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How to Compete with Free: Debunking the DRM Myth

The media is filled with reports of illegal music and movie downloading, peer-to-peer file sharing and the related ongoing legal and legislative battles being played out in our courts and Congress. Most of these discussions perpetuate a myth that existing, or soon to be developed, digital rights management (DRM) technologies are the key to solving piracy problems in the entertainment industry. As support for this idea, many have cited Apple’s successful iTunes music download service. The conventional wisdom is that since Apple uses DRM and Apple is successful, then technical copy protection mechanisms must be essential to Apple’s success. The truth is that Apple’s DRM technology, called FairPlay, actually helped Apple’s success, but not because it prevented digital piracy.

For the prevention of piracy, FairPlay is not only completely ineffective, it is implemented objectively. Once you purchase a song through iTunes, you are allowed to burn it to a CD. Once you burn it, the song is completely out of control in iTunes. You can rip the song from the CD by using perfectly legal software, such as Windows media player; post the music in a part of the file; re-encode it to MP3 format; or make a million copies of the CD and give it to Times Square. FairPlay does nothing to stop people from doing things. So, since the idea that FairPlay prevents piracy collapses in the face of logical analysis, why does Apple bother to do it?

There are two logical justifications for FairPlay. One has nothing to do with the effectiveness of DRM and everything to do with marketing. In other words, having the illusion of DRM makes it easier for Apple to convince record labels to distribute their music through iTunes. Another reason for the existence of FairPlay has nothing to do with protecting rights holders from piracy and everything to do with protecting Apple from competition. The iTunes service and Apple’s iPod player are designed to work together and proprietary FairPlay technology helps keep out interlopers. Any iTunes or iPod clone-maker would have to reverse engineer FairPlay, which would make the task of making clones more difficult and give Apple both technical and legal options to attack. For example, when RealNetworks introduced Harmony, a technology that made the RealPlayer Music Store compatible with iPods, Apple responded with threats that future Apple software updates would likely break compatibility and even go so far as to question its legality. or Real action under the Digital Millennium Copyright Act (DMCA), which makes circumvention of copy protection illegal. This case clearly shows that Apple intends to use FairPlay to protect its own commercial interests, which has nothing to do with preventing piracy.

Even if hackers compromise FairPlay, digital content pirates don’t have to; they can only exploit a gaping, constructed hole. But even if we ignore all past experience with copy protection and assume that FairPlay can be rendered useless, it will still provide little or no protection to rights holders from piracy. Copies of digital content are exact copies. They don’t get damaged no matter how many times you double them. Because of this, even a single in-the-clear copy of a digital work can be perfectly duplicated millions and millions of times while being distributed through the use of file sharing networks. Since many of the latest file-sharing technologies are “open source” applications, such as Bittorrent, which are owned by no one and available to anyone, the tactic of suing against companies operating P2P networks become useless. Technical measures for preventing file sharing have been tried, but the countermeasures are almost as easy. The inescapable fact is that, short of a complete government-enforced shutdown of the Internet, entertainment businesses must face the challenge of competing for free.

In the real world, many microwave oven clocks have been flashing 12:00 for years because consumers either didn’t learn how to set the time, or they didn’t want to bother. Yet some in the entertainment industry continue to entertain a fantasy that consumers will not only tolerate, but also pay for, DRM-based solutions that are terrible for preventing piracy, but that are very good at disrupting consumers depend on commercial success. . This idea that DRM can protect rights holders and help them compete for free perpetuates the purveyors of many incompatible DRM solutions. These vendors have found an eager audience with some executives so desperate to insulate their business models from change that they’re willing to believe that DRM snake oil will protect the current income streams.

Apple’s iTunes shows you can compete for free. But as this document shows, the effectiveness of Apple’s DRM in preventing illegal copying played no part in that success. It is important to note, however, that Apple will not succeed in iTunes simply by creating technical and legal barriers, or by promoting its DRM to rights holders as an elixir of piracy. The other half of iTunes’ formula for success relies entirely on people’s behavior: if consumers don’t recognize the value of iTunes, they won’t use it. In addition, almost every song that is legitimately purchased through iTunes can easily be obtained for free through illegal means. Apple’s iTunes service, combined with the iPod player, offers consumers a complete and integrated solution that is easy to use, flexible (for example you can burn songs to CD) and stylish. Apple is attractive to consumers, not because Fairplay DRM is restrictive, but largely because it isn’t.

Pundits and vendors are doing a lot of damage to the entertainment industry by perpetuating the myth of DRM and holding up iTunes as an example. With iTunes, Apple doesn’t show the cost of DRM to consumers or rights holders. Apple has shown, however, that you can successfully compete with free, and get consumers to open their wallets, if you can offer them convenience​​​​​​​​​​​​ and value. The entertainment industry should listen from the real iTunes example: give consumers a good offer at a reasonable price, and you can eliminate the incentive to acquire jobs illegally and make digital piracy obsolete.

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