IPTV/VoD: The fall of content's kingdom

But how will the story end?

A digital file can be transported across multiple platforms and devices worldwide, but it may only be decrypted in certain circumstances. It can be carried or transported anywhere, but only the owner to the rights may access it, wherever they have bought the rights to. Many argue that this has always been the case, even with physical media such as CDs. Not so, even if it is the legal definition on the sleeve. The irrelevance of geography really messes up the traditional rights "window" model superbly. But the studios and labels don't seem to have found a palatable alternative that allows them the level of control they want.

But DRM is worse than any alternative. Consumers absolutely loathe it and have no understanding of it altogether. Trying to explain to a novice computer owner why they can't play their music back on different devices or record it to different media is a nightmare that simply makes most people just give up. It's fine for early-adopting technophiles who understand how DRM works, but for the other 95 per cent of the media-buying public, it's not acceptable. Worse still is that it just doesn't work at all. A simple search on the net will explain in 20 different ways how to go about cracking or circumventing most protection systems if you are so inclined (even those which are analogue-based). The industry can't keep up with an enemy that out numbers it millions to one. Stories of locked machines, hacker rootkits being installed on PCs and so on are just the thin end of the wedge that's yet to come.

Neither businesses nor consumers buy things because of their features and benefits. A universal venture capitalist truth is that they buy things because those things take away pain of some kind. DRM creates pain, hence why it will not work long-term no matter how cleverly it is marketed. The same is true of download-to-own services, which have got off to a very shaky start. Having to pay the same price of a DVD, minus packaging, plus discs, and then undergo the hassle of burning them only for them to be scratched to pieces when lying around the house is just too much. The public implicitly understands the concept of value (even if they don't refer to it in the same way that business does), and see very clearly that compared to buying a DVD, video on-demand and D2O has little to them.

So how do you end piracy or marginalise it? The answer lies in a combination of punitive action and providing more imaginative services. A war against piracy is like the so-called "war on terror" – it's a misnomer, and corrupted English language replacing a genuine enemy with a vague abstract noun, giving a perpetual, free scapegoat for every corporate failure. Who you are going to war against are your own customers and ordinary people. We are told copyright violation is a crime, but never see the police taking it particularly seriously, unless it involves cases of organised gangs. The content industry doesn't make any distinction between those at home and those that traffic drugs, launder money and have guns.

Guilt or the threat of legal action won't ever work – people laugh out loud in cinemas when the copyright warning appears and, just like illnesses, always think it happens to someone else and won't happen to them. These campaigns are trying to talk old language to a new generation who have already grown up with free media and movements against the power and greed of corporations.

However, P2P networks have weaknesses too which are permanent. First, they are very slow. Secondly, the files are generally bad quality and/or badly named. Thirdly, the search results that point to them and the networks themselves are absolutely riddled with viruses and spyware. Fourth, they are generally difficult to use productively without some kind of technical expertise and have varying reliability. Fifth, they kill your internet connection so no-one else can use it. But they are free.

So it's time to follow the first rule of mass media – give the people what they want. And when you give it to them, make sure it's better than anything else out there they might choose instead. That involves change. At the very least, consumers want something DRM-free, very fast, high-quality, easy to use and reliable that doesn't kill their internet connection. But most importantly, they know digital economics mean a lower distribution cost. So don't fall into the trap of profiteering and give it to them as cheap as you possibly can. Only after you have met these prerequisites, then comes imagination to make it more compelling than P2P.

Disney realised the number one illegally downloaded TV show was Lost, and hence released it for free. But the problem is that the idea is practical insofar that you have the will and means to deliver it on a mass scale. That delivery relies heavily on pricing, as once again, it's difficult to beat free. You cannot put yesterday's models on tomorrow's technology – it requires significant change and for the industry to wake up to exactly why people use P2P networks. They want to have a very large cake, and spend a long time eating it. No-one is able to build these legal alternatives as the licensing from rightsholders is just prohibitive.

Making great services that consumers will choose above piracy are the carrot, but a stick is still missing. That's where P2P caching mechanisms come in. P2P traffic is absolutely enormous, second only to real-time video. Estimates vary, but in some cases it's claimed to compose over 80 per cent of all network traffic. In the UK, that's anything up to 80Gbps of data flowing through the pipes alone, with ISPs paying for every MB. Even though it's a sales incentive, at the same time it's killing them and a whole raft of start-ups have seen the pain, and stepped in with an antidote. P2P caching systems work by localising traffic exchange at the edge of the access network, instead of allowing it to flow to the core, meaning a definite reduction in bandwidth.