The Opportunities and Threats for Commercial Players Laurie Kaye, Laurence Kaye Solicitors June 5 2006 Laurence Kaye June 5 2006 Laurence Kaye June 5 2006

DIGITAL CONTENT MARKET ©ONTROL ACCESS, INCLUSION, PRESERVATION V Network is maturing > whatever, wherever, whenever “Commercial players” see this as a world of opportunity (Big old, big new + “authors” & artists” 2 years ago – piracy and illegal file sharing over P2P [Still a problem…] But today the focus is on new and emerging business models for broadcast and on-demand content over the networks and finding the right blend of subscription, pay as you go and advertising-based revenues. [c.f. spate of acquisitions] True of music, film, publishing and TV So where are the threats? Impact on existing business revenues; concerns about a level playing field (BBC) and the ‘chilling effect’ that EC Regulation would have if ‘non-linear services are regulated in the way currently proposed in its proposed Audio-Visual Media Services Directive. But I want to focus on a fundamental issue of concern that I often hear from commerciap players – LOSS OF CONTROL [ITS IMPACT AND HOW THIS WILL CHANGE. LOSS OF CONTROL OVER SUPPLY CHAIN (e.g. music and film) to INTERPOSITION OF NEW DISTRIBUTORS (e.g. online music; online booksellers who scan material and make snippets available – e.g. Amazon’s ‘Search Inside’ LOSS OF CONTROL OVER CONTENT – indexing and caching of text and image content by search engines. + THE POINT I AM MAKING IS THAT LOSS OF CONTROL > UNCERTAINTY > NATURAL DEFENSIVENESS. And this is in the context of an environment where the “User community” says “give me more” So in a nutshell, Technology > disruption of traditional relationships What’s missing? New business models are emerging but there is still uncertainty “We need a common language, not commercial terms” DIGITAL CONTENT MARKET Laurence Kaye June 5 2006 Laurence Kaye June 5 2006 Laurence Kaye June 5 2006

“The answer to the machine is the machine” (Charles Clark) or “Set the rules and get the machines to talk to each other” It’s not just a language, it’s everything that goes with it: Architecture Grammar Language Vocabulary It’s in that context that we should see “DRM” Laurence Kaye June 5 2006 Laurence Kaye June 5 2006 Laurence Kaye June 5 2006

“DRM” “An umbrella term for a range of technologies for managing the buying and selling of intellectual property rights in digital form” EPS Laurence Kaye June 5 2006 Laurence Kaye June 5 2006 Laurence Kaye June 5 2006

“DRM” as an enabler Digital Management of Rights Management of Digital Rights “The identification and description of intellectual property, the rights pertaining to it and the parties” Digital Management of Rights “The technical enabling of usage permissions or enforcement of usage restrictions” Laurence Kaye June 5 2006 Laurence Kaye June 5 2006 Laurence Kaye June 5 2006

DRM in the commercial domain ‘ONIX’ – Publisher to User Publishers & Search engines TPMs e.g. film and music Books and journals A good illustration of the work taking place within the publishing industry in the development of ‘ONIX for Licensing Terms’. The essential point is that these formats make it possible for licence terms to be expressed electronically. It will mean that instead of relying on paper-based contracts and licences, those licence terms will be linked electronically with the content. This is key step in the automation of rights clearances. ONIX for Licensing Terms is a family of ONIX XML formats for the communication of licensing terms for IP resources, and particularly for material published in electronic form. The first manifestation of ONIX for Licensing Terms is an ONIX Publisher License format, intended to support the communication of licensing terms for electronic resources from a publisher to a user institution (e.g. an academic institution or consortium), either directly or through a subscription agent. The purpose is to enable the license terms to be loaded into an electronic resources management system maintained by the receiving institution. The ONIX Publisher License format may also be used for the communication of licensing terms from a content host system to a user institution; and it should also be possible to extend it for the communication of licensing terms from a publisher to a content host system that carries the publisher’s materials, and. There is further potential for the ONIX Publisher License format to be used to communicate usage terms between publishers’ digital repositories and search engines. Publishers e.g .with the necessary tool(s),text based publishing industries could give specific instructions to individual search engine agents, whether and how they should index, store, process, display or link to individual web sites, web pages or digital objects (text files, images, or other). + Creative Commons in the non-commercial sphere Laurence Kaye June 5 2006 Laurence Kaye June 5 2006 Laurence Kaye June 5 2006

“The answer to the machine is the machine (2)….” Fair use by design Trusted third party holding keys to encrypted content in escrow so that fair users of content can access content in a manner consistent with fair use Infrastructure combining both Source: WIPO Report on DRM http://www.wipo.int/edocs/mdocs/sccr/en/sccr_14/sccr_14_5.doc “The most direct method of accommodating fair use would be to mandate or prompt the development of rights management systems that directly allow purchasers of a work to make fair use of the content. They then go on to examine another alternative. The most direct method of accommodating fair use would be to mandate or prompt the development of rights management systems that directly allow purchasers of a work to make fair use of the content compatible with law. The copyright owner would be required to deposit keys to content as the quid pro quo for having the anti-circumvention provisions of the DMCA apply to the content in question. They see the ultimate solution in a combination of the two approaches: The first layer of our proposed fair use infrastructure would involve the design of rights management technologies that incorporate automatic fair use defaults based on customary norms of personal noncommercial use. Those who desire greater fair use access, meanwhile, would turn to a trusted third party intermediary Source:WIPO DRM Report (pp.80-83) Laurence Kaye June 5 2006 Laurence Kaye June 5 2006 Laurence Kaye June 5 2006

Support Creative Industries in ‘learning the language” PRIORITIES Support Creative Industries in ‘learning the language” Promote transparency in use of DRMs Technical and business solutions first, change law next Laurence Kaye June 5 2006 Laurence Kaye June 5 2006 Laurence Kaye June 5 2006

Laurence Kaye Solicitors More information and useful content – see www.laurencekaye.com Free newsletter – subscribe via link on home page of our site Laurence Kaye June 5 2006 Laurence Kaye June 5 2006