Jupiter Analyst: Interoperable DRM Won't Solve Music Industry Dilemma

The lead analyst of last week's JupiterResearch report showing a majority of music industry executives in the EU agreeing that a world without digital rights management would be a world with greater revenues, told BetaNews in an exclusive interview this afternoon that his firm believes the interim solution supported by 70% of executives polled - a single, open, interoperable, standard DRM scheme - would still be rejected by consumers in a market where Apple's iTunes continues to reign supreme.

JupiterResearch vice president and research director Mark Mulligan told us he feels the problem surrounding DRM concerns whether the consumer of digital music feels trusted by an industry that seemed to trust him well enough in previous years. When the right to use music as one wishes is impeded technologically, consumers reject the technology. In fact, this could be why the downloadable segment of the overall music industry is not growing as fast as it could.

Mulligan spoke to BetaNews at length from his offices in London, UK.

Scott Fulton, BetaNews: With regard to our initial story which discussed the figures in your report, a lot of the discussion that arose had to do with what it is that the music industry executives believe. The conclusion was clearly that they believe the current state of affairs with digital rights management may be a hindrance, in their minds, to improved sales. The solution, it appears in their minds, is to move toward a single, interoperable system - I think the number was 70% who agreed with the statement that the interoperable system would be an improvement.

Mark Mulligan, JupiterResearch: I think there's absolute consensus that the current setup just isn't working. The role of DRM is supposedly to protect content and cut down on piracy. Clearly that isn't happening. That's why the report exclusively focuses on piracy and DRM, because the two are explicitly linked. Piracy isn't going away. Online piracy is absolutely established, so DRM is clearly not doing its purpose of preventing piracy.

However, it is clearly not a consumer-friendly proposition. There's definitely consensus within the music industry that DRM, as it stands at the moment, is neither a consumer-friendly proposition, nor is it doing what it's meant to do. It's less clear, though, what the music industry actually wants to do about that. So there's definitely clear support for interoperability, but the whole thing about interoperability is that it's very difficult to understand how that would be enforced, and whether you make an industry standard DRM or whether you make sure that each DRM is capable of talking to the other DRMs out there. Either of those options is likely to take a very long time to implement, either because it will take a long time to be forced through from legislation and court cases, or because it will take a long time for the industry to come up with its own solution.

I'll point you to the experience in the mobile arena at the moment, to see what happens when the industry does try to create its own industry standard. There's a body there called the Open Mobile Alliance (OMA), and they've been charged with the task of creating an industry standard digital rights management [scheme] for mobile. As is so often the case when you get industry groups supposedly working for the industry, but essentially having to fight a lot of very delicate political battles, it took so long to create the first standard [that] everyone else went on and developed their own, and one of the first OMA standards that did come out, all it was, was non-forwarding [where you can listen but not give to others], basically outdated by many, many years in terms of its flexibility.

Now, mobile music is adopted across the European marketplace, and yet most of the operators are using their own DRM standards because they simply can't wait for OMA to get its act together to create the next mobile DRM standard. So take that as evidence that that's what happens when you try to get the industry to create its own industry standard. Normally, when a business is pushing ahead with its own business objectives, with its own cost concerns and everything else associated with it, then you come up with market leading solutions which are deployed quickly and are agile.

Next: Why consumers don't care about DRM interoperability