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Readers Continue the DRM Debate

I've received some interesting comments in response to my column Thursday about the role of "digital rights management" software, which I'd like to share.

One reader wrote that the column glossed over one of the basic assumptions of the pro-DRM argument: That file-sharing translates into lost sales. As this reader noted, a study just published in the University of Chicago's Journal of Political Economy found that was not the case. In it, economists Felix Oberholzer-Gee and Koleman Strumpf concluded:

Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period.

One fellow seized on the irony of companies complaining about side-effects of the digital technology that they already championed: "The recording studios went digital all by themselves to cut production costs. Noone put a gun to anyone's head and ordered them to release CD's. They liked the idea of being able to easily copy the music to media without expensive equipment and edit or extract parts of it for re-use."

Other people wanted to explore the ethical angles of file sharing.

A professional ethicist (yes, these are my readers!) wondered if my analysis of file-sharing behavior might not be read as saying that "anyone who plays by the rules because it's the ethical thing to do is lazy, stupid or ignorant." I told him that wasn't my intent at all. I assume that most people are honest; if they weren't, no amount of technological wizardry could prop up the record industry.

Another reader wrote that I shouldn't call it "sharing" at all: "What is and has been going on in the music business is copying. And since the music's only been paid for once it's really stealing." My reply: The people making music available over peer-to-peer systems are "sharing" them -- no copy gets made until somebody else downloads the file. As for the stealing angle: Yes, keeping a download without paying for it is stealing. But, let me play devil's advocate for a second, what if you either delete the file after a listen or two or buy the song or the entire album it came from? (There are CDs in my collection for that reason alone.) The economic effect -- the profit or loss to the creator -- is the same as if somebody loaned me a CD that he'd already copied to his computer, something few reasonable people would quibble with.

Finally, a few people were confused by my mention of copying iTunes purchases to somebody else's iPod. They asked: What about the "Sync and Erase" prompt iTunes pops up when you plug in a strange iPod? There's no real trick here: Click the "Cancel" button (the default selection in this prompt) and you can then drag and drop individual songs, TV shows or movies to the "alien" iPod.

By Rob Pegoraro |  February 16, 2007; 11:39 AM ET  | Category:  Feedback
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Comments

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The DRM argument has annoyed me to no end. In Internet land, all the technologists argue how DRM IS BAD. I would expect such smart people to not fall for this faulty logic.

The record companies are, among other things, in the business of intellectual property. Part of their business model describes how they control the spread and usage of their IP. DRM is only a means to control it.

When folks say "DRM is bad," that's like saying 'the internal combustion engine is bad.' (instead of blaming global warming on cars...)

Their beef is with the legal restrictions that the record companies put on music purchases, not on the technology used to enforce the restrictions.
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What would happen if there were no technical restrictions placed on legitimately purchased digital music, yet the "you can only burn this music to CD 10 times" existed in the fine print, as part of the contract you signed when you agreed to buy the music. Would the geeks still complain?

Posted by: Gee | February 16, 2007 12:15 PM

Here's a thought on DRM.

I'm a volunteer DJ at a local indie radio station. Our reach is small, but even so, ultimately there are people who buy music because we played it.

I bring in music from home to play, often, if it's something I can't find in the station's library. I also play music from bands' myspace pages, and I play free mp3s I've downloaded from their web sites.

But I never play the music I buy from iTunes. Why? That music is authorized to play only on my iPod and my computer. I don't want to give up one of my precious authorizations to the computer at the station (I already had to give one up with my old computer was stolen), and I don't like to play directly from my iPod (the headphone jack is gimpy and the quality suffers).

The outcome: iTunes DRM effectively has gotten in the way of me promoting the music I've bought from them.

Until I get around to burning a backup CD of all my purchases...

Posted by: Tony | February 16, 2007 1:17 PM

Mr DJ, if you're really a disc jockey, presumably at WMUC (or else it's a quasi-closed-circuit station like Fairfax cable), then you'd know that music that is received by radio stations is licensed for broadcast differently than what you buy at home. It's related to FCC rules. I presume you applied for and received an FCC license as we had to in the 1990s. Radio stations can and will not authorize music for broadcast, most commonly this was used in the past for free demo records when pop singers would release singles given away at car dealerships and the like, also arcane rules from when jukeboxes ruled the earth as the primary music promotion medium (as was true in the 1950s when many stations limited music airplay in favor of radio dramas and sports).

MP3s should never be played over the air due to their lack of dynamic range. I can imagine no record company wants you to do this so that their music sounds bad and they will try everything to keep their music from sounding like an MP3.

