Why DRM Is Bad For Everyone

from the yes,-everyone dept

Cory Doctorow gave a speech today for Microsoft's research group explaining to them why digital rights management is bad for everyone, and I do mean everyone. It's a long piece, but absolutely worth reading, bringing together a variety of stories (most of which we've covered here over time) and pointing out that not only does DRM technology not work by its very nature, but it damages just about everyone it touches, from the consumers who use it to the companies who create it to the artists it's supposed to "protect." The key to all of this: "There is no market demand for this "feature." None of your customers want you to make expensive modifications to your products that make backing up and restoring even harder." Sooner or later companies will realize that DRM is really just incentive for competitors to come into your market and offer customers what they really want.
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  1. identicon
    annonymous_man, 9 Sep 2010 @ 3:08pm

    Are DRM loving media companies worth saving

    One of the things I initially liked about Apple's iPod, iPhone, Apple TV, and now iPad ecosystem of iOS devices (and even non iOS based iPods) is that Apple's consumer electronics products as far as the hardware and software is concerned both are appealing -- like the design of Apple computers and iPods, iPads etc and the way their software is designed that works with their hardware but also the fact that Apple got content deals for its devices. Apple's strategy to use content on its iTunes & iTunes App Store ecosystems to sell content licensed to it from media companies to promote sales of Apple's devices (content companies get paid -- consumers are able to consume content legally etc) is an interesting one as opposed to Amazon's with the Kindle to push content sales using different hardware (Kindle app is available on Apple's App Store) and Amazon makes Kindle e-readers -- couldn't care less about selling more Kindle e-readers using e-books in Kindle store to promote mobile device sales but want to drive more sales of Kindle books anyway they can by selling Kindle books to iPad, iPhone, iPod Touch users as well as users of Kindle e-readers. My question is did the companies now making money because of iTunes worth saving -- was saving the corporate music industry really necessary? They have a monopoly on music, sue fans for file sharing (aka piracy), claim to represent artists but underpay artists, and tried implementing DRM on digital music that restricted what consumers could do with their music. I'll elaborate further in the passages below of the history of Apple's iTunes Store dealings with content companies and conclude again with this question of whether they were worth it.

    Apple though has become a corporate gatekeeper on the mobile web controlling what apps are available in its closed app store -- yes they allow access the to the open web also and promote the open HTML 5 format as a replacement for Adobe Flash (but at the same time are pushing to standardize a closed implementation of HTML 5 using H.264 for the future of web video that open source browsers may be unable to offer access to their users) but they also run their closed App Store which has sold lots of apps and now are even offering in app purchases. I was bought by Apple because of the ease of use of their devices, software and because they have these content deals -- with their market share gains in the music industry Apple became dominant enough to dictate terms to music labels favorable to them -- when record labels wanted to change iTunes 99 cent song pricing model that was fixed to allow variable pricing Apple rejected this model and the music companies eventually relented for a while.

    They resented Apple had gotten this control -- in a way it benefited consumers though for a while keeping prices of music lower on iTunes to encourage more sales. Then came the DRM free movement to lift DRM in music -- Apple got very few record labels originally sign on to iTunes Plus -- Amazon started Amazon MP3 and a number of labels got on board hoping more consumers would flock to Amazon to buy mp3s for their iPods and/or non Apple devices and as Apple loses share labels would be in a stronger position to dictate to Apple pricing next time around. It worked out for them -- Apple eventually caved to the labels to allow variable pricing with songs selling for as much as $1.29 to download on the condition the labels would make more music available in DRM free iTunes Plus. As Apple predicted some reports after they initially raised prices as I recall reading suggested the price increases led to a decline in iTunes music sales -- as less music was being bought at the higher prices. Apple also secured enough dominance in downloadable TV purchases to dictate preserving the fixed price of $1.99 per episode for a while on their SD offerings. Some TV networks protested but there was nothing they could do -- if they didn't like the deal Apple gave them they could pull their content from iTunes (which NBC Universal did in protest but that was a stupid and misguided move) NBC Universal was only company willing to try that other companies realized even if their making less on iTunes than they like its worth making money on iTunes than not making money on digital media at all.

