Re-Defining The Meaning And Scope Of Digital Assets – Part 1
Ralph Windsor, DAM News Editor has written part one of this article series: Re-Defining The Meaning And Scope Of Digital Assets. Part 2 is also now available.
As was discussed in the first comment and analysis article of 2016 last month, there is an emerging debate about the definition of digital assets and what the term means. This was alluded to in Hassan Kotob’s item, What Does 2016 Hold For DAM? In particular the following:
“Previously the domain of librarians and IT, Marketers are a more recent direct target audience for DAM vendors, but speak to most marketers and they may well not even understand what is meant by a digital asset management system. Marketers do not call video, art and other content ‘assets’. So, as a first step, the industry needs to start talking the language of its customers, whether in marketing, publishing or another sector.” [Read More]
I think Hassan, is partly right, but it is worth noting that up until 20-25 years ago (before the web had become as ubiquitous as it is today) the word ‘content’ was also somewhat unconventional as a generalised description and it was more common to hear the actual media type itself used. There were ‘books’, ‘films’, ‘newspaper articles’ etc but ‘content’ tended to be more a term used by IPR lawyers who needed a generic word for contracts and licences.
In the 1990s, phrases like ‘Content Is King’ (which is apparently attributed to Bill Gates in 1996) started to be used more frequently and helped to encourage the adoption of ‘content’ as term to refer to any kind of media output. As such, there is a partly technology-driven motivation towards using abstract definitions of this nature because different types of media content now tend to be delivered via the same channel, where before that simply wasn’t feasible.
As I will describe, ‘digital asset’ may well become popularised as a description in the same way as ‘content’ has. Digital assets are self-contained entities that have more tangible characteristics than ‘content’ which is vaguer and harder to assess the value of (especially a quantifiable one). There are trends which I will discuss in this article that suggest this is already happening. Some powerful forces are generating momentum behind the term ‘digital assets’ which will likely re-shape and redefine it in the medium term. For that reason, it is important that anyone who considers digital assets an important aspect of their professional life understands the wider context in which the term exists now and will get used in the future.
Emerging Legislative Recognition Of The Concept Of Digital Assets
Recently, a bill was passed by the Florida Senate to allow next of kin to access deceased relative’s ‘digital assets’ in the event of their death. The definition applied to digital assets in the legislation includes photos, legal documents, social media profiles, audio files to name just a few and it covers everything I will describe in this article. Some of the terminology employed is familiar to those with some existing experience of DAM. For example, an ‘asset manager’ can be selected by someone and in the event of their death they have a role which has some similarity to the executor of a will, but specifically for digital assets. I am not sure about the progress of similar legislation elsewhere in other less localised jurisdictions (e.g. federally for the US and EU, or nationally in other regions) but the term ‘digital assets’ is already being used in a similar fashion elsewhere.
The emerging legal definition of digital assets is quite a lot broader than most who currently associate themselves with DAM are used to. As discussed in my item last month, I do not think it is tenable to maintain these paper dividing walls between types of digital assets any longer. Increasingly, end users will demand that they can manage and integrate them interchangeably and there is clearly legislative and commercial momentum to encourage that to happen.
The Three Definitions Of Digital Assets
By my reckoning, there are broadly three definitions of digital assets which can be summarised as follows:
- A reference to a unique binary media essence (or ‘file’ as most people will understand it) which is the focal point for associated metadata.
- A digital representation of a person or entity and associated metadata.
- Digital commodities as assets where the value is expressed using metadata.
It is worth noting that metadata is a fundamental characteristic of all digital assets, however you care to define the term. Some might propose that there are other elements also like workflow or permissions etc, but I would contend that they are still essentially metadata (although I do acknowledge that when it comes to implementation there are differences which need to be taken into account).
While those three basic outlines are satisfactory to describe the context of the term digital assets, they mask some subtleties and further subsidiary definitions which (while related to each other) change the nature of how they should be evaluated and ultimately managed. One of the key distinctions is the difference between intrinsic and extrinsic value and how that applies to digital assets in each of the contexts give above.
