Monday, October 19, 2009

Crazy Ideas for Crazy Times: Centralized Digital Distribution

Alright, I'll get right to it: amongst the many things that are being revolutionized in the world around us, distribution is a rather important one. There has been a lot of attention in particular to itunes, a music-player/mp3-store that has been the first successful attempt to capitalize on mp3 distribution, and on Steam, a game-server/game-store that sells Valve's products, as well as those of third-party companies. Amazon also recently entered the picture with the Kindle, to digitally distribute books.

So it seems like we're making a lot of progress on the digital distribution front, right? Unfortunately, there's a problem: each of these services is so much more successful than any competition in the same genre (itunes for music, Steam for games, Kindle for books) that they pretty much hold a monopoly of their respective markets.

Now certainly there are smaller distributors of digital goods, and in many cases individual developers of media can distribute their own files, but it's very hard to be a small distributor. In particular, smaller distributors have difficulty integrating effective DRM that users won't find overly intrusive (and in most cases, the overly intrusive DRM isn't effective anyway). Wizards of the Coast, for instance, has had so many problems with piracy that they've pulled all D&D .pdfs from their store (not necessarily a smart move, but then they just got $120k in a settlement with one particular pirate, so maybe they know better than I do, and in any case it shows that they at least perceive piracy to be a very dangerous problem). Steam and Kindle, however, are able to convince their users to put up with DRM by offering in exchange the convenience of a centralized library users can access from anywhere (something Wizards of the Coast can't offer, since they only have their own products available for download, and no advanced management software).

This suggests that digital distribution relies on centralization, to some extent, in order to gain traction, but since the companies that are capable of generating that kind of centralization are large and few, digital markets seemed to be destined for monopolization, and we're already starting to see some of the side effects, such as Amazon retroactively removing purchased documents from users' Kindles (would not go over well with consumers if there were an alternative product for them to defect to).

What could possibly be done about this? In my mind, what we need is to take the "hard" part out of the hands of for-profit organizations. If it were up to me, I'd create an international organization tasked simply with maintaining a database of users and which digital files they have access to. This organization isn't responsible for actually distributing the files - just keeping track of who owns what.

Once this is in place, private companies can gets permits to access the database and even modify entries for users for which they have the proper credentials. The companies offer services for connecting the user to files they own and to offerings for new things they can buy - basically what things like Steam do now. The difference is, now any other company that wants to can offer a competing Steam-like storefront that's capable of offering the same games Steam does. In fact, if you switched, in our scenario, from Steam to a competitor, you would still be able to access all of the games you bought on Steam from the competitor's application (because they're both accessing the same database).

In other words, the idea is that companies like Valve, Apple, and Amazon would be offering browsers - interfaces whose principal value is their user-friendliness, but users wouldn't be completely beholden to these companies for access to the items they purchased. What's more, the creation of a digital ownership database could speed up the shift toward digital distribution for things that aren't already available and possibly result in other advantages down the road...

There are a few more things that could be pointed out here, but that's the basic idea, so I'll stop there for now.