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

2. 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!

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

4. 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

5. 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

6. Strategic Advantage ?

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

8. 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

9. 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!

10. 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!

11. 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?

12. Down the rabbit hole!

13. 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

14. 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!

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

16. 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.

17. 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

18. 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!

19. 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

20. 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

21. 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

22. 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!

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

24. A B
Digital Space
To Here
Analogue Space

25. 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?

26. 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!

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

28. DO WE WANT JUST ONE DRM FOR ALL DIGITAL WORKS?

29. OR ONE STANDARD SPECIFICATION FOR MANY INTEROPERABLE DRMs

30. 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.

31. OR

33. THE END