The pragmatic topic of digital rights management should be important to us all. Transcoding digital content is the purview of the techies in our midst, and while most of us don’t need, or want, to understand how that encoding works, we need to be cognizant of the ramifications of safeguarding the rights of the content we produce.

Who handles what in the process of taking our content as an entity and moving it out into all these digital platforms that are available for distribution, downloading and sharing?

Ted Sarandos, Chief Content Officer of Netflix, outsources a lot of this process due to its intense labor and high cost. “We have 80,000 titles on DVD and the authoring of those is pretty straightforward.” But Netflix now has a “watch instantly” feature on its subscriber site with over 4,000 full-length movies and TV episodes and that library will grow tremendously in the next year. Last month, they had over 2 million movies viewed off the server. And every film they have in their library has to have four separate encodes to be compatible with whatever bandwidth is available to the viewer. This determines how uncompressed or crisp the image is when viewed. The site automatically recognizes what kind of bandwidth you have at home and adjusts to that so that you’ll get an appropriate file that won’t timeout and won’t get stuck. So while you may not receive a stellar-quality file due to a tight bandwidth, you can watch the movie in its entirety without any technical interruptions or re-buffering. Sarandos says that, “If you’re going to deliver movies online, the minimum cost of entry is that it has to play.” Knowing that a bandwidth can change in real time, the trick is for the encode to be able to adjust to that without interruption every time there’s a blip in the signal. The technology is very dynamic and so, over time, whole libraries and archives will need to be re-encoded in as many variations as there are bandwidth capabilities–that’s a very expensive proposition to basically re-master everything over and over again. Along with all that encoding, all the digital rights management is being layered in, as well, to protect the content from piracy. And part of this technology that enables the download to be watched, unravels the DRM encoding. Tricky.

Richard Doherty, director of technology strategy for the Consumer Media Technology group at Microsoft, says that a producer shouldn’t care about DRM at all. This, to me, was a pretty shocking statement, along the lines of “don’t worry your pretty little head about it.” But he clarified that by saying that he believes that the content service provider you choose to go with should take care of all that for you–you tell them what you want protected and they layer that protection into the encodes. He’s more concerned with the end-point–where and how the filmmaker wants the content to be viewed. The biggest challenge is getting from a good-quality laptop viewing to the wide-screen viewing of the same movie and making both a premium film-watching experience. So basically, you need to pick your online service based on how they deliver that content to the user and understand how that end-user is going to view the film.

Mediastile’s structure is such that a DRM discussion happens with the filmmaker at the beginning of the process of authoring and distribution since they disseminate products on many different platforms–this is what their business model is based upon. So whatever the format in which the film was shot, it’s encoded at the highest resolution possible and they will even up-convert it to HD if it’s shot in standard definition. Every retailer out there has a different format that they’ll accept–naturally. And that’s constantly changing, too. So just for download and streaming, the format of the moment has to be dealt with. What Mediastile will also do during this process, is package or bundle all the other elements that go with the film–poster art, extras, price points, ratings, and services–when they sell to iTunes or Netflix or X-box, every single retailer that will sell the product. Every piece of content is forensically watermarked so you have an idea of where the content is going. So, if it is pirated, one can tell on which service that piracy occurred.

Quality is key to the filmmaker and so that, in essence, is what all these services want to accomodate. And they are also attempting to provide “real time” reporting, since, again, each retailer has a different reporting system–naturally. This means that sales and revenue data will be tracked instantaneously upon each view of the product and the information will reflect where it was purchased–very specific data that can provide an exact snapshot of how the film is being sold, viewed, downloaded, etc. in a consolidated way. There’s no way of getting that today. So getting that demographic data together is an important task to master for the future of online marketing. Retailers’ margins are very slim, and if a filmmaker has an accurate reading on this data, some good promotional offers can be made that benefit both the retailer and the filmmaker–i.e., you know that there is some good activity for your film on iTunes from the data reports. You can offer Apple an extra incentive in revenue shares to promote your film for an extended period of time on their site and then start tracking sales that way.

So partnering with a content aggregator has many advantages. But what will it cost you? What kinds of fees are involved? Some charge what amounts to a kind of management fee which is applied over the life span of the agreement. Mediastile doesn’t charge anything up front; the fee is based on a per transaction basis, so when you make money, so do they. Their cut on each transaction ranges from ten to fifteen percent. That includes all encoding, storage, distribution and reporting. The retailer is then paid out of that percentage, again per transaction.

So onto which platforms should one push one’s content? What constitutes a good digital and promotional deal? If you didn’t get the theatrical deal you were hoping for or didn’t make the DVD distribution deal you were hoping for, can selling online give you a decent return on your investment?

In the next post, we’ll talk to Geoff Francis, owner and creator of, based in the UK, a new startup music and film site which made its debut on the web about five months ago. Their philosophy espouses Bonobo as a place of play and their ethos is centered on the avant-garde artist, one whose work has a hard time finding a home anywhere else. The website acts as a showcase for image providers, showing full copyright details on-screen, contact details displayed with each image and links to each media donor’s own web activities. They are a free platform for this content and thus far, the model is not based on any kind of revenue stream for the site or for the artist. But we are a society of consumers and so Francis has been approached already with revenue sharing propositions from other sites. We’ll talk about his unusual business model and how he hopes to keep the ethos and ideals behind the creation of this site pure, while being able to provide a bit of income for its users and eventually become producers and aggregators of original content themselves.


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