Tuesday, January 31, 2006

It's a Bird! It's a Plane! It's Superdistribution! (according to IDC)

Reading old analyst predictions is written proof of the proverbial adage, "hindsight is 20-20". Many times the world's technology sages are dead wrong, sometimes they are close to being right, and then other times they are mostly right. Their ability to be right some of the time keeps them in business, much the same way supermarket tabloids operate. (although tabloids are frequently sued for being wrong...not a problem analyst have to worry about.)

Looking around for successful predictions regarding Superdistribution, I found the writings of various academics, (Brad Cox most notibly), a few sage bloggers, and yes, an analyst firm, IDC, who saw the vision fairly early on. Below are some highlights from a report they filed in November 2000, written by a swami named Geoffrey Dutton.

Lockbox to Cashbox (according to IDC)

"The absence of solutions for safeguarding proprietary content on the Internet from misappropriation has tended to limit electronic distribution and inhibit ecommerce. Vendors tend to withhold content rather than risk that some portion of it will escape their control."

"What if this were to change, enticing consumers to become channel partners rather than potential thieves?"

"Most people - if they've heard of it at all - think of digital rights management (DRM) as a way to prevent piracy or unauthorized use of digital media content (such as ebooks or MP3 music selections). That's a major motivation, but copyright protection is just the beginning of what DRM can do, not the end."

"To be successful, a DRM scheme must persistently protect content and not allow decrypted versions to be saved as files that could be given away. Password protection isn't good enough, because passwords can be passed along. Likewise, content should be traceable from one recipient to another."

"Content publishers craving absolute security will be disappointed: Virtually any encryption scheme can be cracked if motivation is sufficiently high or widespread. In any case, adding more locks to a box will frustrate users and drive them away. Making shopping convenient enough to encourage customers to return often entails some risk of pilferage."

"It's a Bird! It's a Plane! It's Superdistribution!"

"DRM developers and users hope to find winning combinations of enticements, pricing, and convenience that - rather than discouraging users from transmitting content to one another - will motivate as many users as possible to share content that circulates under audit. This model of retailing has been called superdistribution."

"While enticing repeat business is important, a network economy's unique strength comes from contagion. Satisfied customers can propel a buzz, quickly multiplying a product's exposure. All vendors appreciate such marketing cascades, but media and software publishers are most likely to experience them and stand to benefit the most."

"Well-orchestrated DRM can turn buzz into bucks. When a consumer sends digital content to a friend for which the friend must register and pay to play, a new channel opens. No matter how few recipients actually opt to purchase, each one that does so constitutes a virtually effortless sale, and those that do not may still eventually become customers."

"Expect publishers to offer new models of DRM-backed digital content soon. Issues and merchandising parameters they'll need to test include:

* Does content expire?
* Can content be printed?
* Are free samples available?
* Are files locked to machines?
* Are superdistributors identified?
* Are superdistributors compensated?
* How are traditional channels affected?"

"Super Possibilities"

"Content providers should watch the DRM space closely and experiment with bold new marketing, sales, and licensing schemes. Here are two scenarios that illustrate possible arrangements:"

"Example 1: A college professor downloads articles from an academic journal publisher's Web site, agreeing to pay $3 per copy, then passes them to students in his class, who are each charged $2 per copy by the publisher for decryption keys to the files. The professor doesn't make the extra dollar - rather, it is applied as a discount for the students."

"Example 2: Lars buys a music download posted by The Alkaloyds on their Web site. Enjoying it, Lars immediately informs 25 friends by sending them a URL furnished by alkaloyds.com, which also includes a field identifying Lars. Every time someone uses the URL to register and download the same selection at the artists' site, Lars is credited with a commission, which he can redeem either for more music or for cash."

"Software for managing superdistribution already exists. The trick is to make transactions easy to administer and as transparent as possible. A number of vendors are vying for attention in this space."

MetaGroup, (now Gartner) also showed prescience ...I'll show you some of their predictions about Superdistribution in a future post.


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