Olivier Braet: Business model issues voor de audiovisuele sector

Business model issues for the audiovisual sector

[email protected]

IBBT-SMIT, Pleinlaan 9, 1050 Brussel

A) OBSERVATIONS

B) EXPLANATIONS

(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel

SOME BASIC OBSERVATIONS


Evolution physical vs. digital sales


Rough projection physical vs. digital


Piracy (Ofcom 2008)


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Illegal downloads

P2P: Bittorrent has replaced Napster, Limewire, Kazaa, etc …

Over http: downloadfora, blogs, google


Piracy also follows hit behaviour


Even free content is ‘pirated’


Content industrie1. SMPTE Broadcast flag: For digital TV

2. CSS (Content Scramble System): DVD-CCA

3. AACS(LA) (Advanced Access Content System(Licensing Administrator)): For HD-DVD / Blue-Ray

4. IP Targeting (Case: hotspotshield)

Connectiviteitsindustrie1. Deep Packet Inspection

2. Traffic shaping (packet prioritization)

3. OMA DRM: Mobile world

4. OSF: Broadcasting world (DVB consortium)

5. 18 Crypt: Broadcasting world (DVB consortium)

Software industrie1. Windows Media DRM (BBC iPlayer);

Apple Fairplay; Helix DRM; Adobe Flash DRM

2. Protected Video Path (PVP)

3. Contentguard (XrML)

4. DReaM

Consumenten electronica

1. HDCP for HDMI

2. DTCP

3. Proprietary PVR techniques

Proliferation of Digital Rights Management


Content industrie1. SMPTE Broadcast flag: For digital TV

2. CSS (Content Scramble System): DVD-CCA

3. AACS(LA) (Advanced Access Content System(Licensing Administrator)): For HD-DVD / Blue-Ray

4. IP Targeting (Case: hotspotshield)

Connectiviteitsindustrie1. Deep Packet Inspection

2. Traffic shaping (packet prioritization)

3. OMA DRM: Mobile world

4. OSF: Broadcasting world (DVB consortium)

5. 18 Crypt: Broadcasting world (DVB consortium)

Software industrie1. Windows Media DRM (BBC iPlayer);

Apple Fairplay; Helix DRM; Adobe Flash DRM

2. Protected Video Path (PVP)

3. Contentguard (XrML)

4. DReaM

Consumenten electronica

1. HDCP for HDMI

2. DTCP

3. Proprietary PVR techniques

Proliferation of Digital Rights Management



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Free streaming dominates



Legal and economical arguments thicken

“Intellectual and artistic property rights are every bit as important as the rights of ownership to physical property. It is no less wrong to steal a film recording than it is to steal a teenager’s laptop.”

But stealing a laptop is zero-sum; stealing a digital song or movie is not.

Argument from efficiency: “Without enforceable artistic property rights, there is no incentive to produce.”

Empirically unproven

Argument from justice: “Taking something for nothing, without permission, and with no compensation for the person who created and owns it, is wrong.”

But creating does not imply ownership, nor is there a right to maximize income.


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B) EXPLANATIONS


Explosion in supply & demand


DEMAND

Quantity

Pri

ce

SUPPLY

Democratization of digital production expands media supply…

…equilibrium price of media drops to below zero

€0

Source: Umair Haque

From the traditional value chain…


To value networks: modular value network


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Google value network


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Telecom value network


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Strategic reasons for DRM

Each industrial actor attempts to control the value stream of its ecosystem

Content aggregators want to maintain traditional revenue model

ISPs are worried about broadband consumption Software providers strive for platform dominance Consumer Electronics manufacturers aim for hardware

profit margin The higher in the value chain, the greater the fear for

canibalisation. Biggest fear: Exchanging analog Euros for online cents.


Creators and aggregators most afraid for digitalization

Bron: Telco2.net 2007 managersenquête(c) 2009 - Olivier Braet, IBBT-SMIT, Pleinlaan 9, 1050 Brussel

CONCLUSION:

DRM Business Motives

& Revenue models


1st pro memorie: Revenue mechanisms for online digitale content

Three basic mechanisms: Direct revenue model

“Pay-per-item” (iTunes 68%, AmazonMP3 5%) Subscriptions (license model: Rhapsody 2,5%)

Advertising based revenue model Free-to-air Product placement; merchandising

Rights clearance http://fairplaycalculator.nl/

Public broadcaster subsidies … and combinations of the above.


2nd pro memorie: Media consumer generations according to IBM

‘Massive Passives’ Older demographic Prime Time TV; “lean back”

‘Gadgetiers’ Younger professionals Focus on ease of use (iTunes, PVR)

‘Kool Kids’ Children, teenagers, students Multitaskers; Circumvent protections (download, rip and

share)


2nd pro memorie: Better approach :: Technology and age agnostic variables

Product category Do not treat ‘music’ or ‘books’ etc. as single content

forms Sort according to repeat use value

User groups Do not treat age cohorts as groups with same

technological competences Sort according to technology knowledgeability &

sensitivity


Introducing supply & demand

Collectability & Sensitivity


Zones of risk and opportunity

DRM


Traditional revenue models

INDIRECT REVENUE MODEL (Advertising

based)

DIRECT REVENUE MODEL(Pay per use)


Adapting the digital content portfolio

Move?

Product bundles

DIRECT REVENUE MODEL

INDIRECT REVENUE MODEL


Requests anyone?

Olivier BraetIBBT-SMIT (V.U.B.)

Pleinlaan 9, 1050 [email protected]

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