DRM Destroys Value: Why Years Old, But DRM Free, Devices Sell For Twice The Price Of New Devices

from the DRM-protects-who,-exactly? dept

Nothing takes value out of a product faster than DRM. Digital rights management has expanded into places where no “digital rights” should exist. What once was something clumsily inserted to “protect content creators” has now become a catch-all term for anything a manufacturer does to ensure that the end user never truly owns the product they purchased.

A small scanner in a coffee maker ensures you’ll never use a competitor’s coffee, even though purchasers thought they were purchasing a device rather than being sucked into the undercurrent of a revenue stream. The application of inkjet-esque DRM to a souped-up cat litter box means a $200 purchase will be outperformed by its $5 equivalent should you happen to run out of proprietary cleaning solution.

DRM takes purchases out of purchasers’ hands. It nullifies the right of first sale by allowing the company — not the end user — to determine how the product will be used.

Public Knowledge’s John Bergmayer points out that not only does this screw the customer, but it devalues the product itself.

Back in 2010, I paid $99 for an Apple TV–technically, the Apple TV (2nd generation). Recently, it stopped receiving software updates, so I decided to put it on eBay. I was surprised that I was able to sell a piece of four-year old electronics for $161–it’s not often you make a profit on old devices.

A 2nd-gen Apple TV isn’t a collectors item. It’s just worth more to people who want something more from their Apple TV than Apple is willing to give them.

The reason for this is simple–tinkerers have figured out how to jailbreak the 2nd generation Apple TV, but not the 3rd gen one, which is the one Apple currently sells (also for $99).

Despite its name, there’s nothing criminal about jailbreaking a device, although plenty of device manufacturers would argue otherwise. Jailbreaking returns control of the purchased device to the purchaser, and certain companies expend far too much capital and effort ensuring they can regain control with the next iteration. These same companies are either unable or unwilling to understand that products a purchaser can control are worth more than those boxed in by DRM.

A device that a user can modify, add capabilities to, and freely install software on is more valuable than one where she can’t. And people are willing to pay for that capability. Pre-jailbroken Apple TVs are selling for around $230 on eBay right now.

Brand new: $99. Last generation — jail broken and untethered: more than twice that.

Certainly, most of the buying public is happy with dumbed-down devices forever enslaved to their makers. Diehard hobbyists, hackers and fans are a market to be courted, but very few companies do so, no matter how “forward-looking” they claim to be when touting their latest products.

Amazon’s Fire TV, a direct competitor to Apple’s offering, suffers from the same problem, but the company is even more aggressive in its thwarting of jailbreaking. Not only did a firmware update brick rooted devices, it also prevented rollback to earlier firmware versions. What value does that add to the product? What benefit does a purchaser derive from a move clearly meant to lock them into Amazon’s ecosystem — one in which the “purchased” product makes every effort it can to sell them even more stuff?

The market is there for goods you can actually OWN. Products are meant to be controlled by the people who purchased them. The insertion of DRM reverses this long-standing relationship, allowing companies to control purchasers — and expecting them to pay (sometimes repeatedly) for the “privilege.”.

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Comments on “DRM Destroys Value: Why Years Old, But DRM Free, Devices Sell For Twice The Price Of New Devices”

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tqk (profile) says:

Re: Property

They prefer to lock in their customers because they do not want to work to keep them.

They don’t even want to work to get them. They want sheep who’re already willing to be sheared. They’ve done their market research and learned there’s lots more sheep out there than informed consumers, so they can do without complainers like us. It inconveniences them not one bit that I’ll never buy anything they’re offering, because there’s plenty of marks out there willing to fall for this BS.

I imagine we’re derided as “high maintenance” in their board rooms. We used to call this crap “planned obsolescence”, where stuff was designed to fail soon after the warranty ran out. That wasn’t good enough for them. Instead, they want us to be paying rent and upkeep continually after the purchase. Unacceptable. I refuse to play. I will not buy intentionally crippled tech. I’ll also do everything in my power to lambaste anyone foolish enough to fall for this crap.

If any of our politicians were worth a plug nickel (ie., cared about their constituency), this disgusting practice would have been outlawed years ago. It’s fraud. I buy a coffee maker, then I find out I need to buy the coffee from you too? I’ll take my money back please, and please go out of business, and please take any other lieing bastards like you with you!

