Not long ago, owning content meant holding a physical item – either you had a disc in hand, or you didn’t. Distribution and storage may have changed dramatically with digital formats, but ownership was still mostly defined by the files you had on your local device. Remember how iTunes reminded you to back up often or risk losing everything? The entitlement or right to consume content has always been rooted in possession of the content itself.
But this model of ownership is becoming problematic as technology and customer sophistication advance. Better connectivity, cloud services, and the proliferation of multiple devices have all led to heightened expectations that purchased content should be available everywhere, synchronized across all screens, and accessible from any combination of cloud or local storage.
Delivering all of this with a system where rights are afforded by the simple possession of content would be almost impossible. Instead, today’s market strongly favors business models that monetize and manage entitlements (just the right to access content) separately from the storage, delivery, and presentation of the content itself.
It’s a subtle distinction, so let’s look at a few real-world examples of why strategies that focus on entitlements are so effective.
1. Entitlements are the perfect bridge between platforms
Separately tracking customer rights to access content across incompatible devices is already common for subscription services such as Netflix or Spotify, as well as for publishers like the New York Times. Their simple entitlement models – one or two options that allow for unlimited consumption on any device – make it relatively easy for them, but this “all access” approach is also starting to show up in more complex products.
By operating their own registration and entitlement systems outside the realm of any one platform like iOS or the Playstation Network, these companies maintain complete control over valuable customer data, while avoiding issues such as revenue sharing and restrictive covenants. Each device-specific application becomes a simple client that only has to check with the entitlement engine and then deliver the appropriate content to users. There’s no better way to provide a singular multi-platform experience in today’s fragmented landscape.
2. Entitlements can span formats
Creating a master list of entitlements, regardless of how or where the original content was purchased, is the clever idea behind emerging digital services such as Apple’s iTunes Match and the DECE’s UltraViolet.
With these products, both the music and motion picture industries have recognized that the original format of purchase has become largely irrelevant. Consumers want a buy once, play anywhere experience where media purchased in any form, even physical, can be seamlessly transferred from one screen to another.
iTunes Match, for example, builds an entitlement list for each customer by scanning their devices for songs, regardless of where or how they were acquired. The primary motive for ripping CDs changes from transferring the music itself to obtaining an entitlement that provides digital access to those tracks from the iCloud. While this empowers consumers to consolidate their physical and digital music libraries into a single accessible collection, it also effectively transfers all control and responsibility for it to Apple.
Once fully realized, UltraViolet will work in a similar way, allowing the DECE to maintain a central repository of customers and their movie consumption rights. Like iTunes Match, the system leans heavily on entitlements to deliver a consistent ownership experience to users, regardless of how or where the original title was acquired.
3. Entitlements are the key to incredible distribution opportunities
Once separated from content, entitlements are flexible, independent entities that can be traded, monetized, or used to enhance other services. The best example of this in action is HBO Go, which has delivered more than 100 million video streams to over 5 million viewers – each one granted access based on an entitlement given to them by their cable carrier.
Notice how the purchase of a single entitlement (through cable fees) allows customers to access the same content delivered by a completely separate entity – in this case, HBO itself. Earlier this week, investment firm Needham & Co. estimated that media companies could generate almost $12 billion in new revenue just by extending entitlements to other devices through TV Everywhere services.
While the business negotiations for such deals may be complex, their technical prerequisite is simply an entitlement engine that can validate access rights. Once deployed, this can be opened up to partners via an API, creating a synchronized entitlement cloud capable of powering incredible distribution and revenue opportunities.
For example, imagine being able to pull up your own music, movies, or TV season passes on an inflight entertainment system. Or purchasing a show on one hotel television, continuing at your next destination, and then finishing up via another provider at home. The possibilities are endless.
4. Entitlements keep customers engaged
The final reason to consider building a strategy around entitlements goes back to my previous post on why engagement matters most in digital commerce. When customers entrust you with the permanent administration of their content, your business is held to far higher standards of product quality, user experience, performance and security than companies that simply sell things. While it may sound onerous, this forces you to build a better business. Just compare the fate of Barnes & Noble, which invested heavily in an entitlement ecosystem, with competitor Borders, which is bankrupt.
In return for becoming a system of record for entitlements, customers reward you with an almost unimaginable wealth of data about their assets, behavior, habits, and preferences, along with long-term opportunities for contextual selling and recurring revenue. It’s a win-win situation for businesses, and the most important reason why entitlement-based services like iTunes Match, UltraViolet, TV Everywhere, and the Nook Library represent the future of digital content.
Looking for help with digital commerce?
A new report from Forrester Research examines the technology behind successful digital commerce, provides tactics for selecting a digital commerce solution, and looks at the digital commerce platforms available on the market today. Get your complimentary copy of Market Overview – Digital Commerce Solutions 2011 here.