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Big Media Clings to Restrictive DRM Models

The recent "DRM-free" music tracks that were announced by Apple and Amazon.com do not herald the death of Digital Rights Management (DRM) restrictions on digital media, according to In-Stat's latest market assessment.

Instead, the DRM-free model will likely be viewed as a music industry-only experiment -- albeit one that will be closely monitored to see if a viable business model emerges, the high-tech market research firm says.

"The amount of digital content flowing over telecommunications networks is enormous and growing," says Mike Paxton, In-Stat analyst. "Much of this content is already protected by some type of DRM or content protection scheme. As the creation of digital content expands, it is fueling demand for more DRM solutions and content protection technologies."

I also believe that the big media companies will cling to their DRM security blankets for the near-term -- until they can overcome their fear of free-wheeling digital media formats. The rapidly growing independent record labels will continue to lead the way -- regarding which business models are proven viable -- for the legacy industry players.

Seeding the market with new DRM-free digital content is clearly counter-intuitive to traditional industry executives that have built their careers around perpetuating and controlling an environment that's centered upon creative content scarcity. Therefore, they will proceed slowly, which ironically adds more unfettered momentum to the Indie label marketing machine.

Meaning, big media companies are unwittingly contributing to the ongoing entertainment market fragmentation. Again, they can't help themselves, it's in their corporate DNA.

In-Stat's market study also found the following:

- Forensic DRM technologies, which are used to identify actual end-users of digital content, will see much wider usage in the future.

- A significant percentage of U.S. consumers remain ignorant about DRM. In a recent In-Stat survey of U.S. consumers, over 40 percent of respondents stated that they were not familiar with the term "Digital Rights Management."

- However, DRM is a familiar topic for a growing number of consumers. Forty-five percent of the same survey respondents stated that they had either purchased or used some type of media product with integrated DRM or content protection technology.

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