John Fenderson (profile) says:

If I can't jailbreak it, I don't buy it

When I decided to upgrade my Galaxy (through AT&T), I failed to do my research and went for the S5 as it was the latest model. I quickly learned that the crypto hadn’t been broken yet and I couldn’t unlock the bootloader or root the device.

I took it back to the AT&T store and returned it, explaining that I needed the S4 instead, and exactly why. Also, that I will no longer be buying my phones from AT&T, as it the problem was due to what AT&T did to the device rather than the device itself.

Zakida Paul (profile) says:

Re: If I can't jailbreak it, I don't buy it

HTC’s making it easy for users to root their devices is the reason I decided on the One M8 for my phone upgrade.

Fiio’s allowing users to mod the interface of the X5 is one of the reasons (sound quality and format support being the others) I went for that device over others.

Kobo’s support of the basic .epub format is why I went for a Kobo e-reader over a Kindle.

If the device ain’t flexible, I ain’t interested.

Anonymous Coward says:

Re: Re: If I can't jailbreak it, I don't buy it

John and Zakida: I’m curious, what will you do when everything (and i’m not talking just phones) has this DRM? When companies collude with each other to ensure no competitors will offer an open product?

I’m perfectly happy with my bare-bones flip phone from 07, and i wouldn’t even have that if work and family didn’t require it, but i find that i am a rarity in that regard. There are enough people out there who will keep buying whatever there is to buy no matter how absurd that the corporations will keep tightening the noose and eventually people like me will be left in a desolate wasteland of consumerist insanity with eyes worn out from constantly buldging at the draconian things society will accept in order to keep up with the joneses.

David says:

Oh, there is value for customers

Amazon’s willingness to screw over customers trying to get control of their device means that Amazon is a more attractive partner for MPAA and other content deliverers banking on not letting a customer record movies even for private use.

Amazon will be able to offer content cheaper to the customer if its content providers are reasonably sure that customers will have to pay for every view and not be able in any manner to enjoy content more than once without paying extra.

Of course, many of today’s offerings are such that you will not voluntarily watch them more than once anyway, but probably some houseguest would and be warned off purchasing a viewing of his or her own.

Anonymous Coward says:

Recommend a DRM-free ink-jet printer?

I have several ink-jet printers that are gathering dust because they simply don’t work, and their DRM keeps me from fixing them. I’d love to get a DRM-free ink-jet printer, but can’t seem to find one.

I have several old laser printers that I won’t get rid of, because I’ve already learned how to get around their silly DRM.

John Fenderson (profile) says:

Re: Re: Recommend a DRM-free ink-jet printer?

He’s referring to Lexmark, which included straight-up electronic DRM with their inkjet refills, so you could neither refill their own cartridges when they were emptied nor use any third-party ones.

Lexmark then sued under the DMCA non-circumvention clause when someone broke the DRM. They lost.

OldGeezer (profile) says:

Same thing was true for years ago for DVD recorders. On C-band satellite the premuim channels and even some basics began blocking recording for all the newer DVD burners. When I tried to replace my older machine I found out used ones of that model were going for much more than I paid new. I solved the problem by using the old one as a tuner connecting the video output to a newer recorder.

Anonymous Coward says:

forget everything else and just concentrate on the one thing that screws up the experience for customers, regardless of what the item is and then thank the entertainment industries and Congress for doing just that! and the only ones impacted are the members of Congress with the ‘encouragement flowing into bank accounts and the customers who cant use the modern items because of the greed and the fear of the makers!

tqk (profile) says:

Re: Re: Re: Re:

Ya know, we have enough people fat fingering and relying on autocomplete while replying via cellphones. It would be nice if people would care enough about what they write for me to want to read what they write that they’d bother to proofread before sending! TD supplies a “Preview” button. Use it! Yes, I know you’re in a hurry. Don’t be! Meh.

FWIW, I seldom (if ever) have any trouble understanding you. Others, not so much.


PaulT (profile) says:

Re: Re:


Because there’s enough dishonesty and trolling in some parts around here without some people being able to retroactively change what others see them writing.

Even intelligent people make mistakes and typos, but the honest ones among us shouldn’t mind admitting and correcting them, even if it can be a little annoying.

