DRM Doesn't Enable Business Models; Blind Fear Disables Business Models

from the get-over-it dept

A bunch of folks have asked if I had any comment on analyst Michael Gartenberg post over at Engadget claiming that DRM has been demonized too far, and for all the "bad" things about DRM, most people really don't mind it, and we should be happy that it "enables new business models." I've discussed this before, but not in a while, so it seems worth revisiting.

First, it's a lie that DRM "enables new business models." Gartenberg doesn't realize it, but he admits it in his post, when he suggests that DRM made all-you-can-eat subscription models possible, while immediately countering that point by admitting the real factors are elsewhere:
Take subscription services for example. Sure, I'd love a service that would allow me to download unlimited content in high bitrate MP3 format for a reasonable fee every month. Except economics and greed will never let that happen.
Notice what he says here. The DRM isn't what enabled the business model. It's fear of how people will use such a service that does. It's fear that people will actually use what's been given to them -- leading to the claim of "economics and greed" stopping such a service from ever coming about. But, that makes no sense. People already have access to pretty much every song ever recorded with no DRM at all. Claiming that they need DRM to enable such a service makes no sense. It's already there -- just not legally. So what does the DRM stop in such a service? Absolutely nothing. If the fear is that someone takes a song and shares it online... too late. It's already happened. The only thing that DRM does in that situation is put up a restriction on a legitimate, paying customer. That makes no economic sense at all.

And that's my real problem with DRM. It cannot enable a new business model economically. That's because it's only purpose is to limit behavior. There are no business models that are based solely on limiting behavior. It may be the case that some companies may be too afraid to implement a business model without this faux "protection," but that's entirely different than saying DRM enables the business model. DRM takes an economic resource and artificially restricts it. It takes away options, it does not enable them. DRM hasn't been "demonized." It's a pointless solution that prevents no unauthorized sharing and only serves to hinder the activities of legitimate customers.

Filed Under: business models, drm, economics, subscriptions


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  1. identicon
    ERH, 27 Sep 2009 @ 8:32pm

    DRM Facilitating Business Models

    Actually, I find fallacies in this article. A busines model is a construct to take advantage of opportunity in the marketplace. The argument that DRM cannot act as a profit-gathering marketplace construct because places limits on something currently available is incorrect. In fact, the very act of limiting something and promoting that limitation is one of the strengths of marketing and positioning - it creates value where none existed previously in the eyes of consumers.

    Rather I think the issue is that anyone reading Techdirt is quite likely not to be the proper demographic for DRM business model. We are tech savvy enough to, if we choose, download whatever we like in the very same manner that is being sold in the DRM model - albeit (and here's the catch) "illegally".

    Even for those of us who deplore the fundamental cultural shift that occurred with the massive lawsuits of the 90s admit that the big corporations won, and it is now illegal for people to share copyrighted files with one another - except through services that use a DRM model. There's a demand, but no legitimate supply, and legitimacy is a commodity worth $$.

    Consumers purchasing through DRM are purchasing security. That's more important to some of us than to others - it may even be a niche market of "law-abiding" internet citizens, but they do exist. With the population of internet users being so vast, if only 2% accept DRM, that's a profitable business. My guess is that it's likely a lot more.

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