Problems With DRM

 Posted by at 1:18 PM  Tagged with: , , , ,
Aug 232010
 

Does DRM Prevent Piracy Or Cripple Legitimate Users?

DRM, which stands for Digital Rights Management, is a form of copy protection sometimes embedded into electronic media (like e-books, MP3 music files, etc.). Its purpose is generally noble: prevent piracy (unauthorized copying and distribution of copyrighted material) so that the content creators (authors, musicians, publishers) can earn the money they deserve for their work.

NOTE: If your stance is that copyright is evil and “all information wants to be free” and that people shouldn’t get paid for creating music or writing a book or researching a newspaper article (but that you should get paid for fixing people’s computers or writing car dealership advertisements or whatever you do for a living), then I don’t think we’ll see eye to eye and you may as well move on to another blog.

But here’s the problem with DRM: it generally doesn’t prevent piracy, since almost all forms of DRM have been hacked, and it just ends up annoying legitimate, paying customers. So the pirates strip out the DRM and continue sharing files illegally, and the actual customer (who we as content creators should be bending over backwards for) is annoyed, limited in how they can use the music or e-book they purchased, and sometimes has to buy it again just because they got a new computer or e-book reader. Lame.

Let me give you a simple example to explain why DRM is broken: I have a few MP3 songs on my computer. Most of them came from old CDs that I had bought. I bought a few from Apple through iTunes several years ago. They’re all mixed together, and I don’t really remember which songs came from which source — except that I was forcefully reminded of it when I tried to do something as simple as transfer the songs to my wife’s iPod.

Now, let’s make this clear: I own the music. I own the Mac. I own the iPod (OK, I’m borrowing my wife’s iPod for a trip). I listen to the music on the Mac, and now want to listen to it on the iPod. No piracy is going on.

I go to copy over all my music onto the iPod and get an error — iTunes tells me that certain songs (the ones I had purchased through iTunes) are copy-protected and can not be used on my wife’s iPod. Now think about this for a second. Had I pirated (stolen) the songs, I could copy them over no problem. But since I paid for them, I can’t do something as simple as listen to  songs on an iPod? What? (NOTE: there might have been a way to authorize the iPod or blah blah, but at that point I was just frustrated and didn’t want to troubleshoot and figure out something that shouldn’t be that difficult.)

Now, when I offer a product (like my e-books over there in the right-hand column) for sale, I want to provide a quality product at a fair price. I want my customers to get a pristine file, the best one available. I ensure that it looks good, has no formatting problems, no typos, and it’s the newest and best version. If someone is paying me money, I want them to have a pleasant, easy experience. I want them to get value for their money — so even if there were a pirated version of my e-books floating around out there, I want the customer who buys from me to get a superior product. I want their $2.99 to buy them peace of mind (knowing they’re doing the right thing and supporting the author), a pristinely-formatted file, “tech support” if they have issues with it, and the ability to legitimately use that file and enjoy it — even if they trade in their Nook for a new Kindle 3.

And that’s why I don’t put DRM on my files (NOTE: e-books you buy directly from my website have no DRM, and neither do my e-books at Amazon, B&N, or Smashwords. Apple, Kobo, and Sony currently put DRM on files and there’s no way for me to opt out of it, like I did with Amazon.) If a customer asks, I’m also happy to send them my e-books in any other format they’d like. It’s not that I support piracy — in fact, I think many “anti-DRM” arguments are actually “I want stuff for free” rationalizations. And I’m not supporting taking DRM off files that have it — that’s against the law. But I personally generally avoid buying files that have DRM attached — there are plenty of DRM-free e-books out there that I choose to buy instead.

So, back to my song problem. I have the iPod connected, and my choice is now: (a) buy another copy of these songs through my wife’s account or figure out how to “authorize” her iPod, (b) not have the songs I paid for on the iPod, (c) find a way to download something to strip the DRM off the files (against the law), or (d) download pirated copies of the songs I paid for and not have to deal with DRM at all (also illegal, but by far the easiest and quickest solution). This is why, in my opinion, DRM is broken: it doesn’t actually stop piracy, it just annoys legitimate customers — even to the point of pushing them toward piracy! Maybe someday they’ll invent some better, less invasive form of DRM, but the way it is today just sucks.

