Diversification of Demand Abundance in Supply & Diversification of Demand By Marc Gauvin Copyright Madrid 2004

Supply/demand in the Digital Space The supply unit is the content hour Available content hours are increasing rapidly But per capita hours for consumption are constant Ratio content hours/ hours to consume is increasing i.e. Abundance is going up!

Content Abundance/Diversity Pump Users More Options More Decisions More Fragmentation Niches Markets Abundance

Markets tend to fragment into smaller niches Niche markets multiply Any niche size no matter how small is supported Result is both increased quantity and increased diversity of content End users must be active no longer passive consumers

The sum of niche markets becomes greater than any single market Capacity for content hours is increasing but per capita access time is still constant

Strategic Advantage ?

In analogue media there is quality of service but resource control (production, storage and distribution) dominates

In digital media Media is cheap and abundant Distribution cost is trivial Client duplicates i.e creates the copy on the client’s device Everyone can produce

Diversity of niches and demand produces: Decreased predictability Decreased period of predictability Decreased control from the production side Some predictability from identifying demand but no way to create demand! Advertising value decreases as a function of decreased predictability. Conventional economic precepts get very stressed in deed!

Ubiquitous Value? In the conventional analogue economy Value = scarcity Hence it is not ubiquitous Availability of conventional money is correspondingly made scarce But Money is the supreme value of the analogue economy because to a few, it makes value feel ubiquitous!

But in the digital space value is ubiquitous without money Like a light, when it is on it is everywhere It multiplies itself But correspondingly, analogue money per digital value becomes even scarcer! So where do prices in analogue money go?

Down the rabbit hole!

Two Economic Spaces at Odds With Each Other The analogue space Limited points of supply Centralized distribution Control through supply Barter is cumbersome E.g. Time shifting exchanges of analogue objects i.e. perishables, generally is not viable So, conventional money plays central role

The digital space Unlimited points of supply so no control there. Decentralized distribution no control here either Barter is optimal Time shifting exchanges is trivial But analogue money still is the only game in town!

What Can DRM Do? Control the end user Or Manage rights

DRM DRM provides the ability to control the use of content and the Work contained in it Techniques include: Rights expression languages Key management Encryption Watermarking Pattern Recognition (Music Notation Codec?) Etc.

DRM So DRM permits the full range of control from Author through to end user Each player in the chain having control over how his contribution is used and applied Any provider of technology in the chain is a player From end to end

DRM So we are all in this together What is the big picture? What do we need to understand to know where each of us are going? So we can know where we can go together No one is going anywhere alone!

DRM to Control the End User? Why control the end user anyway? To protect big markets? But then prices race down the rabbit hole! E.g.. RealNetworks offers iPod services and half price! Big markets are dangerous places and heighten the need for security

Hackers love to break big business models In reality talent is everywhere we can always entertain and educate ourselves for free and legally thanks to DRM! And that is Value In big insecure markets Users naturally hold on to their hard earned scarce cash! So with the rabbit hole and all this fun were having it looks like hard times for big business models

But DRM to Manage Rights? Great idea for better defining niche markets Many less significant markets kills the thrill for hackers Security needs are naturally relaxed Diversity is safe many eggs and many baskets easy to define with DRM Talent shines everywhere

Diversity makes every digital search an adventure Digital object for digital object trading makes sense When it is ‘one to all’ and ‘all to one’, no matter how big “one” is ‘all to one’ is always BIGGER! And time shifting exchanges is trivial. No need for conventional money in the digital space unless you want to buy real tomatoes!

Analogue and Digital Value Exchange Digital Space A B Analogue Space how do we go from here

A B Digital Space To Here Analogue Space

Analogue Money? We have already been down the rabbit hole! So what can we do? We can trade digital: “all to one” is always bigger than “one” no matter how big “one” is. But can we time shift the analogue side of digital analogue trading?

Yes we can! Every piece of analogue money used to be a limited edition of a work of art on a support, with the option of extending the edition of that work as needed to facilitate time shifting the trade of other goods. Every piece of digital content is a an edition of a work! DRM makes the edition limited and extendable!

So Banks safeguard limited editions of works So too, every DRM is a Bank of limited edition of works! Now the Big question

DO WE WANT JUST ONE DRM FOR ALL DIGITAL WORKS?

OR ONE STANDARD SPECIFICATION FOR MANY INTEROPERABLE DRMs

Diversity vs. Monolithic Control Either a new age is enabled where each node (individual) becomes the cause of the whole network. Like a knitted sweater where every knit represents the health of the whole fabric Concentration in maintaining each knit becoming the mainstay of the new paradigm.

OR

THE END