People Would Pay A Hell Of A Lot More If DRM Were Gone

from the paying-for-value dept

An argument that we’ve made for years is that for all the whining about how the legacy entertainment industry insists it needs DRM, adding DRM takes away value. It limits the content/games/software/etc. that people purchase a license to and therefore limits the value. You don’t need an economics degree to recognize that providing less value decreases how much people are willing to pay (and how many people are willing to pay). Thus, there’s at least some economic force when using DRM that decreases the potential market for DRM’d offerings. Supporters of DRM will likely counter with some version of the argument that this decrease in value/addressable market is okay, because it’s less than the expected decrease in the potential market that happens when “OMG I CAN GET A PIRATED VERSION FOR FREE!?!?!?!??” enters the market. I’m not entirely convinced that’s true — as time and time again, we’ve seen that people are more than happy to pay for (1) official versions in order to support creators they know, appreciate and trust and (2) especially when it comes with other benefits beyond just the content.

But, one thing that hasn’t really ever been made clear is just how much DRM depresses markets. Until now. Some researchers at the University of Glasgow have just released some preliminary research (found via Cory Doctorow and EFF) specifically looking at the market for DVD players — and how things work when they come with built in DRM and without it. The findings are pretty spectacular. People are much more willing to spend more money to be able to avoid DRM.

Overall we find that interoperability has a significant positive effect on the price that consumers are willing to pay for DVD players. The average price that they are willing to pay increases by $19 USD for players with any interoperability features present. The average price increases by $30 USD for players with the specific ability to play content in open file formats like Xvid. This feature has the strongest impact on price in our study. The lack of region locks also has a moderately significant effect on price. Backwards compatibility with legacy formats live VCD had no significant impact on price in any of our models, likely because VCD is a very legacy format, indeed, having been popular in the late 1990s. Backwards compatibility might have a bigger impact for products that are released at closer time intervals.

These are — again — preliminary findings, and specific to DVD hardware. It’s possible that there are confounding factors here as well, but as a starting point, it’s quite interesting to see that people seem willing to spend much more for greater interoperability and less DRM. And, once again, it goes against the claims of Hollywood that people are always just looking for the cheapest overall option.

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Comments on “People Would Pay A Hell Of A Lot More If DRM Were Gone”

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Chris ODonnell (profile) says:

Last night…

Me: It took 90 minutes, but I finally got the book from your Kindle to mine.

Wife: You could have just read it on my Kindle.

Me: That’s not the point. It shouldn’t be this freaking hard to borrow a book from my wife.

(Yes, I know about family accounts. Daughter is other adult on my account so that she can buy e-textbooks at college on my account)

The real problem was that it had been a couple of years since I messed with Calibre, and didn’t realize that Amazon had a new file format that was incompatible.

That Anonymous Coward (profile) says:

Not to mention the DRM gives them a reason to raise prices.
We have to specially make all of these versions of the same thing for each region. Then sometimes they make something a little different & people want to see they different part.

Overlooked on BluRay players is somehow the standard managed to include must playback specific formats that you don’t find on the discs.

ShadowNinja (profile) says:

It also makes you much less likely to play the game when you have it.

Years ago as a gift I got a copy of a game in a series I really enjoyed playing.

I still haven’t even opened the box it’s in to this day, because all the fan forums I went to were flooded with complaints about problems with the DRM making the game not work.

Worse of all, it seemed that the server necessary to validate the DRM went down on a semi-frequent basis for maintenance, meaning legitimate customers couldn’t play the game during that time.

The company that made that game was Ubisoft by the way.

Thad (user link) says:

Re: Re: Re:

I had a job interview once where they asked me how I felt about Spore.

After I responded about how you would expect (total bafflement), they reminded me that years earlier, I’d signed some kind of online petition or something protesting Spore’s DRM (maybe it was an FTC report? I don’t remember, there was a whole campaign). They’d found it googling my name, and wanted me to explain my opinions on DRM.

They also asked me how I felt about SB1070. It was a weird fucking interview.

I didn’t get the job.

Anonymous Coward says:

Re: Re: Re:

The problem with this article for me is that they are talking about grey market players that are hard to get.

