DRM encourages piracy, say US economists

Three US economists have challenged the idea that Digital Rights Management (DRM) helps prevent music piracy, arguing instead that attempts at copy protection actually encourage illegal file sharing.

Dinahy Vernik, assistant professor of marketing at Rice's Jones Graduate School of Business, together with Devavrat Purohit and Preyas Desai of Duke University, all experts in game theory, argue the case in a newly published paper published in the journal Marketing Science, entitled Music Downloads and the Flip Side of Digital Rights Management Protection.

"In many cases, DRM restrictions prevent legal users from doing something as normal as making backup copies of their music," says Vernik. "Because of these inconveniences, some consumers choose to pirate."

Vernik, Purohit, and Desai created an hypothetical economic model in which an album of music can be obtained in two formats: 'traditional' (CDs) and 'downloadable' (MP3 or AAC files).

The three academics assessed the "pure joy" that consumers experienced from listening to the music - a factor that was affected by choice of format, the restrictions posed by DRM systems, and users' perceived moral cost involved in circumventing DRM to steal the material. DRM-free music offers much more attractive competition to traditional CDs, and so forces the price of CDs down, which in turn pushes down the price of downloads.

In short, the team argues that removing DRM actually reduces piracy because it encourages more consumers to buy music legitimately, whether in physical or downloadable format, by bringing down the cost of doing so.

The academics' conclusion tallies with an earlier piece of research thinq_ reported on in March, which argued that piracy was an economic issue, and that cutting prices, not imposing DRM restrictions, was the only logical way to tackle it.