Digital Assets As Binary Essences + Metadata
The intrinsic value of this type of digital asset is binary data that some suitable device like image viewer, video/audio player, or document reader etc can render. The other component (the extrinsic value) is the metadata that helps the consumer of the digital asset decide whether or not it might be useful for their current purpose. The binary essence and the metadata combine together to create a digital asset. The more extrinsic value a digital asset has, the greater the potential range of usage contexts (and therefore the likelihood of it actually being used).
Note the word ‘potential’ in the paragraph above, it is entirely possible that a digital asset has gigabytes of metadata, but none of it might be of use for anyone who currently may want to do something with it (including being able to find it in the first place). On the other side of the argument, it is also conceivable that all of this metadata which currently has no obvious use might become highly valuable and relevant at some unknown point in the future. Without the ability to see into the future, it is impossible to know when (or indeed, if) that might occur. That implies two strategies: firstly it is advisable to retain all of a digital asset’s metadata because you don’t know when it might become important (i.e. valuable). Secondly, identifying what type of metadata is most useful to each group of prospective users is absolutely critical. In other words, it is necessary to understand the different types of value sought and to optimise around them. As should be obvious to most readers, those priorities will probably change over the course of time also.
The other characteristic of binary essence digital assets is their provenance or digital lineage and the marginal utility of having additional instances of a given digital asset. A highly obscure digital asset that has a very narrow range of usage-contexts might have a very low marginal value: you can have one copy or ten of them, but the volume doesn’t really make a lot of difference. For example, a photo of a drain being dug underneath a road bridge might be of limited use, however, if the scene depicted subsequently acquires some evidential value (e.g. in a health and safety legal dispute) then its value may suddenly increases exponentially. It does not matter how many copies exist, only that there is at least one and that it can be accessed on-demand.
To take the opposite example, a recently released audio recording by a popular musician is likely to have a far higher marginal value which diminishes at a far slower rate. Once the digital asset has been originated, the ability to generate further instances of it is of importance to the intellectual property owner because that is where their revenue is derived from.
While I have presented two polarised examples, it is frequently far less black and white. In the context of typical corporate Digital Asset Management use-cases, it will be more like a spectrum or range and the strategy for managing assets to maximise the value that can be obtained will need to be adapted accordingly, e.g. by segmenting them into multiple collections. To offer two related examples, a current company logo has some of the same characteristics as the popular music audio referred to above: users will want to access it hundreds or even thousands of times on a daily basis. By contrast, the organisation’s logo from fifty years ago is a speciality historical interest item; it might be needed for retrospective articles in newspapers etc but outside those sort of use-cases, demand for it will be limited.
As assets in the conventional sense, this type has some similarities with works of art (including prints generated from them). Each is differentiated and unique, but some have characteristics which make them appear more like commodities than others.
Digital Assets As Representations Of Non-Digital Entities
Many readers will be familiar with what is called the ‘metadata only’ asset. This often gets used to represent something non-digital in a DAM solution but an asset record has to exist to allow metadata to be associated with it. This method is particularly common when DAM solutions are used in museums (e.g. as alternatives to Collection Management Systems) but there are other commercial uses too, for example a customer’s profile, a sales lead or a player’s performance history (in the case sports-related digital asset repositories).
There are other examples of collections of data about physical entities, which I would argue are also digital assets for the same reason, for example, social media profiles. The intrinsic value is the person who is being represented by their profile. If they did not exist, the metadata (or extrinsic value) about them would not either. Some extrinsic value enhancements (like photos or video content uploaded by the individual) may or may not contribute a great deal, however, other attributes like the quantity of other users who are linked to them (e.g. ‘followers’ or similar terminology) might be a lot more important. To demonstrate this point, there have been legal cases involving high profile social media users where a case has been made that the individual in question has an audience which is equivalent in size (or larger) than some conventional press outlets. When media brands are bought and sold, the number of readers, viewers, listeners etc is one of the most important determinants of their value and so it is no different for digital assets.
These are fairly conventional examples, but it is possible to argue that there are other more specialised types of metadata-only digital assets that depend on non-digital intrinsic value. Consider this statement by Tom Goodwin, which is being widely quoted currently:
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.” [Read More]
What is ‘interesting’ to me is the role digital assets play in all this.