I found about 15 of them on Amazon with a ten second search. And yes, they were a mixture of third party, fulfilled by, and directly sold by Amazon. At least as far as not region locked are concerned. Open file format compatibility was more difficult to recognize (usually didn’t see it on Amazon’s description). At least one of them could play Xvid based on user comments online, but I didn’t bother checking the others.

Pretty good for "illegal, hard to get" items.

Thad (user link) says:

Re: Re:

You could conversely look at the price of the dvd players that only support DRM free formats (if such a thing is even worth selling) and the price of those with both DRM free and DRMed formats supported and say that people are willing to pay a lot more for DRM.

There’s no contradiction there. People see the ability to play the movies they want to play as a value-add. But they see the removal of DRM — ie the ability to rip their movies, play other regions’ movies, etc. — as a value-add too.

Though that doesn’t necessarily mean what the headline says it does, "people would pay a hell of a lot more if DRM were gone". The truth is, we don’t know what people would pay if DRM were gone. People are willing to pay a premium for region-free DVD players as an alternative to region-locked ones, yes — but if every DVD player were region-free, then it wouldn’t be a value-add, it would be the default option, and I suspect prices would settle around what DVD players sell for now. (This is without even getting into added complications like the overall decline in physical media sales in favor of streaming video.)

That said, there’s definitely something to be learned from the premise that a DRM-free version of a device is considered more valuable than a DRM-infected equivalent.

Loki says:

Not sure how this is in any way groundbreaking. Sony, in particular, has been well aware of this for years (despite their lies and obfuscations to the contrary), which is why a product like the PS3 had features like backwards compatibility and OtherOS which they slowly removed as the market stopped paying a premium for their devices.

It’s like an article I read years ago that “recent studies” showed that caffeine was just as addictive as cocaine (even if the drug itself isn’t as harmful). Really? Maybe they should’ve just talk to the people at Coca Cola, which would explain why they put the caffeine in their product when they had to remove the cocaine in 1927.

But this just highlights the inherent dishonesty of an industry that’s pushed IP from a safety net for creators into a perpetual revenue generator (mostly for large corporations). This is why over the last 20 years I’ve gone from something of an IP Maximalist to an IP Abolitionist. Since their attitude for years has been either all or nothing, that’s all I’m willing to concede, NOTHING. People who have work every day (and even some that don’t) don’t really care if some does or doesn’t get paid for work they did (much less work someone ELSE did) 30 years ago.

Rekrul says:

Amazon has a goofy kids show that I liked called Level Up. It’s not available on DVD, you can only get it on Amazon streaming. I would pay for both seasons if I could download and save the episodes permanently. I’ve even tried searching for methods to download or “rip” such videos, but to no avail. The only advice I got was to use screen recording software. Sure, and get the buffering messages, glitches and stutters when Windows decides it needs to write something to disk.

Rekrul says:

Re: Re: Re:

Thanks for mentioning this. Unfortunately I can’t currently use it as I still have an older Windows XP system and it requires Win7 at minimum. To be honest, I don’t even know if I can view Amazon videos on this system since I’ve never tried. I’ll definitely keep it in mind for the future, because I am thinking of getting a newer system.

I’m curious about how it works though. Does Playon handle paying for whatever videos you want, or do you have to pay through the Amazon site, then somehow get Playon to access them?

Seegras (profile) says:

Re: Re: Re:

Usually this comes up by goons doing astroturfing. You can tell by

a) that they try to insinuate somebody must have been paid by someone who usually does NOT have a real interest in the outcome.

b) their own position however is one that really does have a lobby in the background that might pay for astroturfing.

in this case, we have Google which doesn’t really care about someone else using DRM or not. And on the other side we have at least the manufacturers of DRM which have a big interest in somebody using their products. Plus the idiots and apologists within the content industry who think DRM is necessary (even though it hurts them).

I mean the question “cui bono” is always a good one, but if the answer is “the public”, then somebody arguing for astroturfing is almost certainly the astroturfer from those opposed (or an apologist for them).

robster (profile) says:


About 5 years ago, I wound up spending $500 just to watch the Spurs in the playoffs.

I needed a solution where I could watch on my PC.

