Lack Of Mobile DRM To (Generate) 3.5B Euros

Moco.News is reporting a story on Frost and Sullivan's recent dire warning about the lack of mobile DRM -- the article is titled Lack Of Mobile DRM To Cost 3.5B Euros But I'd like to suggest the nutty idea that actually the REVERSE is true. The question is really about WHO will be making money and WHO will be "losing" revenue.

The core of the issue is about the cellular operators who would like to apply a tax to every content elements that slips across their networks. While F&S poses this as a problem for the entertainment industry itself, I would suggest that mobile phones are more important as an opportunity for viral marketing than they are as the sole end consumption device for digital content. Moco.news writes:

Combined, F&S thinks these activities will cost the mobile entertainment industry around 2.7 billion euros this year. Another 800 million euros “is missed due to the lack of widespread interoperability for content across PCs, mobiles and MP3 players”.

But what if the entertainment industry allowed content to be easily spread (for free without DRM) from mobile device to mobile device? What if consumers could easily share video and music content thus creating demand for purchases of these products for other kinds of devices?

Sure, you don't want the highest quality MP3 or video product circulating for free (oops, that cat is already out of the bag) but consumers don't want HDTV versions of videos on their cell phones -- they only need a small, low-res version. That is all they can play anyway with that screen size. And a low-sample rate version of a song allows more songs to fit on the phone. And a ringtone made from a song simply PROMOTES the song.

Of course, if the entertainment industry allowed people to make their own ring tones for free, share low-sample rate music for free, share low-res video for free... the cellular operators would be back to being a DUMB PIPE. But don't they make a lot of money on that bandwidth?

Note to F&S -- please calculate how the entertainment industry might use viral marketing of freely available (lower quality) digital content to generate sales of high quality versions of the content for other devices as well as generating more fan adherence to entertainment properties which result in additional sales of secondary products. And does all of this generate more revenue for the entertainment industry than they would have gained by locking up their content?

UPDATE - TechDirt weighs in, similarly calling the F&S report "ridiculous..."