DIGITAL RIGHTS MANAGEMENT IN THE MOBILE

ENVIRONMENT

Yrjo Raivio, Sakari Luukkainen

Helsinki University of Technology,Telecommunications Software and Multimedia Laboratory

P.O.Box 5400, SF-02015 TKK, Finland

Keywords: Mobile multimedia, Digital Rights Management, m-Commerce, Dominant design, Superdistribution.

Abstract: Number of Internet capable mobile phones is growing with rapid space. However, the data consumption is

still very low in the mobile community. The existing business models for sharing mobile multimedia have

not worked properly, and new solutions are looked for. In the mobile environment Digital Rights

Management (DRM) is a key enabler for novel business models like Superdistribution, a Peer-to-Peer (P2P)

type of Consumer-to-Consumer (C2C) delivery chain. DRM is a concept that defines the access rights to the

copyrighted digital media. It does not only include encryption technologies but the whole architecture,

content formats, commerce and usage monitoring. In this paper we evaluate novel m-Commerce business

models supported by the latest mobile DRM specifications, and we give recommendations how they should

be applied to the mobile environment in order to create a healthy business opportunity for all players in the

industry.

1 INTRODUCTION

Mobile phones are becoming more and more

suitable for digital content consumption and

basically mobile phones could replace the position

of standalone multimedia devices. Mobile phones

have the advantage that end users prefer to carry just

a single device while being also all the time

reachable (Eylert, 2005). The mobile service can

facilitate the link between the experience and the

download event, thus stimulating unplanned purcha-

ses on the move (Grech and Luukkainen, 2005).

From the mobile operators’ point of view

content business is extremely important because the

Average Revenue per User (ARPU) figures have

lately come down. There is however a contradiction

in price per transferred bit between voice/SMS

services and new digital media formats. That is why

operators should be able to apply content based

pricing schemes in their mobile Internet business

(Kivisaari and Luukkainen, 2003).

Lately, the operator independent Internet

service innovations have been receiving more

foothold and started to disrupt incumbent operators’

business models. Parallel discontinuous

technological change, ignored by the incumbents,

may enable cost effective products that initially

attract cost sensitive low-end customers

(Christensen, 1997). For example, Amazon, Skype,

eBay, Yahoo and Apple have been successful to

utilize novel business models that suit for a new

economy. On the other hand, most of the Internet

traffic belongs to the Peer-to-Peer (P2P) category,

that is outside of the business ecosystem due to lack

of an appropriate copyright system. Mobile

businesses can learn a lot from the Internet

experiences, but it should be noticed that the Internet

success stories should not be applied directly due to

the different usage models and constraints in the

mobile networks and terminals.

Management of the Intellectual Property is the

key phrase for a successful content business. Digital

Rights Management (DRM) has been the de facto

solution to protect content creators’ and owners’

immaterial rights. DRM is a process that defines the

access rights to the copyrighted digital media. It

does not only include encryption technologies but

the whole architecture, content formats, commerce

and usage monitoring, which makes DRM an

organic part of the business model.

Standards should however be introduced in an

evolutionary way by starting from a simple one and

building the complexity as market uncertainty

182

Raivio Y. and Luukkainen S. (2006).

DIGITAL RIGHTS MANAGEMENT IN THE MOBILE ENVIRONMENT.

In Proceedings of the International Conference on e-Business, pages 182-186

DOI: 10.5220/0001425601820186

 SciTePress

decreases thus allowing for a staged investment in

creating and growing the standard (Gaynor, 2001).

Typically new technology and related standards do

not become common in their initial form and

dominant design is not based on the leading edge of

the technology. As DRM standard contains large set

of optional features, the biggest challenge lies in the

creation of dominant design that contains a set of

features that best meet the requirements of the early

majority of the markets.

On the other hand, it is essential that we should

maximize the value, and not the protection. This

emphasizes certain requirements of a DRM system:

a very high of usability and freedom together with

sufficient content control mechanisms. According to

theory high price leads to low quantity. By a good

business model we are however able to set the price

that maximizes the revenue (Baseline case). More

liberal terms and conditions increase the value of the

service to the customer, which shifts the demand

curve parallel when also copying and sharing

increase which further also decrease quantity. A

sustained business model seeks the optimal solution

between these forces, as shown in Fig. 1 (Shapiro

and Varian, 1999).

Figure 1: Demand Curve, Quantity and Price (Shapiro and

Varian, 1999).

The mobile environment is most suitable for

legal and reliable content distribution. Unlike P2P

networks, the mobile users form an authenticated

community, which enables a coherent market place

and channel. More than 2 billion mobile phones,

with a rapidly growing penetration of smart phones,

are ideal devices for digital content consumption. In

addition to the traditional client-server business

models, Consumer-to-Consumer (C2C) trading is

becoming realistic. This new business model is

called Superdistribution. It means free C2C

distribution where content is usually protected from

modifications and usage requires a separate license.