So, I bought an HDHomerun($100), renting a CableCard monthly, had a spare PC but had to buy a legit copy of Windows 7($199).. I get everything up and find that my monitor isn’t DHCP compliant! I spend $200 more on a new monitor.

After all this, I still wound up with driver issues and DRM software update issues.. took me weeks of frustration to get it all working.. right in time to see them lose their last game from my PC.

Rapnel (profile) says:

“People Would Pay A Hell Of A Lot More If DRM Were Gone” – Exactly this.

Remove the stress caused by idiots and let the barriers drop and watch the money makers make.

I am befuddled by the almost total resistance. It’s sort of like the masses that continue to vote against their best interests just to stick it to the ‘other’ guys. Yeah, good one, idiots.

crade (profile) says:

Re: Re:

DRM is about control and about preventing competition. It’s about locking phones to carriers and about forcing people to use your app store if they want to sell apps that work on your hardware, it’s about preventing third parties from being able to make games that are compatible with your game system without paying you. It’s about preventing competitors from making printer cartridges that are compatible with your printers, coffee cups that are compatible with your coffee machine.

It’s basically only against the best interest of the newcomers who want to bring honest competition into the market. Those that vote against it are not they.

Anonymous Coward says:

My Game Buying rules

Any game with DRM absolutely MUST be 50% off before I will buy it. These include all games on Steam since steam is a form of DRM.

No on any game that requires a 3rd party service like uPlay, that adds ON a launcher with similar “register to play” requirements like Enix/Square, Stardock. If a company does this shit retroactively, they get fucking banned from me and my cash period!

O yea, FUCK YOU STEAM for letting them pull this fucking shit and not ALLOWING A FUCKING REFUND! I have now lost access to a few games FF7 for PC being one of them because of this fucking shit!

Gog, there I will buy a game full price, and if a game is available on GOG I ALWAYS buy there first, and I check every time before I buy a game!

I tolerate steam but I sure would love to kick it to the curb, and will do so if given the chance!

Anonymous Coward says:

So, like 30 years ago I bought this music CD–Geminiani, Brahms, details don’t matter, just some dead dude who didn’t play a guitar even in private, even when he was alive.

When my Sony CD player conked out (Sony, as old folks may remember, was sort of like the Samsung of the 1980’s), I bought a Samsung CD player. But mostly I just played the CD in two or more of a succession of (1) automobile CD players; (2) home computer CD drives; (3) work computer CD drives, at a succession of two or more employers. The employers periodically upgraded computers, without my permission (and often without much advance notice).

But that was never a problem for me, because whenever I got a new CD player, or automobile, or work computer, I could just track down the original CD manufacturer, re-register the CD, and pay a special upgrade fee to take my old player/car/computer off my account, and add the new player/car/computer.

And this was no problem for me. I’ve bought hundreds of CDs over the years, and I knew when I bought them that I’d need to keep track of the manufacturers very carefully. And since I don’t bother with the dead-drunk dopeheads with guitars and Sony contracts, there are a lot of little publishers out there–many of them out of business before my latest computer’s hard disk finishes defragging. And, again, since I don’t bother with music that’s out-of-date before your MS-Windows version goes out-of-support, I want to upgrade all my music licenses every time I get a new computer.

What I love about buying music in electronic form is … it’s just like CDs.

Anonymous Coward says:

Multi-region Bluray Players

I am a personal example of this principle at work since I already paid extra for DRM free content.

I bought a multi-region/format blu ray player a number of years ago because there were movies that were available for sale that were only available in in non-USA compatible regions/formats. At the time, the multi-region player went for twice the price of a regular player. While I wasn’t happy with the steep price difference, I paid because it enabled me to get past the regional DRM. My alternative choice was to not be able to watch those movies since they were otherwise not available.

To this day, I find it ridiculous that movies are printed and available for some regions, but not for others. If the movie company REALLY wants the sales, shouldn’t they make that movie available to all viewers who want it? If they have a reason to restrict access to physical disks, why can’t they make it available by some other legally available viewing outlet (such as Netflix or Amazon Prime)? A sale is a sale. It should not matter where the viewer is located in the world. If that person is willing to buy a legitimate copy from the company, that person should be able to play it on their machine without further hassle.