    What happens to NBC Universal content when they leave iTunes Store more users wanting convenient access to it in digital form start file sharing -- and piracy increases. NBC eventually came back to iTunes Store (they claimed iTunes needed them more as 40% of TV show sales were of NBC Universal content across their networks USA Network, NBC, Sy Fy etc but in the end it would appear NBC needed them more. While NBC was away they started Hulu a joint venture -- between NBC Universal, and a few other media companies for streaming Internet TV online (a YouTube competitor) by no means was this going to replace revenue lost by leaving iTunes. NBC eventually came crawling back to iTunes Store after Apple starts offering HD TV content for $2.99 in addition to keeping SD $1.99. In a way NBC got what it wanted but really Apple won. In the end consumers benefited from Apple preserving lower prices for TV Shows -- and even when they added variable it was based on whether content was SD or HD.

    Apple secured good usage rights in its license agreements with content companies to ensure its DRM was not too restrictive that it bothered consumers -- it offered as much user freedom as possible. Apple also began the App Store for its iPhone, iPod Touch and later iPads and then created in app purchasing to download extra content within an app (this system enabled douple dipping for some apps -- you pay for the app and then if its a game you pay for bonus levels etc) from a consumer standpoint at first under these circumstances could be unfair to users to have to pay twice for same content -- but doing in app purchases of digital comic books in MARVEL Comics Reader (app is free but there are some titles in app that cost money) or e-books from Barnes & Noble e-reader app, Kindle app, or even iBooks etc is fine when the app is free but contains a digital storefront to buy, download and access content within the app.

    Right now there's a debate about the future of journalism and saving the future of newspaper industry and news media in general -- if you turn on TV news there's too much sensationalism, celebrity gossip, soft news etc on major channels often. Newspapers are seeing subscription revenues and print advertising decline -- its worth noting that when you buy a newspaper your reimbursing the newspaper company for the cost of producing the paper (for printing it) consumers have never paid for the news in the paper -- that's what advertisers pay newspapers for.

    With print advertising in decline, fewer people subscribing to newspapers in print there is less revenue to the papers -- some have been forced to shut down operations completely (print, online etc) others have scaled back their print operations and increased web presence. Since Apple launched the iPad some apps have become available for iPad (via App Store) using in app purchasing model to buy and download electronic copies of newspapers and magazines - now consumers pay for news online as Internet advertising has also suffered (availability of free news online is in some cases declining) there is a debate about whether Apple should/can save the news media -- saving news media if possible is needed as our country needs access to trustworthy and relevant news so we can make informed choices as voters in elections -- etc and as citizens be informed about what's going on in the world. Whether the corporate music industry was worth saving or not the news media certainly is -- but dunno if it is in best interest of news media to have their digital destiny controlled by Apple.

    Other competitive platforms to Apple iPod/iPhone/iPad/iTunes have developed and continue developing with alternative digital storefronts for digital media -- to promote sales of competing devices using content (duplicating Apple's business model) Microsoft has Zune Pass music subscription service and a Zune store for Zune users to buy digital music -- these other platforms have had DRM issues as well. How well designed and how well the hardware/software in these platforms work compared to Apple's model can be debated -- some competitors are trying to innovate and make sleek exciting devices to compete with Apple's and get good content deals also.

    Question is: Are the media companies making money via Apple's iTunes Store ecosystem and other digital storefronts worth saving? Is it worth letting Apple expand the control it already has and maintain the dominance of its App Store over the long run in the interest of user freedom, and openness for the Web.

    Perhaps the corporate music industry should have been allowed to slowly die so indy music can finally have a chance -- and payola (pay for play scandal of majors bribing radio stations to only play RIAA music can end -- enabling consumers to discover indy music more easily) Perhaps saving the TV networks and movie studios digital future for similar reasons wasn't necessary either from a consumer perspective. Yes digital music has gone DRM free for the most part but other content including video games, e-books, audiobooks, movies, TV Shows and even mobile apps sold still maintain DRM.

    Is it worth being locked into Apple's system or any company's system be it MIcrosoft, Adobe, or even Sony. Apple already is a corporate gatekeeper with their App Store -- an Open Internet with Net Neutrality rules of nondiscrimination frown on corporate gatekeepers and corporate control of the Web -- if the FCC hopefully reasserts authority and protects the Open Web does so should Net Neutrality rules not only be extended to mobile broadband service providers (AT&T Wireless, Verizon Wireless) but to Apple's App Store. Should Apple iTunes be required to comply with Net Neutrality that's an interesting question.

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