If Warren Lieberfarb, the "father of DVD" believes it, so do I. Believes what? That the worlds of digital and physical media delivery can work together for even greater success than either can achieve alone. Lieberfarb has recently joined MOD Systems as vice chairman of its board of directors. MOD Systems, based in Seattle, offers technology that provides solutions for digital media on three fronts: in the corporate arena, in the retail space, and for consumers. Why is this technology good news for replicators? "Synergy," says MOD CEO Mark Phillips.
     MOD Systems says that they provide retailers with a complete system for profitably managing, merchandising, and delivering digital media to customers. MOD Systems' approach is based on managing digital content and delivering it flexibly, with a focus on large-scale deployments. With the MOD System, retailers are positioned for the next generation of retail, supporting a wide range of consumer devices and delivery options including CD burning, direct-to-device, and wireless.

Recently, the company announced the release of the MOD System 3.0 platform, an advanced distribution platform for retailers to provide in-store and online digital media merchandising and sales to consumers. MOD Systems also announced a new application service provider (ASP) offering for retailers. The latest platform release extends the existing in-store CD burning capability to include delivery of music and video direct to consumers' mobile phones and portable devices within the store via USB or wireless connection, as well as future support for secure DVD burning of movies from kiosks. A Fortune 500 electronics retailer is slated to deploy the platform in early 2007 via MOD Systems' new ASP model. Phillips could not name the company at press time.

MOD's technology allows retailers to augment their physical inventory and adopt a long-tail business model. They can do that either on-demand for the consumer or through just-in-time inventory. For those unfamiliar with the "long-tail" effect (and if that includes you, you're in good company—at the recent IRMA show in New York, more than half of the attendees said they weren't familiar with the term), I'll briefly describe it. Chris Anderson of Wired wrote an article a few years back in which he said products that are in low demand or have low sales volume can collectively make up a market share that rivals or exceeds the relatively few current bestsellers and blockbusters, if the store or distribution channel is large enough. Within the confines of conventional local retail this type of sales model was well-nigh impossible. With catalog sales, it was more manageable, but with online sales, it's a natural, and the e-commerce world is where the long-tail phenomenon has taken hold.

In his talk at IRMA, Sonic Solutions' Jim Taylor said one of the biggest draws to online stores is the desire to buy titles that are difficult to find in brick-and-mortar retail outlets. Taylor used Warner Brothers as an example. Executives there reportedly say they have about 6,600 movies in their catalog, but only about 1,300 are available on DVD. Warner also says that about 2,200 movies in their catalog are in a form that can be easily converted to a digital format, but until now there hasn't been a viable business model to support the investment that would entail. That's where MOD can help.

Phillips addressed the past failures of Kiosk and JIT customer designs. With earlier schemes, content storage was a problem, and equipment required in retail for manufacturing was extensive and expensive. There was also the issue of time. "How do you communicate with the sales person or the computer's user interface? How much time does it take?" If you've ever been in FYE or Strawberries, for example, you know that you scan a CD or DVD and get a sample of the what is on the disc. It's easy, and even my 7-year-old looks forward to our store outings because of this system. While I'm sampling Aerosmith, she's checking out High School Musical. After all, she knows I'll likely buy it for her after that. But I digress … Phillips went on to note, "We are going to be announcing a whole slew of solutions at CES that really address this market."

MOD is also the technology provider for Starbucks' in-store music system. Success there has proven to Phillips that the in-store experience of discovering content in a café and reducing the amount of physical inventory creates an environment that is a plausible new type of media retail environment.

"We believe there will always be a place for physical media," said Phillips. "There will always be the need to store the richest formats, the newest content, and the largest payload. Digital will be there to enhance either the sampling or the replication of legacy content."

Plenty of opportunity for replicators also exists to manufacture emerging content or enhance the flexibility of the content that they do. An example of that opportunity is Amazon's CustomFlix, which is a leader in manufacture on demand services for independent and enterprise media content owners. CustomFlix was founded in 2002 "with the mission of profitably connecting content owners to a worldwide audience," the company says. Today, CustomFlix offers professional digitization into the Future-Proof Archive service, as well as inventory-free physical media distribution via both CD and DVD on demand. Recently the company announced that members can add a digital download option to DVD titles available for sale on Amazon.com.

So, there you have it, perhaps an opportunity for replicators to do more duplication and get into distribution and to be less fearful of the immediate future in terms of survival.

Debbie Galante Block is a freelance journalist living in Mahopac, NY. While her areas of concentration have varied widely, she most closely covers music as well as audio and video technologies for magazines such as Billboard, One to One, and Post.