DRM technology has done little to stop P2P video downloads, which means it may be time for the video industry to stop worrying about content protection and start focusing on ways to help P2P downloaders get the content they want - and pay for it.
That's according to a new report from In-stat this week which reported that US broadband households download 14 billion videos each year. The bad news: 85% of those are illegal, despite the use of DRM technologies like copyright protection, watermarks, digital fingerprinting, and conditional access to prevent illegal downloads. The figure for Asia is almost undoubtedly similar, if not higher.
That doesn't necessarily mean that DRM is useless - but it does suggest that it's being used the wrong way.
Anti-DRM groups have long complained that their biggest beef with DRM is that it makes digital music and video a user-unfriendly experience. DRM typically restricts how and when and via what device you consume media - which is hardly consistent with the panacea of on-demand multimedia that broadband is supposed to be enabling.
It doesn't help that video content owners impose labyrinthine licensing restrictions from region to region, which is why DVDs come with regional codes and Hulu can't be seen outside North America (two factors that I can personally guarantee has cost the video industry money or impressions they otherwise would have gotten from viewers like me).
Put another way, digital video piracy figures are arguably as high as they are not because most consumers would rather steal than pay (as the music industry incorrectly assumed when Napster first reared its head ten years ago), but because consumers want on-demand video - and if the video industry won't give it to them, they'll get it some other way.
Some perspective is helpful here. In-stat analyst Keith Nissen notes that most of the 12 billion illegal video downloads in the US every year are committed by 9% of US broadband households. That said, the rest of broadband users don't watch a lot of video on the Net to start with apart from YouTube and Hulu. That will change as they get into the habit, and when they do, they're likely to turn to P2P sites if the legit video industry can't satisfy their video needs.
Which is why the solution for video providers, says Nissen, is to come up with a business model that makes video easy to access, with monetization from subscriptions or ads. The same business model could then be used to entice those power users on the P2P sites (most of whom are downloading because it's easier than any legitimate service available) to bring their business to legal sites. That 9% base could generate $1.4 billion in subscription revenue and $1.1 billion in advertising revenue, Nissen says.
Ironically, DRM technologies could help them achieve this goal - not by preventing personal copies or device transfers, but by helping keep track of who's downloading what and creating tiered usage rights based on how much they pay.
For example, watermarking downloads would allow content providers to charge the price of a video rental for users who want to watch a film once, charge DVD prices if they want to keep it, charge extra if they want multiple formats (PC and iPod, for example) and the ability to upload clips on YouTube, and so on.