The failure to sort out effective Digital Rights Management almost lost the mobile industry the co-operation of the music industry for good. Now, with more and more music and other content services being launched, a row about licensing costs for “standard” DRM technology has threatened to leave content providers once more scratching their heads as to what is going on in the mobile industry.
At its simplest, the story runs like this. The companies whose patents lie behind the Open Mobile Alliance-promoted DRM solution allied for joint representation by a company called MPEG LA, which exists to provide a “one-stop licensing shop” for groups of patent holders. The companies represented in this instance by MPEG LA are ContentGuard Holdings, Intertrust Technologies, Matsushita, Koninklijke Philips Electronics and Sony Corporation.
MPEG LA put the backs up of just about everyone in the industry by saying, in March, that it intended to charge one Dollar per device with OMA DRM 1.0 functionality (or OMA DRM 1.0 and OMA DRM 2.0). On top of this would sit a 1% levy on any transaction in which OMA DRM 1.0 were invoked, payable by the service provider.
Unsurprisingly, the various industry associations reacted badly. The Mobile Entertainment Forum called the proposals “Onerous, Impractical and Unclear”. (Their capitals!)
“The terms being considered by MPEG LA could have a devastating affect on any business involved in mobile and wireless entertainment,” an MEF statement said.
The MEF said that both the fee amount per device and the fee structure levied for each download would “place an unnecessary burden on the business models of all players in the mobile entertainment value chain”. It also said was impractical as “fees would need to be levied retroactively for devices already on the market with OMA V1 capabilities”. The mere cost of implementing and administrating the suggested transaction fee could easily outweigh the fees levied, it claimed. It also criticised the lack of clarity on OMA V2 and the likelihood that the number of essential patent holders would increase in the MPEG LA pool.Â
Also on the warpath was the GSM Association (GSMA). GSMA ceo Rob Conway said that there was significant member discontent about the terms of the licensing scheme, along very similar terms to the MEF’s objections.
The GSMA added to the debate with the observation that the terms would potentially lead to the fragmentation of services, additional cost, delay and a reduction in future innovation and growth. In other words, operators would simply abandon the OMA solution altogether in pursuit of their own solutions.
“Based on frank responses from operators throughout the world, our Board understands that members are being ‘forced away’ from the OMA DRM standards by this unworkable licensing scheme,” said Craig Ehrlich, Chairman of the GSM Association. “In order to provide the services and content which their customers desire, operators will have no option but to take their own routes toward implementing proprietary DRM solutions. These solutions may have lower licensing costs, but will ultimately introduce problems for customers when roaming, changing networks or exchanging content with other users.” Â
The GSMA then called for all rival DRM providers to come up with alternative solutions by 11 April.
Perhaps not that surprisingly, MPEG LA then came back with an offer on the 13 April on behalf of its patent holders. Under its revised terms cost of integration of OMA 1.0 and combined 1.0 and 2.0 into devices had come down a third to 65cents (US). Its royalty fee had also been altered from the 1% charge per transaction down to a 25 cent fee per user per year.
At time of going to print, the GSMA and MEF both said they were “considering” the revised terms. Mobile Europe spoke to several executives within operators’ content divisions who also said they would assess the impact of the new proposals before making comment. You can be sure the story will not end here however. Meanwhile other DRM solutions suppliers are flooding into operators with rival propositions. OMA proponents have the advantage of relative ubiquity and standardisation so the most likely outcome seems to be that a deal will be worked out. But one senior executive at a major record label told us that although the operators can’t be blamed, he was surprised to learn that DRM licensing issues were still up for grabs. “There is certainly no fee set aside for future DRM license fees in my model,” he said, “and I would expect most content providers would expect the operator to wear that cost himself.”