Why DRM Cannot Open Up New Business Models 131
An anonymous reader writes "Techdirt has a cool post up that doesn't just explain why DRM is bad, but gives a really interesting economic explanation for why DRM cannot create successful new business models. Since the RIAA and MPAA keep insisting that DRM will create new business models, it's useful to see an argument for why that's basically impossible." As the article says, anyone can create a "new" business model. Creating a successful "new" business model is what is so elusive here.
No, that does not count. (Score:3, Interesting)
So the idea of selling digital downloads of on-the-radio songs for 99 cents doesn't count?
You could do that without digital restrictions and should. If you try to restrict your customers, you will be dependent of M$ and or the RIAA majors to deliver your product. Those people are not known for fair competition and are both kings of repositories of stale, second rate junk pushed at monopoly rates. If you think you can make a "new" business in that kind of market, more power to you. I think you will be just another RIAA vassal station.
there's a better argument here (Score:5, Interesting)
however, the internet renders such a model inefficient in comparison. now, the artist and consumer can interact directly. the internet has replaced the distribution model the riaa's constituent companies are attempting to defend. there defenses are unsuccessful so far, and will continue to be
the consumer is served, the artist is served. the only person left out in the new internet distribution model is the old guard distribution model. i could say "adapt or die" but that doesn't even apply here. there is only one valid economic choice for the riaa's backers: die
obviously they aren't dying gracefully, but no one ever did. forgive the dinosaur its death throes i suppose. but the riaa is history. it's simply a matter of time and the inevitable march of progress
the artist becomes the distributor. seems like a better world to me. the distributor's money in the old distribution model warped true artistic expression i think. so it's progress all around: we get better artists. the unfettered democratic interaction of artist and consumer on the internet will let the cream rise to the top, instead of whomever is backed with the most cash and radio plugs, a la the old model
go ahead riaa, try to stop progress. good luck to you
Yes it can (Score:5, Interesting)
Its success will be predicated on how much pain/reward the model brings to the customers when accepted versus the collective pain/reward of civil disobedience when it meets force.
No, iTMS isn't successful really, hear me out. (Score:3, Interesting)
There is a simply reason why; DRM and cost. When I buy music, I don't want to pay for it again, ever. Yes, I converted all my old vinyl to CD. No matter how nice or good iTMS is, I will not lock myself or my family into a single choice of music players, no matter how cool they might be.
We continue to have the choice of sources for music downloads, and always will. We jointly spend quite a bit on music, but iTMS isn't getting any of that revenue. So while it is successful in the eyes of Mr Jobs and Mr Gates, its not successful in everyone's eyes, especially those of the RIAA as they aren't getting much money at all.
To be successful like McDonalds, everyone in the world needs to know firsthand how your burgers taste. This is not true of iTMS.
Lack of DRM responsible for iTunes success (Score:5, Interesting)
Restrictions kill business and it's a lack of those restrictions which make iPod what it is. Restrictions, other than those imposed by M$, had nothing to do with the success of iTunes. Good hardware design, compatibility with existing CD collections and a lot of bad decisions from M$ are what made iPod and iPod made iTunes. Restrictions can and will kill iTunes and iPod if Apple is not careful.
Without iPod, no one would ever have bought anything from iTunes and restrictions have hurt it. People load their iPods with CDs, not restricted tracks from the iTunes music store. iPod is responsible for the success of iTunes, but that is tiny trickle of what it could be without restrictions. People took more time and trouble to purchase the same thing on CDs. If they really could have exactly the same thing from iTunes as they get from CDs, they would have bought much more.
Both iPod and iTunes would have been a flop like WMP and "Plays for Sure" if Apple had put restrictions on music that originally had none. People got angry when they learned that WMP made it impossible for them to transfer their CD based music collections, had to rip everything again if Windoze flaked out, and when WMP itself was not stable due to all the paranoid checks and M$ using it as a conduit for advertising. All of the M$ imposed restrictions made media on M$ decidedly second rate. M$'s suppression of the ogg format probably spared both M$ and Apple of early Linux competition, but that did not make WMP any better. Apple won because they had the easiest to use and least restrictive package.
Competition will continue to threaten non free music. iTunes sales will collapse as people continue to discover legal and restrictionless music online. If Apple makes it difficult for people to buy and load restrictionless music though iTunes, iPod will die. iPod also faces a significant threat as makers of music players embrace ogg and free software. M$ let those makers down by not delivering on sales, stabbed them in the back by eliminating the whole "Plays for Sure" DRM and all of them are now under the mp3 patent litigation cloud. Music player makers who deliver a quality product that works with all file formats and does what the user wants can and will supplant iPod.
Re:Say what? (Score:3, Interesting)
No not for free if you pay for the subscription. Maybe you would be selling music for very low prices then, but that is not a problem since there is no limit to the amount of music or downloads that the world can supply. Just make more. If the artist makes a song, and only get's one tenth of a cent for each download, but a 10 million people download it, that's $10,000. Make ten decent songs a year, and you have a good living. Sure you can wank about advertising costs and millionaire rockstars, but those things are not necessary to good music, they might even inhibit it. There are thousands if not millions of people it this world with worthy musical skill. Recording and distribution only consume electricity and bandwidth, which are easily renewed and plentiful. Why is the supply of music kept as artificially low as the supply of diamonds? Same reason: to inflate the price. At least with diamonds there is a limited supply.
Re:Say what? (Score:5, Interesting)
Maybe that is the point here... Certain types of "information" are now so ubiquitous that they are infact worth just about zero. Maybe we should not worry so much about wether the system will encorage people to produce entertainment, or even art. Maybe we as a society are producing too much entertainment.
I hate to say this but it is after all the option nobody seems to be considering, perhaps we have reached a point where this stuff is so easily had that without a questionably legal cartel to artifically prop up prices supply is in excess of demand. If less entertainment was produced people might not choose to patronize those who produce work they like, they might thing hey given the releative SCARCITY of media products I like maybe it would be fun to have the physical materials that normally come with or join their subscription service to get their new stuff sooner, whatever. As it stands now there is so much out there for everybody that I think most consumers can't figure out what they *want* but they can get *everything* free so they do and end up buying nothing.
I think there certainly *is* a market for music, film, art, etc just not as big of one as has been created by legislative and technological(DRM) rent seeking the industry has engaged in. The amount of value this society places on these products has become HIGHLY distorted. I bet if we roll back copyright rules to what they were at the end of the nineteenth centry and call the *IAAs what they are organizations that enable illegal colusion and price fixing we get as a result in a pretty short time frame:
1. A much smaller entertainment industry dollars and cents wise
2. A much smaller entertainment industry in terms of product output
3. Much higher quality entertainment products that are produced
4. Consumers paying(voluntarily) for a much larger portion of the entertaiment products they use
5. A functioning market place where consumers reward producers for stuff they like and stuff they don't like sits unsold on shelves and ceased to be prodcued. Since the industry would no longer be able to afford the marketing power to tell people they like something when the really don't.