Sunday, July 29, 2007

DRM is (almost) dead

Recently, Fred Amoroso of Macrovision published his response to Steve Jobs call for a DRM free world. Needless to say, he did not agree with Steve, mainly because that is what Macrovision does: its main product is DRM. Several readers pointed out to me that Steve Jobs did not object to DRM for ethical reasons and I agree: Steve is a businessman, not an activist. Steve Jobs statement is important however, since it signifies a departure from the stance most corporations have had so far concerning DRM. And recently EMI announced that they also left the DRM bandwagon. That's not good news for Macrovision.

Of course, the arguments Fred Amoroso uses are flawed to say the least. I'll tell you why. First he states that DRM is broader than music. Those of you who use a PDA of a DVD player probably know that. Every copyrighted content is affected. But the arguments against DRM apply there too. A tautology at best, but hardly an argument of any importance.

Second, he states that DRM is in the customers best interest. Why? Because it enables the industry to use electronic distribution channels. In what way is that interesting to the end user? That he can see a movie at home instead of going to the cinema? That he can see a movie in Europe at the same time it has been released in the USA? Or simply that he can stay at home instead of renting a DVD? Even if only some of these possibilities are used I can only see advantages for the industry: cutting out the middle man. And of course, there is the price argument: DRM makes content cheaper. That is true, if we would have a choice. The point is: there is no choice! EMI CD's come with DRM, end of story. They don't offer the same CD at a higher price without DRM. Are copy protected CD's and DVD's cheaper as their unprotected counterparts? Again, no. Prices are comparable. Did DRM make recordable media cheaper in Europe? No. You pay the same price for a DRM infested CD and pay a fee on top of your recordable media. And since you're not able to rip your CD and transfer the resulting files to your MP3 player, you pay even more. So, DRM only increases the price consumers pay for content and limits their choice, not the reverse as Fred wants us to believe.

Third, dear Fred claims that DRM will increase electronic distribution. As I've already pointed out, how does that benefit consumers? It does only benefit the industry. Even worse, if they step out, somebody else will step in. The industry left electronic distribution to Apple, because they stated – and I quote here – that the industry only produces content, not distributes it. And even that is an overstatement. Most companies serve as a bank. They give loans to artists, which need to be repaid, so most artists so not see a penny from a record company until after their second album. On the other hand, the technology is here and will be used, whether the industry uses it or not. Books will be scanned and OCRed, music and video digitized and the whole electronic highway will serve as a split second distribution medium, simply because it is there. The only option is to label every single copyrighted bit, outlaw any device that cannot be "trusted" and ship all hackers with more than one braincell to Guantanamo Bay. Ok, am I getting ridiculous yet?

Finally, Fred wants "interoperable DRM". So what. DRM infested content will never be as easy to share and manage as unprotected content, no matter what. This is one of the most fundamental flaws of DRM: unprotected content has better value than protected content. Where there is a margin, there is profit; where there is profit there is a market; where there's a market there are suppliers. DVD Jon is not the problem, he is the inevitable consequence.

Neither Prohibition nor "the war on drugs" have been successful in eradicating the problems they addressed, because it is a simple question of supply and demand. DMCA is flawed in itself and in some cases even detrimental. Even when all political and technical goals are achieved, DRM will give rise to a new form of piracy, much more professional and malignant than anything they've seen before. As long as pirates can provide the content at a lower price than the official channels - and they will - the black market will continue to exist and even thrive. Think of it: Blueray offers the possibility of mass producing Blueray disks loaded with DVD quality, unprotected movies. Mod chips that will allow you to view it on any machine you want. And how much priority do you think the police will give to piracy? "Terrorists robbed the Federal Reserve Bank, eighty-nine civilians were raped and decapitated, five million K of cocaine was brought into country, but we did capture at least three bootleggers and two kids who traded MP3's in a schoolyard".

And whatever you may think of piracy, it is still a petty crime compared to trafficking drugs, firearms or alcohol because there are no health issues here. I think public support for DMCA will drop dramatically when the first eleven year old is thrown in jail for hacking his way into a HD-DVD he legally bought. Already political support for DMCA is subsiding. Consumers are also voters and votes still beat money where politicians are concerned.

So far, corporations have come up with inadequate solutions to piracy. The first one is to offer a better quality. The first step, digital media, is usually successful. The audio CD was a success and so was the video DVD. The second step - pushing the envelope - usually doesn't work. SACD and DVD audio are hardly mainstream and I expect HD-DVD and Blueray to fail as well for the very same reason: good is good enough and more is too expensive. Note that most illegal downloads are of inferior quality. Still people are willing to view an entire film shot in some obscure Asian movie theater with a mobile phone as long as it is the latest hit and it is free. The second one is putting up hurdles for Joe Average. True, Joe Average will not crack any DRM issues. But may be he has a friend or colleague who can open up that DRM infested CD that he cannot play in his car stereo. The CD-R Joe brings home does not only play in his car stereo, but he can also make a copy for a friend or family member after telling them "not to buy the CD", because you can't play it on car stereo, MP3 player or computer. And next time Joe will wait until an unprotected, illegal copy pops up because he now knows what that darn logo means. Even better, since the inability to play the CD on certain devices violates basic consumer rights, Joe's friend can simply rip the thing and get his money back. The conclusion that DRM promotes piracy is almost unavoidable.

But the industry seems to avoid the most effective and obvious measures at all cost: offer more choice and lower prices. In the beginning DVD's came with a lot of extras and a hefty price tag. Nowadays you can choose between the single disk version – feature only – and the full fledged double disk version. There are many ways to differentiate and offer consumer choice. And don't tell me differentiation costs money: it wasn't me that invented the region code. But it were the consumers and the electronics industry that defeated it. Globalization works two ways as the industry has learned by now.

The confusion the industry is in is best illustrated by Bill Gates, who told a bunch of bloggers that he advised users just to rip their CD's and on the other hand Steve Ballmer, who not only released the most DRM infested software product in the history of computing, but also proposed even harder anti-piracy measures (read: DRM). As if WGA works perfectly.. NOT!

The main question is when (and not if) the majority of consumers will fail to adopt a new, costly technology, creating a major debacle for the corporations that developed it or when the electronics industry will cease to play along with the increasingly absurd demands of the content industry.

IMHO the industry should start to consider alternatives for DRM, simply because there is no alternative. The Dutch have a saying "an ass doesn't stumble over the same stone twice", meaning a smart man learns from his mistakes and doesn't repeat them. What do you think we call people who do?

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