What Does DRM Have to Do With Advertisers?

This column normally addresses trends in online video and rich media advertising and how those trends affect advertisers. Advertisers include content producers such as TV networks, movie studios, video game companies, and record labels. This week’s column, however, addresses a trend in video content distribution, which will inevitably affect how video advertising dollars are spent in the future.

Movielink announced on Monday that movies from a select crop of studios will be simultaneously rented on VOD (define) and sold for download. A major step forward in theory, but likely a few steps away from what consumers really want. What’s inherently wrong with this arrangement is consumers will only be able to download the content and play it on up to three PCs — that have Movielink installed on them. Oh, and Macs aren’t welcome.

Correct me if I’m wrong, but doesn’t this make actually owning a film on DVD more portable? At least you can bring a DVD to a friend’s house, watch it on any TV you want, and get this — even on a PC or a Mac! Current digital rights management (DRM) structure kills the impact this particular announcement might have had with consumers.

What does this have to do with advertisers? At first glance, nothing. But on further review, this development may just reveal a huge opening for advertisers in the near future.

First, the solution to this DRM-caused non-portability problem may very well be provided by the same company that created DRM in the first place: Microsoft. You can already download many content types onto a Media Center PC in one room and watch that same content on a TV connected to an Xbox 360 in another room. That’s pretty portable. You can even watch it on your Windows Mobile-powered phone from anywhere in the world. Even more portable. Once those mobile, handheld PCs with wireless Internet get into the wild, content will get even more portable. That’s where audiences will finally pay for the content. And they’ll only have to pay for it once to consume it anywhere they want.

Is this a pipe dream? Not at all. Sites like YouTube and iFilm have followed this model for quite some time. Content lives on a central server somewhere. If people choose to place a video on their blog or MySpace profile, their device simply calls back to where the content is physically located. It’s content on demand, without physically holding that content.

In theory, content can live in one place. It doesn’t have to be portable. But the experience sure can be. And that’s what matters.

That’s where advertisers can benefit. If the content consumers purchase or view as part of an ad-subsidized model could be hosted in specific locations, it would allow advertisers to purchase video impressions against content the way they do now, whether it’s ultimately viewed on a PC, TV, or phone.

As consumer demand quality increases and as broadband pipes widen to allow for it, we get ever closer to a world in which advertisers buy advertising against on-demand content delivered to any platform.

We’re a few years away from this reality, but it’s one we’ll likely face. For the time being, advertisers should be finding every opportunity to place their ads within, around, and before both the head and the long tail of content audiences consume online in greater quantities each month.

And that’s why advertisers should pay just as much attention to the ways companies are experimenting with content delivery as the way content is currently consumed. Their ad models, and the publishers they remunerate, depend on it.

Join us for our Online Video Advertising Forum in New York City, June 16, 2006.

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