DRM
I was recently chatting with the guy who has been charged with sorting out what DRM solution(s) will be adopted by a major studio. He was very candid about his belief that the studio had dropped the ball when it came to addressing digital music and he was hoping that the studio could come to some more rational conclusion about DRM for other media going forward. He was less clear, however, what he thought would constitute a more rational conclusion for the studio.
The Berkeley Center for Law and Technology held a conference in late February that took a comprehensive look at DRM technologies and the policies around them. Folks like Cary Sherman from the RIAA, Larry Lessig from Stanford, and many others representing all aspects of the DRM debate spent 3 days discussing the issues. The conference organizers have made video of the conference available at their website. Its very interesting stuff and well worth checking out.
I was watching "Hip-Hop Dollarz" on MTV the other night, which is an MTV-style documentary on who's making the most money in Hip-Hop. I thought was interesting to hear P-Diddy, Jay-Z and Eminem all say that they see making and selling music as means of marketing their brand so they can get in to making the "real money" in clothing, licensing and movies. As Jay-Z explained, "music is good for tens of millions of dollars, but clothes is hundreds of millions and where Roc-a-Fella (his label/corporation) needs to be".
This made me start thinking about the DRM issue. Unlike the major labels and studios, the hip-hop entrepreneurs have already figured out that their music will never generate as much cash as it did pre-Napster, so they’ve diversified revenue streams off the core product (their music) and found more profits in hard goods and licensing streams immune to the piracy issue. So this makes me wonder if we even need a DRM solution?
I don’t think we do. I’ll pay $6 for a CD because it’s convenient for me store and have mobile access to the music content. I’ll gladly pay $10 a month to conveniently access a digital on-demand music service that I can play through my PC and CE devices. Consumers will pay for quality and convenience, and online piracy is not the sole reason the music is in serious decline right now. They should save the millions being blown on creating a DRM solution that will ALWAYS get cracked & hacked, and spend it on figuring out how to compete with Tommy Hilfiger. ;-)
DRM is futile on two counts.
Firstly, it destroys value. People will pay less for a locked-up than an open version. Jupiter recently quantified this for music, and it was about $8/CD.
Secondly it is always breakable. If not by an analog path, by emulation - any Turing-completer computer cna emulate any other one. I've been saying this on my blog for years.
The intersting thing is to consider an economic model that can function with non-rivalrous, non-excludable goods. I've outlined one for media at mediagora.com
Online services and music have moved beyond arguing about DRM and are now (at last) more focused on revenue and business models than locking down content. The future of music is unbundled tracks at reasonable prices, focus on access control rather than playback control and cross-merchandizing. Unfortunately the lesson the studios have taken from the labels' experience is that the legislative approach of criminalizing behavior (and potential behavior) is the best alternative to a failed technical solution. Demographics may turn the worm eventually as the US generates 4M new potential voters each year that grew up being treated with contempt by consumer media companies.