So, what would you do? And why should DRM force purchasers to make that choice?

Pricing Digital Content

 Posted by at 6:57 PM  Tagged with: , , , , , ,
Apr 122010
 

We are seeing more and more digital content, including:

  • E-Books
  • Downloadable & streaming movies and TV shows
  • Apps and games
  • Magazines
  • Newspapers

This digital content costs less to produce and distribute than the non-digital version. It eliminates printing costs, fabrication of DVDs and DVD cases, and shipping costs, just to name a few. So why isn’t this stuff getting less expensive?

The problem is that the content providers are generally overcharging. Why can I rent a DVD from RedBox for $1, or unlimited movies for a month from Netflix for $9, but on the iTunes Store I’d have to pay $5 just to stream a movie one time, or $15 to download it? Why are you charging $3 for a single TV episode I could watch for free? Why are many e-books $9.99 and up, even when they have a paperback version out for several dollars less? Do they really expect me to pay $5 for a single issue of Time magazine, or $20 a month for the Wall Street Journal? Don’t they give it away for free on their website?

And, one thing I quickly noticed on my wife’s new iPad: all those $0.99 and $1.99 and $2.99 iPhone apps have iPad versions that tack “HD” onto the title and sell for $4.99, $9.99, and $14.99. A tad greedy, methinks.

What these content providers don’t seem to realize is that the great benefit of digital content is that there is no marginal cost. Once the content itself is created, you can sell an unlimited number of digital copies for essentially no cost. Yet, many of these providers are still stuck in the tangible retail model, where they need to make a certain profit margin on each book, or CD, or magazine that they print or produce. What they fail to realize is that they could cut prices in half and probably sell 3, 5, maybe even 10 times as much content, doubling or tripling their revenue and profits. (Also, to the extent that magazines and newspapers make a lot of money on advertising, even selling only twice the content at half the cost is a huge win for them.)

I grappled with pricing issues with my e-books. I first priced them at $4.77 each. I figured that was a “fair” price for an e-book, about half the cost of a paperback, so the readers were getting a good deal. But then a funny thing happened. I tried selling them for just 99 cents each. A little voice in my head cried out that I was “devaluing” all my hard work (those books took over a year each to produce) and that they were “worth” more than that. But when I sold 7, then 20, then 35 times more copies at $0.99 than I did at $4.77, it didn’t take long for me to silence that tiny voice. But what I don’t understand is that, if I can figure that out, why can’t the movie studios, large publishers, and newspapers?

Think about it. I’m not gonna pay $5 to digitally rent a movie I can get for $1 elsewhere. But if that movie was $1 or $2, I’d probably digitally rent at least a few a month for the added convenience. So, the movie studio can make $0 off of me, or $6 a month. Remember, it costs them almost nothing to actually stream the video to me. So who’s winning with these high prices?

That doesn’t even consider the fact that higher prices increase piracy. I don’t think overcharging makes piracy okay (you’re still illegally downloading something you didn’t pay for), but it helps people justify it in their own minds when they can say, “Screw these greedy movie studios. I’d never pay $15 for that movie anyway, so they’re not really losing anything by me pirating it.” When an e-book is just 99 cents, for example, the vast majority of people would rather just pay what they consider a fair price than resort to piracy. Apple figured that out with 99 cent music downloads … and the greedy music studios forced them to raise prices to $1.29 … and (prepare to be shocked) digital music sales declined for the first time ever.

On the other end of the spectrum is the “everything should be free on the Internet” model, which people are slowly realizing doesn’t work (even newspapers are finally figuring it out as they lay off reporters and editors). The problem with everything being free is that the people who create quality content need to get paid, so you can get insightful commentary, professional journalists who can travel to report on stories, quality television and movies, and well-written novels. If even the people who are very good at creating content can’t make a living at it, they will take their talents somewhere else that pays the bills, and we’ll all be poorer for it.

So, my belief is that people are willing to pay reasonable prices for digital content (read: less than the old cost of physical content), and that lower prices (that are still above free) will result in more sales and more revenue, and will allow more people to enjoy more content. That’s a win-win in my book.