Groundbreaking Report from the Broadband Stakeholder Group (BSG) urges Industry and Government to accelerate the quest for solutions for Digital Rights Management (DRM) and micro-payments

23 July 2003

“DRM (Digital Rights Management) and micro-payments are becoming ‘make or break’ issues for the whole of the broadband value chain, ” said Antony Walker, Chief Executive of the Broadband Stakeholder Group. “They are the missing links that are preventing broadband from delivering its real potential for consumers and businesses alike. Government and Industry must show leadership to start addressing these issues.”

The Broadband Stakeholder Group, the government’s key advisory body on broadband, today launches its eagerly awaited Digital Rights Management report. Despite years of discussion, DRM and its related issues are still not well understood. This is the first time a cross-sectoral industry group has come together and agreed a common view of the DRM challenges and set out the key components of the solution. It is a significant step forward and a sign that the industry is getting serious about addressing digital rights management issues post Napster.

Investigating four key areas, the report highlights DRM, epayment and micropayment systems and piracy issues as critical elements that will act as a further catalyst for the continuation of current rates of broadband uptake . The report is also the first of its kind to investigate the use of DRM in the public sector.

E-Payment and Billing Systems
Current payment systems do not cater adequately for micro-payments necessary for new business models. Correcting this situation will offer tremendous opportunities for developing innovative commercial content services, providing the UK with a great scenario that would include benefits for its broadband strategy and leading content industries.

Standardisation
The report highlights that DRM tools and systems comprise of highly sophisticated technologies, which in turn require enormous resource to develop, the kind of resources that, in practice only big business can muster. These enterprises need a guaranteed return on their investment to justify the application of these resources. DRM tools and systems have to achieve a satisfactory level of interoperability if they are to provide a generally usable mechanism.

Piracy
The latest figures from CNET show that Kazaa Media Desktop, the most popular file sharing software, has been downloaded a staggering 225 million times at an ongoing rate of 2,5 million downloads every week. Urgent action is required by Government to update existing rights enforcement measures to provide an effective response to this situation.

Public Sector
This is the first report of its kind to address the use of DRM in the public sector. Public administration and public services will have a major impact on the take up of broadband services, both in terms of their own needs and their interfaces with the public. Libraries and education facilities in adopting DRM-enabled systems can prove to be primary testing grounds for implementing paid for content and applications.

“Without straightforward and reliable systems for the public to pay for online content, and effective mechanisms for copyright owners to protect their rights, illicit file sharing will predominate and there will be few incentives for content developers to innovate and invest in new types of online content, “ said Walker. “This would be a huge missed opportunity for a country that should be a world leader in the development of new online media - but unless companies can see a way of getting paid they won’t invest.”

“If we don’t look at these issues now, we could see broadband take-up start to flatten off because the value proposition fails to evolve, or the further erosion of ‘value’ in the content sector, due to illicit file sharing. Neither of these scenarios is acceptable. Now’s the time for the Government and Industry to show leadership and start to resolve these issues once and for all.”

DRM Report Project Leader, Nic Garnett, an IP and IT specialist at The Simkins Partnership, Europe’s leading media and entertainment law firm, has extensive international experience in the management and protection of intellectual property rights argues: “This report addresses the practical and commercial needs of businesses and consumers alike. We have highlighted the essential elements for the effective deployment of DRM systems, including interoperability in metadata, e-payment systems, business models and the legal frameworks to support them.”

Chair of the BSG DRM Group, Dominic McGonigal, observed, "DRM is a microcosm of the emerging digital content business and it has been fascinating bringing together the different elements of the digital value chain in this unique forum. DRM has become a political football. It's a powerful set of tools and applications, but DRM cannot negotiate commercial arrangements and cannot resolve legal ambiguities. There is a clear message to Government and industry to put in place the e-payment systems, the new business models, DRM standards and legal enforcement to deliver premium content online."

" The DTI were closely involved in this work, and were able to provide the resource that enabled Nic Garnett to write this authoritative report. This reflects the DTI's recognition that concerns of content developers about making the business model work will continue to deter the emergence of compelling content in the UK. The effective utilisation of DRM, and closely associated issues such as micro-payments, are core points that need to be addressed."

View full report - Missing Links in the Broadband Value Chain
A critical snapshot of the DRM debate and the ongoing quest for solutions (pdf 729KB)

The BSG Report identifies 11 key recommendations that must be addressed for the UK to become a global leader in implementation of a globally accepted DRM platform.

These include:
1. DRM tools and systems should be regarded as falling squarely within the inventory of online security measures.

2. Government should urgently consider the formulation and adoption of “effective measures for enforcing intellectual property rights.”

3. The UK content industries should jointly commission a study into the application of the emerging rights data dictionaries and rights expression languages to the licensing and management of copyright materials.

4. Government should actively promote the development and spread of global DRM-related standards.

5. Government should commission an in-depth study into the area of electronic payment and billing systems.

6. The UK content industries and public sector beneficiaries of copyright exceptions (such as libraries and education) should work together to create frameworks for use of content, employing DRM systems to enforce the agreed scope and terms of use.

7. The UK content industries should take the lead in addressing relevant consumer confidence-building measures through establishing codes of practice.

8. The Government should implement a number of pilot public service broadband offerings, deploying DRM applications and e-payment systems.

9. The BSG should conduct an international review of the impact of online content services on the take-up and use of broadband.

10. The BSG should bring together the various industries in the digital value chain to explore new business models.

11. Industry and Government must work together to bring relevant information about DRM and related elements of the online content service infrastructure to content and service providers, to their customers, to government and other public institutions.

Contact
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Communications Manager
BSG
020 7395 6731