Friday, May 20, 2011

Digital Distribution

Continuing on this week's topic of first sale and digital distribution, I thought I would discuss emerging distribution strategies for digital media. The outline below comes from my observations on new media technologies, some of which can be found in an earlier entry here. As far as I can tell, digital distribution strategies can be divided into three categories according to salient features.

  • Access-Based distribution (“cloud” based services)
    • the customer subscribes to a service
    • the subscription entitles the customer to access content stored on the provider's servers
    • content is remotely stored, though some items may be remotely cached for offline use
    • when the subscription is terminated, the customer loses access to all content
    • the content provider can exercise a great deal of control over what content is offered; the selection of content may vary over time, meaning that the customer is only guaranteed access to the cloud, not any particular item in the cloud
    • typified by
      • Hulu+
      • Netflix streaming service
      • Amazon's Instant Video service
      • Pandora
      • Napster
  • Direct Distribution
    • the customer purchases a digital file from the content provider
    • once downloaded, files are stored locally
    • the customer retains the files regardless of any relationship with the provider
      • DRM technology may or may not restrict the customer's access rights to the files
    • typified by
      • iTunes
      • Magnatune
      • Napster
  • Device-Based distribution
    • content is purchased, delivered, and consumed via a device sold by the content provider
    • the customer downloads content directly onto the device; DRM technology ensures that the files are useless without the device or software from the content provider
    • files are purchased individually, so the customer can continue to use any purchased files regardless of continued relationship with the content provider
    • content cannot be backed up or transferred to another device; once the device is abandoned, access to the content is lost
    • content provider has access to the devices, so content downloaded is not always secure from remote management by the provider (see Kindle and removal of Animal Farm)
    • typified by
      • Amazon's Kindle and other ereaders
      • PS3/Xbox 360/Wii marketplace games

These strategies are not mutually exclusive. As noted above, Napter now provides a subscription service for access to its cloud alongside offering individual songs for purchase. Netflix continues to offer rental of DVDs in addition to its online streaming service. Now, to see what implications these strategies have for first sale, we must keep in mind that first sale seems to serve two key functions. First sale makes media more available, by allowing the secondary market where copies can be bought and sold even after the original distributor has ceased production. In addition, first sale makes content more affordable by facilitating the existence of lending libraries and, once again, the secondary market. The extent to which these goals can be realized on the digital marketplace depends heavily on the distribution strategy employed.

Access-Based Distribution
There is no way to talk about first sale in the traditional sense here because there is no formal sale. The customer has merely paid for access. It is as if the customer had a subscription to a non-lending library. The subscription gives the customer the right to enter the library, peruse the collection, and read or consult any of the available books, but subscribers may have no control over the content of the library's collection. The library might remove a book from the collection before a customer gets the chance to read it, or it may be very slow to acquire new works. The lack of control makes the subscription less valuable than purchasing works individually, but subscribers may get access to more content for their money. Nevertheless, the provider's control means that content will not be available should the provider go out of business or end the subscription service, so there is no chance of archiving content.

Direct Distribution
Here, the case may be improved somewhat. In such cases, the customer has downloaded files, so access to the content is not contingent on any relationship with the content provider. In the absence of DRM, the customer can access content using any appropriate device or software, make backup copies, and convert the file into another format should changes in technology make such conversion necessary. Nevertheless, content cannot be re-distributed lawfully under the current intellectual property system. The typical means of transferring files involve simply making a copy (from the hard drive to a removable medium, from one hard drive to another across a network), so such transfers are presumed infringement under current law. Of course, content providers might also include DRM technology with such files, potentially hampering all such uses. Free culture advocates often express frustration at both DRM and the state of current intellectual property law because direct distribution of digital files should improve availability of content, both upon release and in archives. While digital files require some storage medium, transferring between media is trivial, allowing many copies to be made. Computer networks also speed distribution compared to distribution by physical medium. Even so, DRM technologies and current intellectual property law prevent making content more available and affordable. The potential of the technology is going unrealized because the law has lagged behind technology, and content owners have been very effective in lobbying legislators to protect their current business model.

Device-Based Distribution
Here, we have a mixed bag of the other two strategies. On the one hand, files are transferred to the customer, so there is no reliance on a continued relationship with the content provider to ensure access to content. On the other hand, DRM is standard for this distribution strategy, making the files more difficult for the customer to transfer, convert, or even use (since a particular device is required). Archiving is impossible since the files are tied to the device; once that device becomes obsolete, the content will be inaccessible. The possibility of transfer will depend on the content provider's DRM; the nook, manufactured by Barnes and Noble, allows limited lending of some books, but no permanent transfer, even on a “send and delete” basis. Furthermore, some content providers may choose to retain access to the customer's device storage. Amazon recently used such access to remove copies of George Orwell's Animal Farm (a public domain work) from all Kindle devices at the request of a publisher (as seen in the New York Times, among other places). As such, content stored on such devices cannot be considered entirely secure from outside interference. All told, device-based distribution is the worst for preserving any first sale benefits, unless content providers offer content at a much lower price in exchange for inherent limitations. Nevertheless, archiving of content distributed in this way is at best unreliable, at worst utterly impossible, and in any event reliant on the provider's continued support of the device.

From personal observation, Access-Based and Device-Based distribution are the strategies preferred by content providers, likely due to amenability to control. If those strategies come to dominate the market, first sale itself will become obsolete. In that event, the availability of content, and the distribution of that availability will be entirely depended on the content providers. There will be no method to archive content, resell it on a secondary market, or alter it for one's own purposes.