Mobile DRM Issues Set to Cost Europe US$4.4 Billion in 2006

The Mobile Entertainment Forum (MEF) has called on the industry to end revenue leakage and protect content rights by delivering an open and interoperable mDRM solution based on a clear open standard. DRM is core to every mobile transaction - every time a ringtone, music track or game is downloaded royalties must be sourced back to the content provider, producers and/or artists.

According to one of the industry's top analyst firms Frost & Sullivan, around 80% of mobile phone content has been hacked or downloaded onto mobile phones, illegally from websites, or through the use of Bluetooth, memory cards and other storage devices. Mechanisms using MMS or premium SMS to deliver content to mobile devices are again susceptible to fraudulent practices, including temporarily switching off the network so as not to be billed.

Combined, these activities combined are predicted to cost the mobile entertainment industry around US$3.4 billion this year alone. An additional US$1 billion is missed due to the lack of widespread interoperability for content across PCs, mobiles and MP3 players.

In total a staggering US$4.4 billion of revenue will not be realised, which is in excess of half the income from the entire European mobile entertainment industry.

By taking steps to implement an open and interoperable mDRM framework, the industry can not only reduce the revenue loss, but encourage the development of new business models and content distribution mechanisms. For instance, the ability to forward subscription content between users with recipients signing up for services to receive the content will offer the industry a powerful peer-to-peer marketing tool.

The MEF is calling for the value of content to be protected through mDRM while ensuring that the ability to share content is not restricted through proprietary solutions.

"For many media owners, the decisions to move into the mobile arena are being taken because of high profit expectations resulting from consumer demand but also adequate rights protection and secure devices. The instinctive reaction is to try to bar consumers from sharing content, but by imposing cumbersome restrictions or by recommending proprietary solutions, the industry at large risks impairing the consumer experience and ultimately stunting the market," comments Patrick Parodi, MEF Chair.

"Encouraging legal and innovative peer-to-peer distribution is vital to driving the growth of the mobile entertainment industry, however we need to consolidate the numerous proprietary and open standards-based solutions being deployed and develop an industry consensus and avoid the Billion euro costs."

As one of its key initiatives, the MEF supports the adoption of interoperable mDRM methods. The need for protection is based upon the creator's right to extract value from their work, as well as the distributor's right to ensure that users legitimately access mobile content. A robust and open mDRM framework is vital to encourage more companies into the mobile entertainment market, providing a more dynamic experience for users and reaping the highest level of revenues."

Posted to the site on 9th May 2006