If they want to see evidence of people willing to pay more for DRM-free content, examining the sales figures for multi-region disk players might be a good place to begin looking for it.

PaulT (profile) says:

Re: Multi-region Bluray Players

“To this day, I find it ridiculous that movies are printed and available for some regions, but not for others.”

Well, that’s complicated, and has a lot more to do with the way the industry has struggled to adjust their business models to the modern world than stating “only people from here can buy this”. Essentially, studios offset costs of localisation (translation, adhering to different censorship rules, etc.) and distribution by selling off the rights to different countries piecemeal.

This leads to a great deal of inevitable problems, ranging from movies not being available at all in some areas, otherwise only being available in inferior versions (movies are often licenced but not the extras) or not available in the form a customer wishes to have (e.g. dubbed rather than subtitled or in the original version after being edited for non-censorship reasons).

As you rightly state, these restrictions lead to people finding ways to bypass the restrictions. Though, realistically, they lead only a small subsection or true cineasts to import physical disks. Everyone else just pirates. They recognise that whereas previous regional restrictions based on high shipping/manufacturing costs and incompatible TV formats were natural and therefore acceptable, the current situation is utterly artificial and not acceptable, and most people won’t feel much moral regret about pirating due to an unacceptable condition.

“If they have a reason to restrict access to physical disks, why can’t they make it available by some other legally available viewing outlet (such as Netflix or Amazon Prime)?”

Again, licencing. They backed themselves into a corner, then rather than fix the issues described above, they creamed themselves over the ability to sell rights by individual countries rather than the 3 or 6 regions allowed on Blu/DVD.

“A sale is a sale. It should not matter where the viewer is located in the world. If that person is willing to buy a legitimate copy from the company, that person should be able to play it on their machine without further hassle.”

Agreed, but you’re missing a couple of things. First a sale is a sale, but Netflix/Prime are not sales. They think that by restricting content, you’ll be convinced to pay more for a purchase and/or pay for multiple services that might have better rates for them.

Secondly, they want to screw everyone as well as possible on exchange rates. They don’t want you to be accessing the South American Netflix for $2 if they can charge you $10 for the US one, and they don’t want Europeans accessing either if they can get away with charging them $20, even if that means they aren’t giving you the content you actually want (figures pulled out from my ass, but you get the idea).

Bottom line – this is all due to a business model and mindset that is convinced that they can get people to pay top dollar if only they put enough artificial blocks in place to getting a good deal. It’s less right than ever, but that’s what they thing.

Anonymous Coward says:

Steve Jobs understood customers.

When the iTunes store was announced it didn’t really impact me. But over the years if I found a song that was intriguing I would spend the dollar. I have an eclectic collection of singles; In addition to my more extensive CD collection.

However, apple finally caved and bumped the price up to $1.29.

I have yet to buy one.

DRM is the same pain point. Origin, Hulu, major networks, UbiSoft Play. Better things to do with my time.

David says:


Your headline reads

People Would Pay A Hell Of A Lot More If DRM Were Gone
but that’s a complete mischaracterization of the actual conclusion that "people would be willing to pay a hell of a lot more for a version without DRM".

The problem with that conclusion is that if DRM were gone, they would not need to pay more since the market would provide cheaper alternatives (not necessarily illegal: the whole region code perversion was designed to prohibit people from making use of legally acquired media in differently priced markets). And so the customers’ willingness to pay more would not actually be exercised.

DRM is designed to keep the customers from undesired use of their media (the worst of which is considered sharing them). If they are willing to pay more for media without DRM, the question is which perceived and actual benefits they are willing to pay more for.

And the question is which of the actual benefits are going to make how much of a dent in the bottom line.

Without trying to factor those effects in, any conclusion is going to end up just as flawed as the nonsensical "piracy accounts for a damage of $x" statements.

To quote Ursula K. Le Guin’s wizard Ged’s realization in "A Wizard of Earthsea": "It is light that defeats the dark". You cannot win by countering misinformation with misinformation.

PaulT (profile) says:

Re: Wrong.