Anonymous Coward says:

Re: Re: hurts my soul

developers are probably lied to. shown some weird (sponsored by MPAA, using MPAA math) how the company is failing financially due to piracy, and the developers NEED to come up with some kooky plan to thwart pirates.

because the pirates steal from the bottom line; and that affects raises.

the developers, with a desire to see their quality work reach great heights, allows a DRM wrapper to be placed around their weeks of unpaid overtime and late nights.

when the product doesn’t achieve greatness, because hot features were swapped with the mediocre DRM module, developers shows a sad face.

And the company can chant its new mantra – “As long as the DRM works, we aren’t losing customers”

John Fenderson (profile) says:

Re: Re: Re:3 hurts my soul

Yes, in smaller shops developers have much more say, which is one of the reasons why I strongly prefer to work with and for smaller shops.

Most developers don’t have that luxury, though. Where I am currently employed, there are a couple of hundred developers. It would be very difficult to pull off something like that here.

Anonymous Coward says:

Re: Of course it devalues the product

People who aren’t sure enough about a product to buy it second hand, probably aren’t sure enough about a product to jailbreak it.

If I am a hardware manufacturer with DRM coming out the buttock, I will still laugh all the way to the bank when I can keep selling my increasingly inferior crap. I wouldn’t get any share of second hand anyway so why should I care about that, except for suing and in other ways discourage such unwanted behaviour?

Chris Brand says:

Re: Re: Of course it devalues the product

Personally, I’d be looking to sell two version of the product – the “mass market” one with the DRM plus the “hackers delight” pre-jailbroken version for an extra $50 or so. Why not capture that extra value ? (Particularly as the development costs for the latter should be less).

tqk (profile) says:

Re: Re: Re: Of course it devalues the product

Or, they could sell the “Walled Garden” version to the sheep for $50 more, and us plebes who’re willing to do without the “Advanced Features” get a deal.

It amazes me that anyone sells anything these days. Why would anyone buy this crap? I much prefer old stuff that still works. Why buy new stuff that doesn’t, or that only barely does dependant upon …?

andrew_duane (profile) says:

Sometimes it's not only DRM that does this

While DRM is certainly responsible for this a lot of the time, sometimes it’s good old-fashioned feature creep.

Example in point: iPod Nanos. I love my 5th gen nano, but the newer ones are twice the size and dropped half the useful simple things in an effort to cram more useless “spiffiness” into them. The result: used 5th gens sell for considerably more than new 6th gens on Ebay. When mine finally dies, I will go there to buy one rather than fork out $150 for a new one from Apple.

Jason says:

The analogy I often use when describing DRM to lay people is buying a car.

If you could only buy gas at one chain of stations, only have service performed by the dealer, only listen to approved radio stations, and only drive in cities the manufacturer sanctioned—all under a possible penalty of massive fines and jail time—would you buy the car?

Maybe you would, who am I to say? (Maybe you think it’s a really cool looking car and that outweighs the restrictions.) But if nothing else, it better be a lot cheaper in exchange for all that.

Not a perfect analogy, to be sure. But it hits at the value aspect of the argument, I think.

John Fenderson (profile) says:

Re: Re:

“would you buy the car?”

If the car were cheap enough, then maybe. It would have to be cheap enough to be considered disposable, since I certainly wouldn’t be getting it serviced. $500 new, perhaps?

But what I would never buy is a car that can be disabled by the manufacturer if they decide they don’t want them on the road anymore, they don’t like me, or any other reason.

Gwiz (profile) says:

Re: Re: Re:

But what I would never buy is a car that can be disabled by the manufacturer if they decide they don’t want them on the road anymore, they don’t like me, or any other reason.

Isn’t that basically a built-in feature these days with new cars? They all have some form of OnStar/SYNC/UConnect/etc. in them don’t they? I’m pretty sure the ability to kill your car and lock the doors with OnStar exists even if you don’t pay for the service.

John Fenderson (profile) says:

Re: Re: Re: Re:

“I’m pretty sure the ability to kill your car and lock the doors with OnStar exists even if you don’t pay for the service.”

This is true, and is one of the main reasons why I don’t buy cars made in recent years. Some day I won’t have that option. Fortunately, for now anyway, it is trivially easy to disable those systems. When the day comes that I have a car that includes one, I’ll just disable it.

It is almost a certainty that if the day comes when these systems are not trivial to disable, some car expert will figure out a way to disable it anyway.

Anonymous Coward says:

Re: Re: Re:2 Re:

And that automobile modchipper could be on his way to sharing a jail cell with a Playstation modchipper.

