Over the last year, an ongoing debate has taken place in the DAM industry about innovation. The consensus is that innovation is in retreat and DAM software is becoming increasingly homogeneous.
In our coverage at DAM News, we see a vendor's new product release as an accurate signal of intent — the time and money involved in modifying applications ensures a certain level of commitment on the part of the vendor.
Vendors initiate software upgrades (in general) for two reasons: existing customers asked for them or the vendor thinks it can improve client acquisitions with given feature was available. That sub-divides into two further motivations: fear (loss) and hope (opportunity). Either vendors worry that competitors are gaining ground because of functionality that they lack, or they see an opportunity to gain an advantage by developing something unique.
To me, genuine innovation takes place due to the second reason. While the vendors in Jeff Lawrence's article on DAM innovations at the start of 2015 might have considered what they discussed new features, nearly all of them had been done before by someone else. In other words, they are not really innovations. The net effect is a lack of forward motion for the industry as a whole and a zero-sum game where the market clusters around an average level of functionality. Hence, the homogeneity of DAM solutions.
DAM Innovation Slow-Down Causes
Fear and hope could be more scientifically described as downside and upside risk. If the majority of new vendor releases just replicate features or are minor adjustments, that suggests a diminished appetite for pursuing upside risks and therefore, a decline in innovation.
Vendors took a lot more upside risk before the current high levels of interest in DAM software. Often, this was because of the ample opportunity to improve products with each release, or for a more prosaic reason: most products were not that good to begin with.
Although a few newcomers have captured market share, many of the vendors still active in the market have been around for a decade or longer. I am reasonably certain that while they have retained many of their earlier clients, their rate of client acquisition has flattened compared to what it once was (when measured in pure percentage terms).
I have it on reasonably good authority from several sources that the revenues of more than a few DAM software firms are currently static (again, in terms of percentage comparisons). While some of the newer entrants report revenue growth, this is probably due to a combination of their extending functional scope (i.e., looking outside the DAM market to adjacent sectors) or a matter of straightforward mathematics: doubling your turnover is quite easy if it isn't very big to start with.
The high concentration of users from marketing-related backgrounds has also contributed to the decline in DAM innovation. This isn't to hold marketers responsible, but whenever one group of users has a high level of influence over product design, vendors are less inclined to incorporate other use-cases for inspiration.
Nearly every DAM user with a marketing background I've spoken to characterizes DAM as more of a background activity in the service of their wider marketing objectives. This places the onus on DAM solutions developers to apply lateral thinking to solve DAM-related problems and generate innovative ideas. The Digital Asset Management software business is all about consulting sales — i.e. vendors are supposed to take the initiative and anticipate need. Unfortunately, many vendors have become more reactive than proactive, which has created a culture of complacency.
The Longer-Term Implications
Nearly three years ago I wrote about The Digital Asset Management Value Chain. The following paragraph is noteworthy:
"Large portions of the time invested into DAM development is spent simply replicating competitor features. Each vendor's take on a given requirement is different from all the rest, sometimes markedly, on other occasions it is practically identical. This amounts to a massive industry-wide duplication of effort which ultimately hinders innovation as vendors have to constantly divide their attention across an ever-expanding range of end user problems."
The threat to innovation has become reality in my opinion. And the implications are now at risk of playing out via a series of effects, such as:
- Declining external investment in DAM
- Vendors begin to dilute themselves out of existence
- The return of users' confusion about what DAM actually is
A direct correlation can be made between the levels of investment by private equity firms into DAM technology vendors and how innovative that firm is. The latter are primarily concerned with gaining exposure to sustained exponential growth (the so-called 'hockey stick' graph). Private equity investors are usually not interested in a level or shallow growth curve. Some newer market entrants appear to be currently generating ostensibly impressive revenue numbers, but the sustainability of their performance over a longer period is unproven. If DAM firms are viewed as safe, dull, (usually) small and operating in a market with hundreds of similar competitors, they risk becoming unappealing investments for those who have the capital for DAM to gain traction.
And then we have the vendors that expand the scope of their offerings as a substitute for innovation by moving into other fields, such as web to print, on-line brand books, PIM (Product Information Management), Creative Operations Management and what's loosely termed "Content Publishing."
While these subjects are partly related to DAM, the connection is tenuous. MRM firms unsuccessfully employed this tactic in the past. We can see similar patterns of behavior emerging now. Many MRM vendors tried to cling on to DAM as part of their suites, but ultimately lost out to those firms who concentrated on it exclusively (and did a better job as a result). DAM firms pursuing these strategies risk repeating the same mistakes and ultimately diluting themselves out of existence. This lack of clarity of purpose results from insecurity and a lack of commitment — a consistent theme in DAM for several years now.
Anyone involved in DAM as recently as six or seven years ago probably spent the first few minutes of conversation with new prospects explaining DAM and why someone might need to know more about it. These days, anyone working in an enterprise who works with rich media assets has usually heard of DAM and understand the basics. If we collectively are asking people to 're-think' what DAM means, we have another lengthy adoption cycle and a return to yet more explanations to look forward to. And at the end of the day, what difference is there between 'old' DAM and 'new' DAM — and more importantly, how does any of this help users with the problems they have organizing their digital assets?
What Can Be Done?
DAM has entered a cul-de-sac. To escape this dead end, we must look at why end users became interested in DAM solutions to begin with.
Businesses start DAM initiatives to organize their digital assets. The goal is to isolate one or more of them and to do something with the results. In Digital Asset Management, the activity around an asset has greater importance than the final destination. This explains why metadata plays such an essential role.
Those who have implemented scalable DAM solutions know that they need a structural roadmap of where assets will arrive, the nodes they pass through and the different destinations for assets. In other words, the underlying digital asset infrastructure. This is a more fundamental architectural concept than technical considerations about hosting, storage, etc (though those subjects are also important). I believe the majority of DAM solutions that survive the next decade will do so by meeting the user's need for a digital asset infrastructure. If they don't, users will move to an alternative.
To survive and prosper, DAM needs to evolve into something closer to supply chain management. The phrase 'digital asset supply chain' has already taken off because enough people understand its significance.
Comparing Digital Asset Management with sectors such as logistics or financial services can offer clues about how to develop these ideas and where to direct attention to enhance innovation. Logistics and financial services have both had their fair share of problems, but they solved their structural challenges (for the most part) some time ago. The size and diversity of these markets made it impossible for one operator to service the entire market. While there's still fierce competition for business, these operators recognized that unless they prioritized meeting end users' needs, everyone would lose. Through specialization and cooperation, these industries have worked to meet customer needs. This can be seen in the relative ease with which these sectors' equivalents of digital assets can be transferred between different providers using some widely adopted protocols.
It comes down to this: do you think DAM innovation is about destinations or infrastructures? If the former, you probably disagree with most of my conclusions. If the latter, you maybe acknowledge that big challenges are coming up for digital assets, yet nowhere near enough attention is being applied to them by anyone in DAM — from vendors through to consultants or users.
If innovation was easy, everyone would do it and then they wouldn't be innovative any longer (as we are now witnessing in the DAM market). I believe most people with an active interest in this field — in whatever capacity — understand that DAM infrastructure is the important issue, not the straw men that some people are advising we support. Whether I am correct or not, however, only time will tell.