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DRM doesn’t have to be all bad April 23, 2012

Posted by David Card in Uncategorized.
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The e-book price-fixing lawsuit against major publishers and Apple renewed discussion among the digerati last week about the evils of DRM. But digital rights management doesn’t have to be all bad. Companies should use DRM to unlock new revenue streams, rather than lock in outmoded business models.

My colleague Mathew Ingram isn’t the only one saying publishers created their own problems by insisting on DRM-enforced copy protection on e-books. Author Charlie  Stross also makes the case that insisting on DRM helped Amazon increase its power over the industry. They and others recommend that publishers abandon DRM.

I’m skeptical that eliminating DRM on e-books would instantly make other retailers competitive with Amazon and dilute its market share – dropping DRM didn’t do much to Apple’s iTunes digital music dominance. And e-books still don’t have file format compatibility, a situation that creates similar user lock-in without DRM.

Don’t get me wrong. DRM always gets cracked, and doesn’t prevent real copyright thieves. Awkward implementations inconvenience legitimate customers and alienate fans. Consumers are used to owning content rather than thinking of purchased books, music and videos as licensing arrangements. Once upon a time, the media and entertainment industry could lock down consumer “rights” via physical media. The industry used physical products to manage pricing and packaging, distribution, reproduction and release windows. It has tried to do the same with device- or merchant-specific DRM.

It’s all in the implemenation

But smart DRM implementation can enable new products and marketing opportunities, while handling platform proliferation and consumer choice. That can mean watermarking, the way Pottermore’s trying to treat the Harry Potter e-books, rather than copy protection. And as consumers adopt identity services from companies like Facebook and Google, it is getting easier to associate authorized access to content services with an individual rather than a device. That will relieve the consumer pain of typing passwords or complicated codes.

Features and services “good” DRM facilitates include:

  • Rental. On-demand streaming is one way to deliver content protection, but what happens to a user’s Spotify experience when he can’t connect to the cloud? DRM has long enabled local storage of “rented” music for services like Rhapsody. And content services could make rent-to-own offers by applying rental fees toward outright purchases.
  • Lending and discovery. You can’t do e-book lending without some kind of DRM. Amazon enables use-limited sharing on Kindles, and e-book borrowing for Prime customers. Microsoft experimented with Zune-to-Zune song sharing and RIM’s got a little of that for BBM Music. Think how much more effective sharing would be across services.
  • Affiliate re-distribution. Although they’re no longer around, Weed and PassAong Networks played around with music super-distribution. Consumers could garner affiliate fees by re-distributing music to their friends.
  • Frequent buyer programs. DRM or watermarking makes usage and purchase points work across different retailers for media companies that aren’t in the credit card business.
  • Un-lockable bonus content. This is betters suited to physical products like CDs and DVDs, and Disney’s even putting codes on Marvel comic books. But tagged digital downloads can get customers to go to the content’s source where a media company can establish a direct customer relationship independent of the content distributor or retailer.

See? Not all DRM is evil. While it may be wise to eliminate copy-protection from content that consumers purchase, media companies would be crazy to give up on DRM entirely.

Question of the week

What new products or services could DRM enable?
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