DRM / IP

This is an amazing paper by Cory Doctorow.....confirms everything we suspected about DRM. (thanks to Confused of Calcutta for the link)

Should be read in conjunction with this study we blogged about here showing DRM destroys value.

As readers of this blog will know, we think DRM won't work medium term for commercial reasons (who is realistically going to keep on buying something with DRM....) - but when you read about how it is created above you realise it just can't work - there are just too many parties with strong interests in breaking it.

We've been saying this for ages, but now there is a really good survey to prove it - putting DRM on music destroys value. Entertainment Media Research, working with media law firm Olswang, conducted lengthy online surveys with 1,700 UK music consumers, selected from a pre-existing panel of more than 300,000 music consumers in the UK (PDF: 2007 Digital Music Survey).

(I saw this on Ars Technica, their article says it all so I'll just quote it at length).

What makes this survey important is the fact that it was aimed squarely at the music-buying public, not the anti-RIAA crowd, not the techno-libertarians, and not our general readership. I've been told more than once that the views on DRM found at publications like Ars Technica are "not representative" of the general public. Perhaps this was once the case, but it can no longer be maintained generally. At least in the UK, the dirt on DRM is out, and it's spreading.

First, the bird's eye view: 68 percent of those with opinions on the matter say that the only music worth purchasing is that which is DRM-free. Yet less than half (39 percent) are willing to pay a little extra for it, while 18 percent say that they'd rather save a little dough and keep the DRM if they had to chose between the two. In the middle is a mass of people with no opinion on the matter, because they're not sure what DRM is or don't know their preference. That will likely soon change.

Familiarity with DRM has grown significantly in the last year. In 2006, more than half of respondents had never heard of DRM, but that number has dropped 16 percentage points in 2007, to 37 percent. The number of people who claimed to have a good or exact knowledge of DRM nearly tripled in that same timeframe.

This is the interesting point - familiarity - 2 years ago one could bang on about DRM and most people would look blankly at you, and in fact you would get more hostility than approbation because the people who cared most were those in the line to lose their livelihoods. Machiavelli summed this up well when he noted that:

It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries, who have the laws in their favour; and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it. Thus it arises that on every opportunity for attacking the reformer, his opponents do so with the zeal of partisans, the others only defend him half-heartedly, so that between them he runs great danger."

However, as mankind's experience levels rose, so did their incredulity lessen.....back to Ars Technica

Of those who have some idea of what DRM is, their views are largely—but not entirely—negative. 61 percent said that DRM "invades the rights of the music consumer to hear their music on different platforms." 49 percent called it a "nuisance," and 39 percent expressed concerns that DRM could have privacy implications. Despite this, 63 percent agreed that DRM "is a good idea because it protects copyrighted music from illegal file-sharers." In other words, the idea of stopping illegal file-sharing via DRM doesn't bother these consumers much, but the effect the effort is having on their own purchases is not appreciated.

This view isn't surprising. Few are those who, in principle, believe that all information (and content) should be "free"; the mainstream viewpoint is still staunchly in the "artists should be compensated" camp. This appreciation for the music business does not surmount all other concerns, however.

Consumers aren't interested in a "nuisance" for the sake of stopping file-sharers, and of course those of us who play closer attention to the world of DRM know that DRM actually does not stop file-sharing at all. As this general truth spreads, so does dissatisfaction.

The takeaway from the survey is that DRM's bad reputation is spreading among general music consumers, and there is a growing aversion to purchasing music that comes with DRM. Despite this, the general understanding of the struggle the industry faces with piracy is still somewhat positive among those same consumers. Still, given that file sharing in the UK is at an all-time high, it would appear that the the music industry needs to remove the digital locks on its tunes, and fast.

This is just another step in the overall restructuring of the media supply chain, where value is moving to the ends - media creation and media usage - as the "middle market" functions of aggregation and distribution increasingly commoditise. Resistance, as they say, is futile against forces such as these - one can expect the current Media industry to resist as long as possible - but failure to use the next few years restructure themselves around the new value chains will just lead to a more painful demise.

Postscript....the morning's trawl of Ars Technica has this piece on Universal experimenting with DRM Free music - apparently as much a poke in the eye to iTunes as anything else. However, this follows EMI's musings on the matter, so clearly the Big Guys already intellectually understand it destroys value - we suspect its just a matter of time now before DRM goes away (in music anyway - video is only starting to crawl up the learning curve, they've been protected to date by bandwidth not being avalable).

This is an amazing paper by Cory Doctorow.....confirms everything we suspected about DRM. (thanks to Confused of Calcutta for the link)

Should be read in conjunction with this study we blogged about here showing DRM destroys value.

As readers of this blog will know, we think DRM won't work medium term for commercial reasons (who is realistically going to keep on buying something with DRM....) - but when you read about how it is created above you realise it just can't work - there are just too many parties with strong interests in breaking it.

There is a conflict of interest at the heart of the whole digital media / webservice business model.

Fundamentally, service providers want to rent assets to users, because that gives them most of the market power.

Users are not dumb however, and prefer to own the asset wherever they can.

(this is not just in the digital world, it would appear to hold in most arenas, especially if there is any sign of abuse of power by the renter)

DRM is - looked at in this light - an attempt to transform an owned asset (a song I bought for eg) into a rented asset.

