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Commentary: DRM vendors seek salvation

Digital rights management vendors such as InterTrust Technologies face a looming crisis and have moved to save themselves without abandoning their long-range strategies.

    By Alan Weintraub, Gartner Analyst

    Digital rights management vendors such as InterTrust Technologies face a looming crisis and have moved to save themselves without abandoning their long-range strategies.

    DRM technology offers substantial benefits to digital content owners looking to protect their copyrights in an environment--the Internet--that favors easy access and free content. It enables a publisher of software, music or videos to set levels of access (such as view, print, copy or save), depending on what the consumer wants and pays for. It can help protect the content for its owners while offering consumers options.

    However, the DRM market has developed very slowly. The vendor community spent much of 2000 educating enterprises about the benefits of protecting valuable content. Despite a focus on protecting consumer-based content, music and e-books, distribution and content vendors made no significant implementations or commitments. Thus, in 2000, DRM vendors earned little to no revenue. Most survived on their capital venture investments.

    In the first quarter of this year, enterprises finally began to experiment with DRM technologies leading to the first products. Those early prototypes and products will help vendors develop and refine their revenue models. However, content providers will likely not become fully informed about DRM's capabilities until 2003, and the market will likely not mature until at least 2004.

    With Wall Street demanding faster returns, DRM vendors--especially independent ones such as InterTrust--must start bringing in more revenue. One way to create revenue opportunities is to expand beyond their focus on PCs to all of the other devices through which people consume digital content, including wireless devices and set-top boxes. For example, vendors could offer record companies the ability to protect or mediate the distribution of digital music on portable MP3 players as well as PCs. InterTrust is not the only one doing so--IBM has launched such an effort in Japan.

    See news story:
    InterTrust aims to protect media beyond PC
    At the same time, initiatives such as InterTrust's fit with vendors' long-term vision for what DRM can become. Essentially, the industry has begun to shift from distributing content via physical media to distribution through streaming media.

    Today, a person can get videos in digital form, but they must be taken home from the video store on a digital video disk. That disk can be put in a DVD player at home, in the car or on a notebook computer; the disk can even be lent to a friend. DRM vendors want to replicate that convenience and experience for consumers when content becomes freed of physical media. Thus, consumers who buy the correct digital rights could access a movie at the beach on a portable DVD player over wireless link, finish watching it at home on the TV through a set-top box and then send it over the Internet to a friend.

    Consequently, DRM offers a compelling vision. However, publishers preoccupied with preserving their revenue while developing business models appropriate for the Internet age have only just begun to pay attention to this technology. And DRM vendors will need all the revenue opportunities they can get if they are going to survive until the technology becomes mainstream.

    (For related commentary on digital rights management, see Gartner.com--free registration required.)

    Entire contents, Copyright ? 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.