Would no DRM actually increase sales?

Our company does quite a bit of DRM consulting, we've even written a few papers on the subject.

Last week I happened on this note from zdnet re the new Protect-DVD-Video DRM. To quote:

"Part of the copy-protection mechanism is a non-standard UDF (Universal Disc Format) file system which results in the IFO file on the DVD (this is the file responsible for storing information on chapters, subtitles and audio tracks) appearing to the PC as being zero bytes long.

The upshot of this is that if you have a DVD disc protected by Protect DVD-Video and you try to play the disc in a PC-based system using, say, Windows Media Player, the process will fail. Now, lets be clear here, we are taking about a genuine, legitimate DVD disc not working in a PC, not a pirated disc or a download via a torrent."

Wow! Great business model - you sell me something I can't play on 4 of the 5 PC's I have in my home, never mind take over to my friend's house.

And it set me thinking about the whole State of Video DRM today. Let me recap:

(i) DRMs by and large reduce content usage to a far more draconian world than buying the existing physical product.....
(ii) ....but there (usually) is no discount in the price asked (and it must cost more to put the DRM in)
(iii) However, it can't stop the pro crackers....usually the crack is out within weeks of the new DRM......
(iv) ......and the crack is soon on the 'net anyway so anybody can find it.......
(v) ...and if you are too lazy you can get the content off a number of Peer 2 Peer sites anyway.
(vi) So, the main impact is just to increase the hassle for the ordinary customer.....
(vii) ......who has more options for their money and time than ever before.

Have I got this right? And if so, does this make sense as a viable approach? Its not just me, here's some comments on hacking netflix

As far as I can see, the risk for anyone to build any serious library of DRM'd content is too great, unless the content player is a market leader and unlikely to go under (or change things too much as it has so many customers who will shout), or gives some form of guarantee that its DRM will remain stable (like put it in an escrow form or somesuch) - or of course I have a hack I know works so i can always get the DRM content to play.

Without that, rental is in my view the only real model that is viable.

This to me implies that DRM cannot really be viable as is, if it cannot really be used for purchases. I have often wondered if in fact zero DRM was a more beneficial approach. And in fact a Yahoo senior executive recently noted that it may be better overall to remove DRM for the good of the whole supply chain.

This leads to an interesting model - imagine a simple supply chain, and say that with DRM the rate of sell through is (say) 50% of a total potential market. Then assume having no DRM both increases sales and increases copying. Play with it a bit on excel or somesuch. As you can see by playing with this, depending on the assumptions there are a number of fairly believable scenarios where zero DRM is very good news indeed.

I will add some scenarios outcomes in a later post, it is really very interesting.