Contrary to the conventional wisdom of the recording industry, removing digital rights management (DRM) restrictions can actually decrease piracy, according to new research from Rice University and Duke University. The study was published in the November-December issue of Marketing Science.
DRM restrictions prevent music owners from making digital copies of songs or CDs. The technology is meant to prevent copyright infringement and piracy.
Bypassing DRM restrictions is illegal under the the Digital Millennium Copyright Act of 1998.
Marketing professors Dinah Vernik of Rice and Devavrat Purohit and Preyas Desai of Duke found that although DRM restrictions make piracy more difficult, they also have a negative impact on legal users who have no intention of doing anything illegal.
Because only a legal user will be effected by the DRM restrictions, those who illegally download the music are not affected.
"In many cases, DRM restrictions prevent legal users from doing something as normal as making backup copies of their music," Vernik said. "Because of these inconveniences, some consumers choose to pirate."
"Removal of these restrictions makes the product more convenient to use and intensifies competition with the traditional format (CDs), which has no DRM restrictions," he added. "This increased competition results in decreased prices for both downloadable and CD music and makes it more likely that consumers will move from stealing music to buying legal downloads."
"Unlike in earlier literature, we examine consumers' choices among all the major sources of music," Desai explained. "By analyzing the competition among the traditional retailer, the digital retailer and pirated music, we get a better understanding of the competitive forces in the market."
The study also found that decreased piracy did not mean increased profits for copyright owners. In some cases, lower levels of piracy are actually associated with lower profits.
"[The late] Steve Jobs said it best: 'Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven't worked, and may never work, to halt music piracy.'" Vernik said.
"And our research presented a counterintuitive conclusion that in fact, removing the DRM can be more effective in decreasing music piracy than making the DRM more stringent."
Photo credit: Karen Rustad