Analyst Firm Warns Of Billions Lost Due To Lack Of Mobile DRM?

from the losses?--what-losses? dept

Tue, May 9th 2006 3:20am — Mike Masnick

Analyst firms love to sell their reports, and that means they need to spin them in ways that make them sound really scary to the industry that might buy them. Last week it was one analyst firm claiming that DVR's are "costing" TV advertisers money, and this week's entry comes from another analyst firm proclaiming that a lack of standardized DRM in Europe will cost the industry 3.5 billion euros this year. This is ridiculous on many levels. First, like so many reports, this seems to include all unauthorized copies as if they would have been paid for. Any time you see a report claiming that all such content is "lost revenue," you know that the report is being used dishonestly -- especially when the report doesn't seem to include the idea that unauthorized usage can often lead to legitimate purchases as well. Next, nowhere does the report seem to note that copy protection has a well-known decrease in the appeal of content. It makes it less useful to the end user in many ways -- thereby making it less valuable. Also, it removes any right of resale, which (especially in the content world) helps increase the value of many products. Again, the report does not appear to take any of this into account. About the only thing it notes is that proprietary copy protection solutions will stunt the market by limiting how content can be moved around -- but that's only a small part of the issue. Also, in the realm of mobile data, this is still very much an emerging market -- with many users not sure why they should bother. Putting up barriers everywhere doesn't make anyone more willing to try stuff. In many ways, unauthorized copies of software products in the early days of PCs were what helped establish them as a platform worth using. I've been testing a few smartphones out lately, and the fact that everywhere I turn there appears to be a tollbooth for apps with limited usefulness makes me wonder why I should even bother with most mobile data offerings. Of course, all of this, combined with too much greed among patent holders, helped effectively kill off a similar mobile standardization effort last year. It's hard to see how trying to go through such a process all over again is going to make sense -- though, thanks to questionable reports from analyst firms, it's likely that another standards battle is about to start over a "feature" that consumers don't want or need.

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19 Comments

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Akeelah, 9 May 2006 @ 5:06am

*first*?
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Not surprised, 9 May 2006 @ 5:31am

No real surprise
It's no real surprise that these analyst firms are catering to the fears and, more importantly, beliefs of the industry they are serving. In many cases if they actually reported the facts in an honest way they wouldn't be able to sell them.

It really seems that most firms do not go to the trouble of hiring or buying these analyst reports unless it confirms what they want to do or say. It seems that companies hire these firms, explain what they want to "find out" and a supposedly unbiased report is created that, conveniently enough, supports the buying company's position. These reports are then used to justify to the board members, stockholders, and others that the desired course of action is the correct way to go. It helps because now the company is really in a somewhat no-lose situation.

They get to go forward with the course of action that they wanted to without the problems of having to fiscally or rationally justify it on the plan's merits. Any naysayers are immediately put on the spot to have to prove why the plan is not good, after all, the company has gone to an "outside expert" already. You no longer have the ability to raise questions and concerns for closer inspection, you must prove the concerns. This leads to anyone questioning the decision to have to be able to predict the future, which ironically is what the analyst report is doing.

If the plan works out then those in charge take credit for executing and being able to guide and direct the company successfully. If it fails they always have the outside analyst firm to blame for any failure, after all it wasn't the leaders that analyzed it, it was "them".

Over the last several years I've seen a lot of companies fail that touted the rosey forecasts of the hired analyst firms. I guess that's the basis of supply and demand. These companies demand it and the anaylst firms supply it.
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lindsay obrien, 9 May 2006 @ 7:02am

AppOnIpod
I found this site on the web and I thought you would be interested. http://www.apponipod.com
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- Jeroen, 9 May 2006 @ 10:57am
  
  Re: AppOnIpod
  And I found this stupid spammer on the web and hope you won't be interested.
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Ajax 4Hire, 9 May 2006 @ 7:11am

How is this different from a VCR?
DVR is not a new technology, it is new technology on an old Idea, saving real-time content for later review.

I can make the same arguement for paper.

Book printers are worried that the wide availability of paper will cut down book sales as people copy content in the library.
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Joe Snuffy, 9 May 2006 @ 7:25am

Download
I downloaded a movie once from the internet "illegally" and I really enjoyed it. As soon as the movie came out on DVD I bought it.
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Marina loves pictures, 9 May 2006 @ 7:29am

I think such reports are very overextimated.
There might be just some lies that sound very impressive to a common citizen.
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Anonymous Coward, 9 May 2006 @ 7:35am

Sources please
unauthorized usage can often lead to legitimate purchases as well.