It’s only a matter of time before cars become much like printers and game consoles, proprietary systems designed to reap profits on the back-end. It’s no secret that Tesla makes more money selling a replacement [proprietary] battery than selling the car.

Anonymous Coward says:

Re: Re:

A while back, a little known company (Sony) sold a slightly popular game (PS3).

Part of the appeal of the PS3 was that the military was building a super-computer using OtherOS, while tinkerers were building apps in Linux that could utilize the controller and output to your TV

DRM – and its laws – allowed Sony to one day Remove OtherOS because it didn’t like how one tinkerer tinkered.

That’s right – the product changed after purchase because the manufacturer didn’t like the direction of the tinkering.

Sony “regretted the mistake”, and compensated everyone with a free game.

So, DRM is more complicated than buying a car you can only service at an authorized service station. You describe perfectly the TOS or License to use said product(s).

Adam (profile) says:

As much as I hate this model of business I admit that I’d go for…say a car that costs 50% of retail with a special type of gas that I can only buy from the manufacturer. I’d be completely happy with that. I disagree when I’m roped into it promising a cheap car without the special gas disclosure but finding out that putting normal gas into might break my car.

Spaceman Spiff (profile) says:

Just say no!

When it comes to DRM-encumbered devices, discs, etc. JUST SAY NO! Refuse to purchase any such item – the market needs to speak up about this egregious violations of our rights as purchasers. If we are just renting something, then that should be made clear in the terms of purchase. If we are BUYING it, then we own it, and can do with it what we want, and if the vendor subsequently “bricks” it so we cannot use it, they should be liable for treble damages! After all, they have stolen our goods from us!

JP Jones (profile) says:

Re: value for money

Not really the right place for this, but if you don’t understand “all this” then it’s probably fine to upgrade. If you aren’t planning to root your phone (or don’t know what that means) the Note 4 is a pure upgrade.

To my knowledge, however, the Note 4 is rootable. I’ve had both (Note 2 and 4) and find the 4 is a significant upgrade over the 2. The screen is amazing, the camera is fantastic, and the S-Pen is far more useful and accurate. So far the battery life has been better, and I’m a fan of the “Private Mode” with fingerprint unlock to secure private data but leave the phone able to unlock quickly for normal use.

Granted, I haven’t rooted my phone as I’ve found the default interface works fine for my purposes and any advanced features I want are easily covered by Tasker even without root. Rooting is only useful if you’re going to use it for a specific purpose, otherwise it’s really a waste of time.

I appreciate that it’s available, and if I found some software that could only be used rooted that I wanted, I’d root in a heartbeat. But between Tasker and the fact that Wi-Fi tethering no longer requires root (I use my Note 4’s 4g to give internet connection wirelessly to my Nvidia Shield Tablet) I haven’t seen much point.

Overall Android is only restrictive if you’re a power-user interested in the absolute limits of your device. For the average user you probably wouldn’t even notice the difference between your rooted and standard phone, and even for power-users there’s a surprising amount you can do even without root. I wouldn’t worry about it, but it’s nice to have the option.

Anonymous Coward says:


Even if the car owner doesn’t subscribe to Onstar service. The car manufacturer still receives real-time location data on all Onstar equipped cars and stores that data. That data can then be sold for a profit to 3rd parties.

So whether you subscribe to Onstar or not. Onstar still makes a profit off you, the car owner. As the old saying goes. Your personal information is the product being bought, sold, and traded for profit. In this case it’s your real-time location information.

Onstar might even be uploaded how many times you exceed the speed limit and sell that data to insurance companies for profit. It’s hard to tell what’s being uploaded with cellular modem and GPS equipped cars. I personally rip all the antennas off new cars I buy. I hate my personal life being the product being sold.

If I need GPS navigation. I use a GPS device which can only receive a signal, not transmit one.

Peter (profile) says:

I ditched my Fire TV for other streaming devices

I bought a Fire TV in 2014, my first streaming device. It has subsequently been replaced by a Roku 4, which supports more apps, and an Nvidia Shield Android box. Unfortunately, Amazon hasn’t developed an app for Android TV, so I view Prime Video much less than I used to.

I would never again consider a streaming appliance that locks me into a seller’s ecosystem (Apple TV being the worst). That defeats one of the major benefits of streaming, which is choice.

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