Building a Better Econtent Commerce Engine

Page 3 of 3

Increased Mobility
Another area of econtent ecommerce that is expected grow in the U.S. over the next several years is mobile distribution, according to Phillipe Poutonnet, strategic market analyst for Qpass. In Europe, where the underlying mobile infrastructure is more advanced with high-speed 3G mobile telecommunications delivery and devices, users can download and pay for music downloaded to handsets. Vodaphone recently unveiled the ability to pay for and download 90-minute videos to handsets.

So far in the U.S., the mobile content business has for the most part been limited to ringtones and other relatively small applications because the high-speed wireless infrastructure is less developed. But the domestic mobile market is evolving swiftly. In mid-February, Nokia Corp., the world's leading phone maker, teamed up with Microsoft Corp. and Loudeye Corp. to enable mobile subscribers to download music from a PC to their phones, much like the way a digital music player works. Unlike owners of dedicated MP3 players, Nokia users will also be able to download tracks directly to their handsets through the wireless phone network and then transfer them to computer for storage or to burn to a CD.

That's not the same as being able to download directly from a remote location, but it does show that there will continue to be new solutions to content delivery, including 3G. As the 3G wireless infrastructure in this country evolves over the next few years, Poutonnet expects similar developments here, with a similar need to protect content. The more valuable the content, the more temptation to pirate the material, so the stronger the encryption will need to be, according to Poutonnet.

As the ability to access content via mobile devices becomes more critical to consumers and businesses alike and as ecommerce for econtent continues to evolve, expect more changes in types of solutions, companies providing these solutions, and combinations of companies via mergers or partnerships. The same will be true of solutions designed for wired devices. As Duane Kuroda, vice president of marketing for BitPass as well as many other vendors involved in the space point out, the digital ecommerce market is still evolving. So, there will be continued consolidation and partnerships among solution providers while content continues to search for the perfect ecommerce engine to drive its success.

Sidebar: Authentica DRM Stops Illegal Redistribution of Off Wall Street

Off Wall Street, a highly respected electronic investment newsletter geared toward hedge fund managers and other investment professionals, charges $50,000 to more than $100,000 per year for an annual subscription. With that type of value placed on the newsletter, it was evident from a very early time that the publisher needed a strong DRM technology to protect the publisher as well as its subscribers. Subscribers paying such a price for the newsletter wouldn't want to learn that another investment professional acquired the product free, explains Off Wall Street Consulting Group, Inc. president Mark Roberts.

"We were very early users of encryption," says Roberts, who started the publication in the late 1990s. "Authentica was the only game in town and was very sophisticated. Over the years, its technology has been very stable. There's never been a problem."

Before adding the digital rights management software, there were countless cases of Off Wall Street getting faxed to non-subscribers who sometimes then faxed the information to even more non-subscribers, according to Roberts. Though the publication was still successful, such lack of protection of the publication's rights meant that the publisher wasn't getting paid for all of the product views. "As we grew, it became more of a problem," Roberts says. "Once we added Authentica on the sell side, it eliminated all of that."

Authentica's PageRecall, like other digital rights management software, encrypts and adds a watermark to the underlying content. The subscriber can print out the information, but any printed material contains the watermark that effectively deters redistribution. While subscribers are capable of printing out and redistributing the material that way, the watermark shows that such redistribution is illegal as well as who the owner of the material is, leading to a big risk and embarrassment for whoever redistributed the material, according to Roberts. He added that he was unaware of any such attempts since his company started using Authentica.

Sidebar: Cash and Carry Content--Mobile Content Commerce

Obstacles ranging from low handset penetration to poor usability have dogged the growth of the mobile multimedia content and services market worldwide. But this year could mark a turning point: analysts forecast that, by the end of 2005, multimedia handset penetration rates will reach a critical mass of 30%. Moreover, the industry is expected to iron out most of the compatibility and interoperability issues that have menaced multimedia messaging services (MMS) like video clips and music downloads.

This combination of factors will allow for a freer flow of multimedia content, according to Terry Ernest-Jones, author of "MMS Evolution," a new MMS study by Juniper Research in the UK. "Beginning this year, providers have more reason for optimism than pessimism," he says. Indeed, Ernest-Jones estimates the global MMS market will reach $42.5 billion in 2005—more than double the figure for 2004. He also expects MMS to be a run-away success, approaching the level of today's SMS: "This revenue growth will be driven by content and services such as mobile music clips and sports updates supplied by third parties to mobile users."

But before the mobile content industry can break out the champagne, it will have to master the basics of content commerce, beginning with content management and billing. "The challenge is that providers must not only manage a growing number of content types, but also adapt the content for a plethora of multimedia-capable devices—each with its own features set and screen size," explains Christian Lutz, CEO of ucp morgen, a Vienna, Austria-based provider of content delivery software for network operators, portals, and content providers.

Charging for mobile content can be even more complex. As content becomes more personalized, so do content bundles. Providers will have to be in a position to charge for packages that combine SMS news alerts and MMS content including full-track music downloads and video clips. Moving ahead, analysts expect the services subscription model to gain traction—a development likely to further complicate the sales of mobile data products and services and force providers to keep better track of what they deliver to whom.

Many content providers are actually aggregators with dozens of content providers plugged into their platforms. "To organize all this and identify the customer, identify the handset, deliver the content, and charge the telephone bill is a tall order," Lutz says. His company serves more than 500,000 digital content assets from 300 content providers and 45 content types. To date, 18 operators and several major media companies have opted for ucp's content delivery and management technology. The company's product line is designed to encompass the entire digital supply chain, which should provide a formidable content commerce solution when combined with that of new parent company Qpass, a U.S.-based provider of mobile commerce software (Lutz serves as new European general manager).

One of Lutz's customers is T-Mobile International. The mobile operator recently signed a software license agreement to use ucp's Content Download Center platform to support its Video-Enabled MMS and Mobile Video Download services across ten markets including Germany, Austria, and the UK. The platform enables users to preview mobile media content such as videos, logos, screensavers, and java games before they download the content via T-Mobile data portal, t-zones. Users are free to send content they have purchased to their own mobile devices or those of their peers. Content downloads are charged directly to the phone bill. The platform also integrates with the systems of T-Mobile's content providers, and incorporates billing interfaces, content management, device recognition, and rendering.

While most business models focus on building the capability to manage, deliver, and charge for content, a key differentiator will be the ability to navigate consumers through the content jungle. "Right now it's a one-size-fits-all approach with a lot of content at one end and a lot of consumers at the other," says Steve Shivers, SVP, sales and marketing at Qpass. "The technology needs to evolve so that providers can link demographics and preference to suggest suitable content to specific user segments."

Helping individual users discover new content will surely lead to new sales, according to Lutz. To this end, his company is gearing up to release a "recommendation engine" that will match content and human behavior. " makes a lot of sales by suggesting similar books to consumers or telling them which books other customers have bought," Lutz explains. "Bringing this same intelligence to the mobile space will allow providers to sell content in a way that is more proactive—and potentially more profitable."

Companies Featured in This Article

Cadmus Communications
Hanley Wood
Kennedy School of Government
netLibrary Off Wall Street
Shore Communications

Page 3 of 3