Users will do anything in their power to avoid this scenario, as it is fundamentally an abuse of power from the user's point of view.

And its users who give you money...without users, you have no business. The whole point of the towers of song, the film factories, the marketing, the artists even - is to delight users.

DRM promoters will kick and scream, but the innate illlogic of a system that "screws over" the people who are its own customers will eventually cause its demise.

QED end of DRM

(Seems like its finally dawning on a number of Meedja people too...)

When a concept has lost credibility, time to rebrand:

Digital rights management (DRM) is the wrong term for technology that secures programmers' content as it moves to new digital platforms says HBO Chief Technology Officer Bob Zitter, since it emphasized restrictions instead of opportunities.

No, indeed.....

Speaking at a panel session at the NCTA show in Las Vegas Tuesday, Zitter suggested that "DCE," or Digital Consumer Enablement, would more accurately describe technology that allows consumers "to use content in ways they haven't before," such as enjoying TV shows and movies on portable video players like iPods.

The rise of CyberNewspeak

As we and others have noted eg Freedom to Tinker:,

“rights management” is itself an industry-sponsored euphemism for what would more straightforwardly be
called “restrictions”. But somehow the public got the idea that DRM is restrictive, hence the need for a name change.

Where could they have got that idea from?

Last night I chatted to a Bloke down the Pub about digital content, as you do (OK, it was a smart wine bar and the occasion was the World Forum Research bash - letting their hair down after a hard year's slaving over those most excellent mobile reports).

Anyway, what he said was very interesting.......rights is apparently not where a lot of the artists make a lot of their money anymore. T shirts, sponsorships, books and so on can make them a lot more profit, mainly because it all goes into their pockets - not the record label's. He wasn't clear on numbers, but it can be the majority of their revenues over time.

And the Internet is a great way to flog this stuff, you don't need to go on tour at all!

So by and large the whole DRM issue has been driven by the Rights Holders to hang on to their (declining) share of the total pie the Fans spend on getting into the Groove.

Only trouble is that DRM has gone down like a lead balloon with the victims - I mean customers - see John Hauxwell's very thoughtful post about iTunes and DRM.

Now it appears that the labels now want in on this loot as a condition of signing a band on too...I do in fact feel some sympathy, after all they made the stars who they were - they would have been nothing otherwise! (Tell that to the Arctic Monkeys, though)

But if the real money is not being made in actually flogging the music, w(h)ither DRM? Its expensive, instantly crackable, annoys the legal customers (and possibly drives them to piracy?).

Seems to me there is a new business model struggling to get out here, that may not actually treat the customers as criminals.

In the meantime, anyone wanna buy a T shirt down the pub - band of your choice, guv......never mind all the Chinese World of Warcraft goldminers, who is going after this gold rush

Last night at the Virtual Worlds session I was talking to two of the sponsoring consultants about DRM, when one mentioned SnoCap as the best system for music distribution today.

I said I thought it was worth waiting a few cycles to see how it pans out (knowing that Sean Fanning was already off to new fields, never a good sign). I then opined that iTunes, (a rival approach) was more than just a content delivery system and was actually a complete value chain, and that this was the real point to grasp, not the DRM free distribution solution component.

I'm no DRM fan (read this) but we need to look at things as they are, not as we would wish.

I was reminded about this little episode again after reading in the Wall Street Journal that EMI (one of the companies talking last night in fact) is trialling selling songs in unprotected MP3 format through Yahoo. Apparently online sales are stalling, so new models are being tried - about time, because the music industry (entirely via its own efforts) has allowed major competitors to disaggregate it..

With Yahoo in the frame it may just work - the thing that seems to elude everyone in this is that end to end Value Chain requirement and Yahoo gets that more than most.

I think DRM is a dead end, but there is one thing Apple taught us that seems to be missed so often; its not the point technology, its how to structure the overal value chain:

- Search for music you want via a high context database
- Get what you want - and only what you want - no bundling
- Make it easy to use and get a "free ride" on existing infrastructure
- Make the price acceptable, so the hassle factor of obtaining free music is a higher cost than buying it off iTunes
- Have a great user experience that connects into the delivery system
- Analyse the data in your end to end chain to improve the service, economics, stickiness etc etc

If these exist, then so long as the DRM is not rapacious, most people will put probably up with it - as the WSJ notes, Apple's iTunes accounts for more than 90% of the tracks sold online some weeks (according to people who work in the music industry).

And if you are going to build a zero DRM system this value chain becomes even more critical, because its only by having superior services that people will be tempted to drop free musc (aka piracy). And this is important. As the Journal notes:

Eric Garland, chief executive of BigChampagne LLC, which tracks peer-to-peer traffic, says more than one billion songs are traded over those networks every month. "It took iTunes several years to reach that particular mile marker," he notes. "The pirate market -- if we considered that a market -- would command better than 90% of the online marketplace."

To compete with all this free music will probably require a combination of better quality end to end services, and a pretty low cost of track purchase to the end user - which probably implies advertising or some other form of subsidy.

And if that occurs, you have to ask "why DRM" - DRM is necessary for a high price subscription or PAYG service, but is irrelevant for a subsidy model.

Will the DRM'ers wake up I wonder?

Postcript.....while searching for similar articles after posting, came across this one by Nick Carr (the Does IT Matter author).