“the whole region code perversion was designed to prohibit people from making use of legally acquired media in differently priced markets”

Region coding was not primarily designed for that (although it’s undoubtedly a reason why it’s still enforced). But, people may still pay a premium to bypass that if the product is better. For example, people in the UK might pay a lot more to import a Criterion edition than the local edition costs because they want to access to content/design/packaging that’s superior than the local version. There is of course a danger that if all regional restrictions were removed then everyone will just import the version from India and pay next to nothing. But, the fact is that most people don’t bother to do that, and don’t mind paying more if they feel the product is worth it.

“DRM is designed to keep the customers from undesired use of their media”

…and fails miserably at doing this by negatively affecting legal customers (while often leaving pirates unaffected). Thus, making the product less useful and thus lowering the price. As already stated in this thread, some people outright refuse to but DRM product at any price, others deliberately wait for it to drop below 50% of retail while they would have been happy to buy non-DRM at full price. Anecdotal perhaps, but these things do actually happen.

This is the problem, and the fact that people don’t mind paying more for a working product is borne out by reality. For example, DRM-free content on GoG can be sold for more than on Steam. It’s hard to make direct comparisons since the major content providers are so indebted to DRM and afraid to remove it. But, as another example, the price of buying a new album didn’t massively plummet when iTunes and Amazon went DRM-free.

There’s arguments both ways, but the examples in the real world suggest that people won’t suddenly pay less when things go DRM-free. In fact, there are concrete examples of the opposite.

PaulT (profile) says:

Re: Re: Re: Wrong.

Something which has never really been proven. Although, neither has the assertion that DRM will also cause less people to pay, though there are many anecdotal examples of this actually happening.

Besides, what you state is not really an issue if people are also willing to pay more. Would you rather have 100 people pay $10 for your DRM infected product or 80 people pay $15 for the DRM free version?

Anonymous Coward says:

Re: Wrong.

The problem with that conclusion is that if DRM were gone, they would not need to pay more

Considering that almost everything that is protected by DRM is cracked and put up for free somewhere on the Internet, your logic does not hold, people still buy things long after the DRM has been cracked.

David says:

Re: Re: Re: Wrong.

You don’t get it. Single persons might pay more for non-DRMed content than DRMed content, but if there only is non-DRMed content on the market, a whole lot fewer people might end up paying anything at all. In addition, there might be considerable market pressure to lower prices in order to keep people from turning to alternative (legal or illegal) sources.

That’s why counting every person willing to pay more for non-DRMed content as someone who’d be a customer paying more in a DRM-free world is as dishonest as counting every person sidestepping DRM as a potential customer at full price (when calculating the “impact of piracy”) if he’d not had been able to acquire a copy at lower financial cost.

It’s bullshit accounting vs bullshit accounting.

PaulT (profile) says:

Re: Re: Re:2 Wrong.

“Single persons might pay more for non-DRMed content than DRMed content, but if there only is non-DRMed content on the market, a whole lot fewer people might end up paying anything at all.”

You say this, but there’s examples of entirely non-DRMed markets out there with no significant drop in price (e.g. digital sales, iTunes still charges the same as they did when they were DRMed). By your claim, they should have dropped significantly now, but they haven’t – and that’s with legal free competition.

You’re bringing up hypothetical possibilities, I’m looking at how things have actually happened.

“counting every person willing to pay more for non-DRMed content as someone who’d be a customer paying more in a DRM-free world”

Who is doing this? I’m not seeing anyone. As with every single market in existence in the real world, some people will always pay less when that option is available. The question is whether DRM automatically means that everyone will pay less as a matter of course, and the research says this is false. The point is not that everyone will pay more – this is of course false. The point is that some would pay more despite the claims of guarantee lower prices without DRM. Nobody’s saying that everyone will pay more, just that the assumption that they won’t be willing to pay more is untrue.

You seem to be getting rather hung up on things people aren’t saying, while applying some false equivalence between that and things people have actually said in the opposite direction.

PaulT (profile) says:

Re: Re:

I don’t get your point. Are you saying that the problem is that regional restrictions prevent many people from being able to pay even if they wanted to? A valid point but not necessarily related to whether DRM is on the product in the first place. Are you saying those people don’t have the money to be able to pay? Then why is the status of DRM on products bought by other people relevant to that discussion?

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