Apple Inc. may announce such a service January 27 in tandem with its widely anticipated tablet computer, according to some reports. However, some fear the service will only work with Apple's devices.

A coalition of 48 companies is gearing up to deliver similar digital media services this year available for anyone who wants to license its specs. "We believe we can significantly expand the digital market place, and the only way you can do it is if you give choice of [service providers] and devices," said Mitch Singer, president of the Digital Entertainment Content Ecosystem (DECE).

Today, Apple commands as much as 80 percent of the $250 million market for digitally distributed songs and movies, according to figures from market watcher Screen Digest (London). That success has come in part from creating proprietary links between compelling services and devices with equally compelling user interfaces—iTunes for iPods, mobile apps for iPhones, and now an anticipated cloud service for an iPad.

Such a service could help Apple expand its footprint in the smart phone market. Apple shipped an estimated 26.8 million iPhones in 2009, taking a 15 percent share of the smart phone market. It is expected to maintain but not grow its share as that market expands by an estimated 21 percent in 2010, according to market watcher Forward Concepts (Tempe Ariz.)

In December, Apple acquired LaLa Media, a company with media streaming and cloud-storage services, fueling speculation of a Web-based version of iTunes with cloud storage capabilities. So far, Apple has kept mum on it plans.

"Apple is an incredible company, they provide a user experience like no other and I am a user of Apple products because they understand the consumer very well," said Singer. "But we are in a big growth trend right now and the question is how to do it in such a way consumers feel confident their content will play on all their devices," he added.

DECE aims to enable a broad array of cellphones, set-top boxes, portable media players and other devoices to tap into an equally broad range of digital media services that sell and store music, movies and e-books. Using those services, a mother could buy a movie on a handset while on a business trip in New Jersey, for example, and let her children play it on a set-top box at home in Oregon.

"We will have DECE up and running this year," said Singer. "It's a very nascent market for digital media—it's just three percent of the home video market—so it's way too early to declare winners and losers," he said.

To date Apple's devices and services have depended on a proprietary software stack. It includes Apple's own operating systems and its proprietary FairPlay digital rights management (DRM) software.

DECE announced earlier this month that devices can access its services if they use any one of five DRMs—Adobe Flash Access, CMLA-OMA V2, the Marlin DRM, Microsoft PlayReady and Widevine. The group will use a file format based on a subset of Microsoft's protected interoperable file format (.PIFF) announced in September. The services will also require use of H.264 compression and 128-bit AES encryption.

The group chose Neustar Inc., a spin out of Lockheed Martin that runs secure online services, to provide a central authentication service for validating digital rights data. Neustar is working on an applications programming interface to interact with the service.

Companies that want to make DECE complaint devices or services need to join the group and license its specifications. Terms have not been announced, and it's not clear whether any companies will assert intellectual property rights over any of the DECE specs.

What DECE requires "is no more onerous than what devices already do today," Singer said. "We're trying to make the requirements as light as possible," he added.

The Walt Disney Co. announced earlier this month it will launch its own online media service this year called Key Chest. It uses its own encryption technology and file format, according to a Reuters report.

Given the ties between Apple and Disney, the Key Chest service could play a role in Apple's Jan. 27 announcement. A Disney spokesman did not return calls by press time.

Both Apple and Disney are taking the position that a secure digital media service needs to be run by a single company. Indeed, many companies are already developing or delivering their own set-top boxes tied to online services, such as the Roku box that delivers movies from an online Netflix service to a TV.

"It's a fragmented consumer experience," said Arash Amel, a research director for digital media at Screen Digest. "Movies you might buy from one store may not work with other services or play on devices made by some OEMs," he said.

Ultimately, Apple, Disney, DECE and others are all expected to help drive digital media forward from today's business of downloading files to a future based on cloud services. "This is the beginning of a new phase of digital distribution," he said.

By: DocMemory
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