The scope of this paper is in the mobile branded

content. As a research method we first study the

existing Internet business models and draw from

these experiences the requirements for the mobile

industry. Open Mobile Alliance (OMA) has

specified a set of new mobile DRM specifications,

and those will be reviewed. Novel m-Commerce

business models suited for the mobile markets and

the DRM systems are then evaluated, and we give

recommendations how to apply these specifications

to implementations and successful business models.

2 EXPERIENCES FROM THE

INTERNET

Only a small number of e-Commerce sites in the

Internet has been successful. This is not very

surprising because the history of the Internet is very

young and the old laws will not hold in the new

economy. However, it is a worth studying what have

been the factors behind those who have succeeded,

and what the mobile domain might learn of those

experiences. It is evident that there is no single key

to the success. In the mobile history several mistakes

such as WAP, Walled Garden and SMS trap have

been made and we may learn a lot of those, too.

In the famous Wired magazine article

(Anderson, 2005) a new term the Long Tail was

presented. It highlighted the importance of the tail of

the typical Zipf-like consumption distribution. The

key point here is that although a rather small number

of unique items receive more hits than others in

average, the impact of the Long Tail in the total

volume is higher. That is why it is extremely

important that the content downloading service is

not restricted for the most popular category but the

service must allow access to the niche markets, too.

Regarding to the DRM policy it can be assumed that

typically the mass market must be well protected,

while the Long Tail material with less downloads

might benefit from a lighter protection.

Apple’s iTunes will most probably follow the

Zipf-distribution, too. The business model of iTunes

is the most restrictive. The proprietary DRM

solution, called FairPlay, protects the value chain

from end-to-end allowing iTunes’s Advanced Audio

Coding (AAC) records to be played only by the

Apple’s iPod players. CDs can be burned without

limits but records can be copied just to five other

hard disks. Pricing is based on the pay-per-use

model with a slightly lower price level than in the

usual music stores. As an advantage users may just

DIGITAL RIGHTS MANAGEMENT IN THE MOBILE ENVIRONMENT

183

download individual hit songs, instead of full

albums.

Wippit has a different business model. They are

offering a subscription based unlimited access to the

record collection of 60 000 items that are

continuously updated. Some of the MP3s are not

protected at all and they can be freely copied, while

others are protected with Windows Media DRM. A

wider selection is available through a pay-per-use

policy. A compensation based business model is also

common. Most often the business logic is based on

the advertisements, that must be received for a free

content. Qtrax is an example of this business model.

Weed service supports rewarding in the C2C model.

In this case, both the music aggregator and the

private distributors are rewarded when music is

distributed through the C2C interface.

P2P traffic conquers already the major stake of

the Internet trunk lines and in the access networks

more than 90 percent of data traffic is from P2P

applications. The success of the P2P applications has

proved a few important lessons. First, consumers are

willing to share content if they have a proper

incentive to do so. Otherwise the Free Riding

problem occurs which means that users just

download content, without the sharing principle of

reciprocity (Kwok et al., 2002). Second, P2P sharing

technology works well without the help of the

centralized servers and operators. Unfortunately for

the content owners, P2P does not usually include the

business possibility. In any case, the Internet P2P

applications have shown that P2P is an extremely

efficient content sharing method, and C2C

communication channel can be used efficiently in

the viral marketing. These ideas should be taken into

use in the mobile networks, too.

3 MOBILE DRM

In the mobile environment Open Mobile Alliance

(OMA) DRM 1.0 specification provided the basic

features to protect the content, namely ring tones and

MMS messages. The extended specification, OMA

DRM 2.0 was approved on March 2006. It enables a

large set of different distribution mechanisms.

Content can be delivered through Pull, Push, Push

initiated Pull, broadcast, multicast and optionally

Superdistribution methods. Superdistribution is

backed by the Transaction tracking feature that

enables free and controlled content diffusion in a

C2C manner. Delivered items can be stored for

backup purposes and used later. Optionally

Unconnected devices are supported meaning that

content can be transferred to devices that do not

have Internet connection. Additionally, specification

includes an optional Export function that enables

OMA DRM protected content to be opened in non

other devices. Streaming is supported both by

unicast and multicast delivery methods. Finally, the

Rights Object Acquisition Protocol (ROAP) takes

care of the interactions between the entities in the

architecture, described in Fig. 2. Watermarking is

not part of the OMA DRM 2.0 specifications, but it

is left for the implementation. (OMA, 2006)

Figure 2: OMA Architecture (OMA, 2006).

4 BUSINESS MODELS

Depending on the DRM system in use, content can

be offered in various ways. The most popular

business models include subscription and pay-per-

view, -use or -download. Subscription based model

enables access to the predefined library of content. It

provides a simple charging logic, both to the user

and service provider. Pay-per-view, -use or -

download methods charge users separately on each

transaction. On frequent and small purchases this

solution creates a lot of charging data and can

discourage consumers to use the service.

C2C trading, such as P2P and

Superdistribution, will improve the system

scalability, and more importantly, it creates the

community aspect. Superdistribution provides new

business possibilities such as gifting and rewarding.

Idea in gifting is that the user can recommend

content for a certain number of her or his friends.

