Report from Digital Hollywood

Last week was the Digital Hollywood spring forum held this time in the Ritz Carlton in Marina del Rey, California. As you might expect from Digital Hollywood there was certainly a lot of talk about content distribution over the Internet, and to augment that discussion I hosted a panel session on Digital Rights Management.

On my panel were:

Brad Hunt, President, Digital Media Directions, LLC Wendy Aylsworth, SVP of Technology, Warner Bros. Greg Gewickey, Vice President, Technology Strategy, Deluxe Albhy Galuten, VP, Digital Media Strategy, Sony Network

The panel focused on DRM technology itself and its acceptance (or not) by consumers, and it also considered the content offers available today and consumers’ acceptance of them. The panel was very well attended, with standing room only.

In opening remarks, Wendy explained from Warner Brother’s perspective that while DRM has been a topic for the last 10 years, it remains the case that DRM is a necessity for digital distribution, but it has to be used to deliver offers to consumers that they value. Unfortunately, developing such compelling offers is still very much a work in progress, and in that light, Warner Brothers is doing a lot of experiments to see what consumers like. Things such as digital copies available since 2007, managed copy from Blu-ray disks, the recently announced “Content Everywhere” based on DECE, Facebook and premium VoD, available just 60 days after theatrical release. My editorial comment here is that this experimentation is both welcome and necessary to figure out what consumers are willing to pay money for, and I applaud Warner Brothers in taking this leading position in the content industry.

In his opening remarks, Greg offered that DRM can be frustrating, but it is nonetheless necessary. It’s important for consumers and companies all along the digital distribution chain to appreciate laws and content rights in order for new businesses to emerge and grow.

Albhy used his time to explain that content creation and distribution is not the same around the world. In England, for example, the government funds the BBC to create content and distribute it globally. As long as government spending on content creation continues, piracy has little impact on content creation or availability. Albhy went on to explain that DRM technology supports the business of content creation, giving content creators and content owners the tools to monetize their intellectual property and hold at bay the negative impact that piracy has on that business.

At one point during the discussion, Wendy was inspired to ask the audience the fundamental question of what consumers think of DRM. There were many enthusiastic responses, not all of them positive. Summarizing the bulk of responses causes me to conclude that the audience sense is that if consumers are not hindered in doing what they want to do when they buy, rent or subscribe to content, then DRM is not an issue. One respondent went so far as to say that as long as he’s able to find the offer he likes, he’s not only willing to pay for it, he actually appreciates that DRM is there to protect his investment and not allow others to pirate what he paid for.

However, one particularly engaged audience member described a content offer for a live sporting event that allowed him to record the event, but did not allow him to watch it more than 30 minutes delayed. This particularly irked him because his intention was to watch the event at some later time (much more than 30 minutes later) when he returned to his house. This led to some lively discussion, but the bottom line is that DRM was invoked to protect content in an offering that did not meet the expectations of this particular consumer. In the end, I conclude that DRM is often the scapegoat for content offers that consumers do not like or appreciate. One participant said it very plainly – blaming DRM for protecting content is like blaming the police for the fact that food must be paid for before carrying it out of the supermarket.

The industry discussion on DRM will continue for the foreseeable future, and longer, but my conclusion after this memorable panel is that DRM is here to stay, and the onus is on content owners and others utilizing this powerful technology to make sure they are offering compelling experiences to consumers, the people with the money.