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DRM, DMCA and Competitive Lock-In

If you haven’t read Cory Doctorow’s Information Week editorial about the economic consequences of DRM in the context of the DMCA, you should. I’ve previously commended Apple for their “loose DRM”, pointing out, quite correctly, that loose DRM that is acceptable to consumers provides a competitive advantage over “tight” DRM. But Cory points out how the DMCA, which outlaws any circumvention of DRM systems, converts even loose DRM into a serious anti-competitive tool that will ultimately reduce choice for consumers:

The DMCA makes the kind of reverse-engineering that’s commonplace in most industries illegal in copyright works….So say that in 2008, Creative finally manages to nail an iPod killer just as you’re ready to retire your 2006 iPod Nano. At $180 for the new device, it’s a no-brainer to pick one up on your next Amazon run or duty-free trip.

 

But say you’re the kind of iPod user who also buys the occasional iTunes Music Store song. Just one or two a month, maybe 20 a year. If you do that every year from the year the Music Store launched, you’ll have 100 tracks by 2008. That’s a $99 investment in music that only plays on the iPod/iTunes combo. Creative won’t play Apple’s music, and if Creative tries to do so, they’ll find themselves in legal jeopardy under the DMCA, which would give Apple the right to sue them for trying.

At 20 tracks a year, you add 50 percent to the cost of switching away from an iPod in five years. In ten years, you double the cost. And if you buy more than 20 tracks a year — or splurge for audiobooks, full albums and other high-ticket iTunes Music Store items — you’ll find yourself in hock for thousands of dollars that you’ll flush away if you change vendors.

Cory’s right. I still think that loose DRM is an OK thing in theory — I remember being told when a student in Cambridge, MA many years ago that bike locks were simply a moral deterrent, a reminder to honest people that you valued your bike, not a deterrent to determined thieves, and I do think those reminders are sometimes useful — but when you put together DRM, dominant market share, and the DMCA, you have a lethal recipe for anti-competitive lock-in.

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  • flynn

    Somehow Cory did forget about CD burning of iTMS songs. Again. I wonder what brought him on that personal crusade against Apple.

    Meanwhile, in real news, HDMI support in Vista is going strong and nobody complains about Hollywood writing whitepapers for MS to implement. Sad.

  • http://tim.oreilly.com Tim O'Reilly

    Actually, flynn, Cory did talk about CD burning of ITMS songs. It’s certainly true that it’s possible to get songs off the iPod — but it’s inconvenient. For example, Apple changes the length of the track when it’s exported as MP3, so that the appropriate metadata from CDDB is no longer detected. So it needs to be re-entered manually.

  • http://zgp.org/~dmarti/ Don Marti

    Explains why MSFT is supposed to be buying out users’ ITMS collections. (Cory is probably right about being able to fake up a big collection and get MSFT to buy the same songs with _their_ DRM, but people who would do that would get the songs from p2p anyway.)

    But I’m wondering how copynorms fit into all this. Will users feel entitled to get copies of their existing music collections when they leave a DRM corral, or will the music industry get one “re-buy all your favorite albums on CD” event per DRM generation?

    Too weird for me — if you need me I’ll be over at Magnatune.

  • http://eschew.org/ Ben Karel

    Tim:

    Even when dealing with perfectly free and open formats (ogg, FLAC, etc), there’s a certain level of time and inconvenience one really just can’t avoid when converting to another format of choice. I think flynn’s main point was, essentially, that the essence of “loose” DRM is that when converting a protected AAC file to MP3, there’s an easier way of doing it than the analog hole.

    Cory’s article is a fine one, mostly, but the whole bit about iTMS music/money being “flushed away” is just weak at best. If a person’s time is so valuable that it’s economically unfeasible to do it themselves, they can pay the kid down the street to do it for them. There are still market forces at play here.

    Now personally, I’m rather curious: If Cory (or you, dear reader) could abolish or painlessly circumvent either FairPlay or HDCP… which would it be?

  • jbelkin

    Cory skirts over the facts that don’t agree with his thesis – his blanket statement is that all DRM is bad – it’s thanks to Apple that ONLY digital music can be LEGALLY stripped of the DRM … instead of thanking Apple for keeping prices low and putting in place a 2-foot fence of DRM, Cory sees the world as black or white.

    Instead of attacking DVD, TV Shows (as others brought about about HDMI where they can “reach” into your home and downgrade the res of a DVD you bought) or eBooks, Cory blindly attacks the only company that is on our side in putting in a place a DRM that can LEGALLY be stripped out.

    Two clicks – how hard is that?

    And I’m not sure why others have had problems. the itunes I use does not strip out album/artist/song info after conversion to CD and/or back to mp3 – everything si there – no need to re-type in everything but then Cory’s whole article seems like something someone wrote on a bad day with a a broken air conditioner.

  • http://tim.oreilly.com Tim O'Reilly

    jbelkin — I’d be curious what version of iTunes you’re using, because I have had that problem.

    In general, I’ve been supportive of Apple’s loose DRM, but I thought that Cory’s point that with the DMCA, even loose DRM is a block to interoperability and competition.

  • Jeff

    “but thats inconvenient”

    Lets see, 20 songs a year – at todays standard, thats about, oh, call it one CD. 74 minutes to burn on a 1x – 74 minutes to re-rip on a 1x – if you can’t retype the MP3 tags in less than an hour, I’ll eat my hat. And you don’t need to sit there for the 74+74, you click and walk away.

    Your ’50-percent of the cost of switching away’ is avoided by less than 2 hours (of work, call it 4 hours real-time) a year. On the slowest hardware you can’t even buy any more.

    Yeah, thats the sort of inconvenience that man just can’t live with.

  • http://tim.oreilly.com Tim O'Reilly

    Jeff — I don’t disagree with that part of the argument. That’s why I always said to Cory that Apple’s “loose DRM” seemed like a fair trade to me. (See for example my argument with Cory in DRM: Dogs and Cats.) What I thought was convincing in his latest argument was the point that put together with the DMCA, even loose DRM will keep anyone from creating an iPod-compatible music player, and will thus restrict competition in the online music market.

    I think you and most of the commenters here miss that point. That’s the important one. If no one can compete with Apple, except by introducing an incompatible player, the billion plus songs that have been purchased will indeed be a barrier to competition. I know a lot of people who don’t just buy 20 songs a year. They now buy all their music on iTunes.

    Microsoft’s Office monopoly didn’t look so bad when it started either….

    Cory’s thinking long term.

  • http://tim.oreilly.com Tim O'Reilly

    Jeff — I don’t disagree with that part of the argument. That’s why I always said to Cory that Apple’s “loose DRM” seemed like a fair trade to me. (See for example my argument with Cory in DRM: Dogs and Cats.) What I thought was convincing in his latest argument was the point that put together with the DMCA, even loose DRM will keep anyone from creating an iPod-compatible music player, and will thus restrict competition in the online music market.

    I think you and most of the commenters here miss that point. That’s the important one. If no one can compete with Apple, except by introducing an incompatible player, the billion plus songs that have been purchased will indeed be a barrier to competition. I know a lot of people who don’t just buy 20 songs a year. They now buy all their music on iTunes.

    Microsoft’s Office monopoly didn’t look so bad when it started either….

    Cory’s thinking long term.