Archive for March 26th, 2009

[FTC Town Hall] Final thoughts on FTC DRM session

Thinking about yesterday’s FTC Town Hall session on DRM, there was some heat (lots of passion on this issue) but not a lot of light.

My take on the issue is that we need to take a step back and look at what’s really happening with the technology and economics of content in the digital realm.

The digitization of content (interesting how the Kindle has now widened the discussion of content to include books as well as music and video) has made possible vastly more efficient distribution methods. These new distribution mechanisms are, as these things tend to do, putting downwards pressure on prices.

Not all of the results of tumbling prices are good (as we’re learning in other areas of the economy) – less money entering the system means that the superstructure of the industry is not likely to survive in its current form. So it’s not surprising that there’s a lot of energy and effort being put into trying to assert forms of control over distribution, which would help maintain the established order. This is what people meant yesterday when they asserted that DRM “enables new business models”.

As Clay Shirky has recently noted in another, related, context (talking about the fate of newspapers),

That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place. The importance of any given experiment isn’t apparent at the moment it appears; big changes stall, small changes spread. Even the revolutionaries can’t predict what will happen. Agreements on all sides that core institutions must be protected are rendered meaningless by the very people doing the agreeing.

I do believe that at the end of the downward pressure on prices is a non-zero price point at which it becomes easier and more convenient for people to obtain content from authorized sources than it is to go get it from other places. Of course price isn’t the only factor here – these sources also have to be comprehensive, reliable, responsive, and easy to use. But I think that’s the lesson of iTunes and Amazon and others dropping DRM from their music distribution systems – at the price point of under a buck per song, it’s just not worth it to them to worry about the wrongful uses and the tradeoff that DRM implies in inconvenienced customers.

As one of the panelists said in the hallway to me at the end of the day, “I wonder if in five years we’ll be saying ‘What’s DRM’?”. I sure hope that’s the case.

Despite several people repeatedly making the point that DRM has utterly failed to deter large-scale piracy, most of the panelists seemed committed to a (perhaps irrational) belief that they can make DRM work.


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