They have a chance to use the content for a

restricted time and after the expiry of the trial period

they are offered a membership. Gifting acts here as a

strong marketing scheme and suits well for the face

to face type of cellular communities. Incentive for

the Super-distribution can be enforced by rewarding.

The idea is to motivate the content sharing by giving

a small compensation to the distributor on each

ICE-B 2006 - INTERNATIONAL CONFERENCE ON E-BUSINESS

184

chargeable C2C delivery. Rewarding is an important

tool for the birth of the viral marketing business

(Einhorn and Rosenblatt, 2005). Compensation

model can be also used in the Superdistribution

context. DRM protected advertisement files can be

attached permanently to the original content files,

and when content is played and advertisements

shown, user statistics are sent to the centralized

system. Distributor can charge the advertisers based

on the number of hits.

OMA DRM 2.0 enables almost any business

model. You may choose models that are closed or

open, complicate or simple, slow or fast, more or

less secure. It is up to the manufacturers, operators

and content creators which of the selections

maximize profits for the whole value chain. As a

drawback, the high flexibility incorporates a high

risk to interoperability problems. To avoid those,

operators and manufacturers must clearly agree the

mandatory features supported.

Based on our analysis and evidence from the

fixed Internet, Superdistribution functionality, with

gifting and rewarding options, is a mandatory new

feature to be supported in the mobile phones and

presumable dominant design. It clearly underlines

the social behaviour pattern common among

humans. Viral marketing and different kind of

compensation based business models are becoming

fascinating. Rewarding is also supported by other

research results (Kwok et al., 2002). However, the

system implementations should respect the privacy

rules, and the tracking features should not be used

for collecting personal profile information without

users’ permission.

The best way to avoid the piracy is to make it

obsolete by providing a better, legal alternative.

DRM has, however, only limited possibilities to stop

piracy. The DRM solution is always a compromise

of the usability and the protection level, and the

small minority should not drive the decisions made

for the majority. More flexible copyright licensing

terms, such as Creative Commons, should be

carefully considered to be utilized for certain

content. Especially with niche markets belonging to

the Long Tail, strict copyright rules are questionable.

5 CONCLUSIONS

This paper has discussed the issues impacting on the

mobile DRM and the related business models. The

scope was in the commercial content but the user

created content should not be forgotten either. The

Internet services give valuable background

information for the successful mobile DRM solution.

OMA DRM 2.0 offers a wide tool box to implement

different business models. Superdistribution is an

interesting possibility for the mobile phones to be

utilized and studied further. Mobile DRM solutions

should be optimized to meet the benefits of all

players, including the non mobile users, and inter-

operability among the standards should be

guaranteed. Last but not least, the best results do not

necessarily equal to the maximal protection level.

REFERENCES

Anderson, C., 2004, October. The Long Tail. Wired

Magazine, Issue 12.10. Retrieved June 10, 2006, from

http://www.wired.com/wired/archive/12.10/tail.html.

Christensen, C., 1997. The Innovator’s Dilemma, Harvard

Business School Press.

DTC, 2005. DTC Says Some 300 Million Mobile DRM

Phones Will Ship in ’09. Retrieved June 10, 2006,

from

http://www.findarticles.com/p/articles/mi_m0EIN/is_2

005_March_30/ai_n13490154.

Einhorn, M.A. and Rosenblatt, B., 2005, February 17.

Peer-to-Peer Networking and Digital Rights

Management - How Market Tools Can Solve

2006, from http://www.drmwatch.com/special/

article.php/3490951.

Eylert, B., 2005. The Mobile Multimedia Business,

Requirements and Solutions, Wiley.

Gaynor, M., 2001. Real Options Approach to

Standardization. Proceedings of the Hawaii

International Conference on Systems Sciences,

January 3-6, 2001, Maui, Hawaii, USA.

Grech, S. and Luukkainen, S., 2005. Towards Music

Download and Radio Broadcast Convergence in

Mobile Communications Networks. Proceedings of

the WTS 2005 Wireless Telecommunications

Symposium. 28-30 April, 2005, Pomona, California,

USA.

Kivisaari, E. and Luukkainen, S., 2003. Content-Based

Pricing of Services in the Mobile Internet.

Proceedings of the seventh IASTED International

Conference on Internet and Multimedia Systems and

Applications (IMSA 2003). August 13-15, 2003,

Hawaii, USA.

Kwok, S.H., Lang, K.R. and Tam, K.Y., 2002, September

01. Peer-to-Peer Technology Business and Service

Models: Risks and Opportunities. Electronic markets,

Vol 12 (3), pp. 175-183. Routledge.

Open Mobile Alliance, 2006. DRM Architecture,

Approved Version 2.0 – 03 Mar 2006. Retrieved June

10, 2006, from http://www.openmobilealliance.org/

release_program/drm_v2_0.html.

Shapiro, C. and Varian H.R., 1999. Information Rules,

Harvard Business School Press.

DIGITAL RIGHTS MANAGEMENT IN THE MOBILE ENVIRONMENT

185