering. He underlined that there was a big difference between traditional e-commerce and m-commerce, the latter providing anytime-anywhere type services limited only by the handsets’ capabilities. He also said that consumers usually do not understand the benefit of new technologies, so accurate surveying of market needs would be very important in order to succeed with DRM services.

In the second presentation by Tamás Foltányi, the attendees heard about a selection of case studies from the technology provider’s point of view. The speaker pointed out that the mobile business environment is significantly different in the United States, in the EU and in Eastern Europe, so care must be taken when one wants to talk about business opportunities in general. He said that consumer interest in e-payment services is present, as is the technical background, so using e-payment is not a problem. However, when analysing opportunities, one must look at the whole "value chain".

Content providers in motion
The first presentation in the third block was about general DRM issues, more specifically the aim of DRM. Tibor Sas first looked at DRM from the infrastructure point of view and regarded DRM as infrastructure for the management of rights. He concluded that also for the DRM infrastructure a critical mass of consumers would be necessary to pay off. Second, he emphasised the importance of object identification, and proposed the widely used Digital Object Identifier (DOI) as a means of solving several DRM-related problems, especially the collection and distribution of fees as a main purpose of the DRM infrastructure. He also brought up several use cases with inherent problems, e.g. component reuse, print-on-demand of small-volume publishing and mixed-financed learning materials. He came to the conclusion that object identification and DRM could solve these, especially by identifying, tracking and billing uses of the many small-scale components by many parties. Finally, the speaker pointed out that in his view the chief problem was the lack of e-content materials in the appropriate quantity and quality. He concluded that a working DRM infrastructure and intensive content protection would encourage providers to supply more valuable content.

Péter Benjamin Tóth, a lawyer at a collecting society of authors and publishers gave a presentation on the role of collecting societies in a world of DRMs. The main issue of the presentation was whether with the spread of DRM systems collecting societies will die out, or whether collective rights management still has some future. He asked if DRM and levies can coexist, and if it makes sense to use DRMs to make royalty distribution more accurate. The answer, he said, might be given by the International Confederation of Societies of Composers and Authors. CISAC’s aim is to develop documentation and distribution standards for the sake of better accounting between collecting societies. CISAC works together with ISO, and they have developed accepted standards for the identification of works and rights holders, which actually forms also the basis of every DRM system.

Business models for consumer satisfaction
The last block of the day started with an analysis of DRM business models. The speaker Vural Ünlü categorised content protection strategies into three groups: technical protection, contractual and statutory protection and the alignment of business models forming structural protection for content. The speaker then analysed the optimal level of technical content protection. His conclusion was that valuation and content degradation are major determinants of this optimal level, which also rises with the network effect. Two further findings were that the profit of content providers is reduced when protective measures cause utility decline for consumers, and that the alignment of business models may lead to additional revenues.

Rüdiger Grimm talked about a conflicting situation between content providers and their potential customers when it comes to digital products available on the network. He examined several alternative business models, among them systems based on Light Weight DRM, the PotatoSystem, and Music2Share. The particular feature of the PotatoSystem is to allow reselling by customers and thus providing incentives not only to legally buy digital products but also to contribute to the distribution. The speaker talked about digital payment methods having to be integrated into the purchase procedure. He pointed out that payment is not integrated in most of the existing DRM systems, and that this is a mistake. LWDRM and the PotatoSystem, in contrast, have payment integrated in the purchase procedure, he said. His conclusion was that a great number of consumers are ready to pay for fair use, and providers are ready to deliver content for payment, so a mutually acceptable level of payment is the key. Therefore, he said, payment has to be integrated with DRM and free usage has to be enabled after payment. Finally, he called for a harmonised solution, technically standardised and widely accepted on the market.

Main conclusions
Perhaps the main conclusion of the workshop was that e-payment solutions must be integrated into the content purchase process. And of course if DRM is also used, e-payment has to be integrated with DRM, too. Consumers do not want to bother about technical and contractual details, they just want to see the offer as one product and then they can decide which one to choose. Of course with today’s technical advancements in mobile computing and wireless connectivity traditional e-payment is shifting over to m-payment. Integration is even more important here, since consumers have already got used to the "one finger, two buttons, three clicks" rule. Any other, more complicated purchase method will be less successful.

Another key result of the workshop was that more attention should be given to consumer needs and consumer wishes. However, it is difficult to establish what they want, since they, themselves, do not know exactly what the possibilities are. Also, fair use should be considered in depth when creating new models for consumers: alternative compensation systems, like the described PotatoSystem, could have a bright future. Finding the perfect offer for consumers is, and will stay a key challenge for markets depending on DRM-protected contents.

Bottom line
If you have more interest in the Budapest workshop, please look at the workshop-site (see sources) where you can download the slides of the speakers' presentations. You might also want to read the more extensive workshop report (Jeges and Kerényi 2005) – it will bring you all of the interesting points of the presentations and of the panel discussions in detail.


About the author: Kristóf Kerényi is a researcher at Budapest University of Technology and Economics in the SEARCH Laboratory. His interests include mobile and wireless IT security, as well as technological aspects of DRM. He received a MSc in computer science from BUTE. Contact:

Status: first posted 22/03/05; licensed under Creative Commons