…A game of bluff but who has the most to lose?
Regular readers of this column, and there are surprisingly many, will know that the editor has been exposed to more Scottish football than is good for him, due to a Caledonian upbringing that left him with little traces of the accent but fond memories of football commentators Archie “Whoof” Macpherson and Arthur “Stramash” Montford. If boyhood Saturday nights listening to Arthur describe the latest event at Fir Park left any lasting benefit, it is surely the enthusiasm with which I endeavour to shoe-horn the word “stramash” into these regular observations on the mobile industry. But now two events have occurred which give me a real chance to invoke the spirit of Dundee United’s 1984 back four, and get stuck in. As aware as I am that the vast majority of readers are now searching ever-more frustratedly for the point, I will come to it. Digital Rights Management. Not, of course, the sexy end of the mobile content world. No, that is best illustrated by the type of content launches Orange held at the end of March, in which a corporate entity of increasing blandness seeks to appropriate a little Rawk coolness by slipping its partner record company an extra fiver to persuade its latest hot property to turn up to the launch, thereafter to play a “set” to assembled hacks, industry analysts and other leeches whose last gig was to see the pre-revival Duran Duran.
Not, of course, that the mobile industry or record industry has ignored DRM, indeed the seeming settlement of such issues was what lay behind several recent music download service launches and the shaking of hands and general agreement never to mention the ringtone debacle again. So imagine the music community’s surprise when it turns out that the licensing issues behind this new accord are far from settled. Indeed, the patent holders for the main DRM “standard” turned round and asked for a dollar a handset and a cent a transaction. Result? More howling than Aberdeen-era Fergie and Big Jim Maclean doing battle over a tense 1-1 draw at Tannadice. So back came the patent holders with a revised offer – namely 65 cents on the handset and 25 cents per sub per year. So if you have five million subs, and 10% of them use the DRM solution just once, that’s 125 big ones to you, Mr Operator, every year, just as an operational expense. Is that a better deal than a cent a transaction? Well, at a cent a go an operator would have to process 12.5 million transactions to reach the same number. Of course, there is no limit on the downside to the operator this way, but given the same 500,000 user base, that’s 25 transactions a subscriber, or roughly two a month, plus one for Christmas. This of course will all be worked out on something more than the back of a beer mat I have in front of me at the moment, as these things are, but michty me whit a stramash.
Content providers we have spoken to are reasonably surprised, some in fact expressed it in stronger terms than that. Ultimately, it seems licensing costs will have to come down. If not the patent holders face being ignored in favour of a range new solutions that the operators consider offer more equitable terms. It seems unlikely the powers that be at the OMA will be willing to let that happen. But the OMA patent holders know they have one trump card, which is that the operators and vendors have been hailing OMA DRM as the de facto standard, and swapping to a new mechanism is not as simple as all that. In the end, our best guess is a compromise and future work to develop more open standards beyond OMA 2.0. There’s surely too much invested on all sides to seek alternatives on a wide scale.