Can you please cite sources that support this contention?
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- Anonymous Coward, 9 May 2006 @ 8:41am
  
  Re: Sources please
  For one, personal experience. You see this same type of discussion every day on several nerd sites and every time there are people who download, like, and buy. I do it, and i know others who do.
  
  No one has gone out and done a study on it, because then it would legitimize piracy, and show that it can actually create sales as well as hamper them. Then there would be little to no justification for DRM and the music and movie industries would have to adjust their business models to fit the need/desire for portable, computer based data. As long as they continue to not do this study, the more they can claim that piracy is killing their business, and sue people for large sums of money, when instead they should focus on selling online, and producing things that dont suck ass.
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  - Anonymous Coward, 9 May 2006 @ 10:43am
    
    Re: Re: Sources please
    There's no one, not the EFF, not some economist, that would produce such a study if it were possible?
    
    The claim that piracy is actually *good* for business is one I see on TechDirt often, but never with any citation. Surely, if such a claim could be supported, there'd be some evidence (beyond anecdotal).
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    - Mike (profile), 9 May 2006 @ 11:22am
      
      Re: Re: Re: Sources please
      There's no one, not the EFF, not some economist, that would produce such a study if it were possible?
      
      The claim that piracy is actually *good* for business is one I see on TechDirt often, but never with any citation. Surely, if such a claim could be supported, there'd be some evidence (beyond anecdotal).
      
      Um. There have been plenty of studies we've pointed to in the past.
      
      File Sharing Boosts CD Sales
      
      Study Shows File Sharing Not Harming CD Sales
      
      Recording Industry's Own Study Shows File Sharing Not A Big Deal
      
      and that's just after a quick look on Techdirt... with Google I'm sure you could find many more. Almost every study we've seen, that wasn't industry supported (and the last one above *WAS* industry supported) has shown that giving stuff away for free acts as a promotion that can often increase sales.
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Hairball, 9 May 2006 @ 8:10am

Imaginary Expenses
If there isn't a good copy of a new movie on TPB, does that mean I'm going to rush to the movie store and buy it? I really doubt it. The people writing these reports have to have a head full of rocks. Actually. I take that back. The people buying these reports have heads full of rocks. If it weren't for them believing this rediculous BS without taking a second look at the reasoning (or lack thereof) behind these reports then perhaps, the report writers might actually report a relevant story instead of lying to their (dumb) customers. Who else do we know like that...?
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Spell check, 9 May 2006 @ 8:13am

It's spelled buy them... Not by them.

"industry that might by them."
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- Anonymous Coward, 9 May 2006 @ 10:50am
  
  Re:
  You're as weak as your handle little man.
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Joe Smith, 9 May 2006 @ 9:18am

Economics 101
First, like so many reports, this seems to include all unauthorized copies as if they would have been paid for. Any time you see a report claiming that all such content is "lost revenue," you know that the report is being used dishonestly

Quite so.

In economics 101 they taught me that demand goes up as the price goes down and vice versa. To argue that every free download is equal to one lost sale assumes that the basic laws of economics have been repealed. Perhaps someone should be asking these consulting firms and industry organizations whether they fundamentally believe in a market economy or not.
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Bob, 9 May 2006 @ 9:49am

The whole point of the article is that advertisers are losing revenue because people dont watch the commercials. If they would just get it through their head that people dont WANT to watch commercials which is why they skip them. If they dont want to watchem they arent interested in them and therefore wouldnt pay attention to them if they were forced to watch them. Therefore the advertising is useless anyway. The strong sales of TV shows on DVD show people are willing to pay to watch TV shows without commercials. I would be extremely willing to pay a little more for commercial free TV and the advantage of that is each episode can be longer too. Most ads are ineffective anyway. Who hasnt heard of Coke by now. Is there really a need for them to have commercials? The same goes for Ford,GM, Budweiser, Geico, Toyota, Coors Light, Pledge, etc the list goes on and on. Everyone knows this stuff exists so why advertise it.
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- Techie, 9 May 2006 @ 11:52am
  
  Re:
  I like commericials on tv as it gives me a chance to go fix a coke or grab a snack and go to the restroom
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derfaust, 9 May 2006 @ 11:54am

free beer!
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BillyBob, 9 May 2006 @ 12:50pm

The other way 'round...
Why don't they consider the cost of having an entire industry side-tracked into developing ever more complex and problematic DRM schemes instead of figuring out how to deliver better video & audio quality, more compelling content and other new tech & electronics?

DRM is a waste of resources for EVERYONE - the content creators, the media mfrs, HW & SW mfrs and consumers.
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