The reason why Uber ‘owns no vehicles’, Facebook ‘creates no content’, Alibaba ‘ has no inventory’ and Airbnb is ‘the world’s largest accommodation provider’ is because the firms described leverage the value generated for them by their suppliers using digitally stored metadata which in turn generates sufficient extrinsic value that they can re-sell to third parties. They are managers of metadata-only digital assets or branded intermediaries who control (but do not usually own) an inventory of digital assets typically acquired at low or no cost. This is also why these firms are ‘interesting’ to venture capitalists, the cost-basis is a fraction of the value that can be realised.
Consider the following: the fact that there exists a person who lives locally to you who has access to a vehicle and is willing to drive people around in return for money is a useless piece of information, even if you required a lift and had the money to pay for it. The critical element that makes a transaction possible is if you can find them to solicit their services. The metadata (extrinsic value) provides the ability to make a connection with a supplier who can deliver the intrinsic value you require (i.e. get you where you need to go). Without a portal that holds the required metadata about drivers, to go and find someone suitable you are forced to use methods like finding cards with phone numbers printed on them or walking out into the street and hoping a prospective supplier drives past.
There is the ability to do all this from a mobile location via your phone, but that advantage may not remain very unique or significant for long. Similarly, there are other aspects which make the process smoother and more integrated, like the ability to arrange the booking and pay for it as well as comments, feedback, standardised agreements etc but the components with the key value proposition are search and access (or communication). Without those two elements at the core of their offer, Uber (and all the rest) would go bankrupt within a matter of months.
If this sounds a lot like what happens with a typical DAM solution, that is because it is. The user profiles of all the aforementioned online operations are digital assets. They provide an on-line exchange or platform which facilitates a market for the intrinsic value offered by their suppliers. This is exactly what happens in a DAM system. It might not be taxis or some other consumer product/service, but the item being sought still has differentiated value which is highly context-dependent.
One unique characteristic of the firms described (and others of their ilk) is their voracious appetite for your metadata. The reason for this should be obvious, they implicitly understand that this is what will give them the raw material to potentially increase the value of their digital assets and consequently expand their opportunities to generate revenue from them.
This is a realisation most digital stock media libraries had nearly twenty years ago (although both their methods and ambitions were massively under-developed by comparison). Far fewer corporate DAM users currently grasp this at present. Partly because those with responsibility for digital assets in most organisations tend not to have the kind of influence necessary to effect organisation-wide changes, but also because they still do not have a complete understanding of what the term ‘digital assets’ literally means and they treat it as a proxy word for ‘photo’, ‘video’, ‘document’ etc.
They are not currently being assisted in gaining that awareness by most of the generally available analysis or business strategy materials about digital assets that I have read to date. Those responsible for what does exist appear to have taken far too long to acknowledge the significance of digital assets and are now clearly struggling to find a framework (or ‘big idea’) to shoe-horn digital assets into.
If you are able to see the bigger picture, however, it should be apparent that digital assets are the ‘big idea’ themselves. They offer a conceptual model which is already being employed with considerable commercial success. ‘Customer experience’ is all grist to the mill, but it is not the key determinant of why the aforementioned digital businesses are successful, instead it is the digital assets (and the intrinsic value they represent) which is what gives them their edge.
The Achilles heel for all of these firms is their dependence on human beings. While they all might appear currently irresistible and inevitably bound for world-domination, if they face strong competition from an alternative suitor at some point in the future, they are equally at risk of being ‘disrupted’ themselves. The value provided by their human suppliers can just transfer to someone else with a better offer and the cash to mount an effective user acquisition challenge. This is one other reason why a lot of money is currently being spent on Artificial Intelligence by these firms along with substantial PR expenditure to promote the idea that the technology is far more sophisticated than it really is.
I suspect that the ambitions of digital businesses to create pure digital metadata-only assets may not be achieved as rapidly as is being suggested by some because the level of sophistication necessary to completely replace all human-generated intrinsic value is far harder to realise than many technologists think it is. I am certain, however, that a lot of money will get spent trying to prove people like me wrong (and not all of it will be completely wasted).
In part two, I will continue by examining digital commodities, blockchains as digital asset interoperability protocols and the role of digital assets in more cutting edge technologies such as 3D printing, Virtual Reality and Internet of Things.