Posted by: Former WMUC DJ | February 16, 2007 2:21 PM

That should read "record companies can and will not license music for broadcast" not radio stations. My typo.

Posted by: Anonymous | February 16, 2007 2:27 PM

It always amazes me how people like the first poster want to protect the music industry or hollywood for that matter. File sharing and video recording very well might cause some people to illegally record somethings. Do you really think the studio industry would be making so much money on vcr tapes and cds and dvds if they had won the betamax decision 20 years ago? All these things create a far bigger base of interest for music and movies than they take away from as evidenced by profits the movie industry has made. The same tired arguments were made in that case and history has shown that they were incorrect. And lets not even get into the ethics or morality of it, considering the books of the music and movie industry are as crooked or more crooked than Enron. How does a movie that grossed almost 400 million dollars-coming to american with eddie murphy- actually lose money for the studio that produced it? Accounting like enrons that how.

Posted by: niceday | February 16, 2007 2:40 PM

[quote] "MP3s should never be played over the air due to their lack of dynamic range." [\quote]

You gotta be kidding me. Every radio station I've seen uses dedicated compression hardware to DECREASE the dynamic range.

Posted by: sasha | February 16, 2007 2:41 PM

You gotta be kidding me. Every radio station I've seen uses dedicated compression hardware to DECREASE the dynamic range.
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What? Well, "Yes, but." They both contain the word "dynamic range" in the description, but there are limits to what the fm band can handle (less than cd) and what the audience wants (much more than MP3). You don't hear radio stations clamoring to say they sound like MP3s, do you? Can Marc Fischer get in on this one? While I'm no engineer I got this info from broadcast engineers. CDs were compressed and yes, we always side-chained when doing voice overs and other compression tricks to keep... the ambient volume of the music up... but MP3s sound like dead robots and cassettes and other non-broadcast-quality audio were too muffled due to lack of range and in MP3's case, simply not enough digital data to make the music sound good. You aren't wrong in your description, but it doesn't apply to commercial MP3s.

Posted by: Anonymous | February 16, 2007 3:11 PM

"When folks say "DRM is bad," that's like saying 'the internal combustion engine is bad.' (instead of blaming global warming on cars...)"

Um it's the exhaust from a car's internal combustion engine that leads to global warming.

As for DRM no one has yet to persuade me that music I buy as a file shouldn't come with the same rights as music I buy on a CD.

Tony, iTunes will let you deauthorize all of your computers http://www.apple.com/support/itunes/musicstore/authorization/

then you can reauthorize the one's you still have.

Posted by: Norm | February 16, 2007 3:55 PM

"Accounting like enrons"

Do you even know what the Enron Scandle was about?

If Coming to America lost money (and I don't know nor care if it did) it's probably because about 20% of the Gross Revenues had to be paid to the story's original author, that Eddie Murphy didn't credit appropiately.

I love when none business people (this includes techies) start making statements about how much money a company does or does not make. As if there is some proper profit number out there that owners are obligated to stop at and give the rest to the consumer. Its like when Susan Sarandon or Tim Robbins make a political comment...so mis-informed.

Posted by: Accountant | February 16, 2007 3:57 PM

As if there is some proper profit number out there that owners are obligated to stop at and give the rest to the consumer.
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Wall Street definitely decides that issue for the companies and their boards. Don't act like they don't Robert Nardelli.

Posted by: WMUC DJ | February 16, 2007 4:29 PM

This is the same silly argument that I find stupid in windows-licensing. I bought a copy and now i want to put it on every device i own. Microsoft wants me to buy 3 copies of the same thing. Ridiculous . I bought it and that is where their interest ends. It is mine to do as i wish. I remember when the movie industry fought vcr's and now that makes up 2/3 of their income.

Posted by: pATRICK | February 16, 2007 5:29 PM

Wall Street definitely decides that issue for the companies and their boards

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Duh...That's my point. The Market (Wall Street in your example, which is just the most efficient reflection of the overall market) decides if a product's sales price is proper. The intersection of the sales volume demand line with the price line, provides the optimal price point for maximizing gross revenue. In an isolated state that is all consumers care about. The majority of the market does not make buying decisions based on anything other than price, despite what Eddie Vetter or Metallica may think. Thus a statement such as, I'm not buying that because the music isn't good enough to pay that much, makes sense. A comment like, I love that music, but the damn CEO gets paid too much money and I don't want to support that is in many ways ludicrous. Granted, none monetary impacts do change buying patterns, and people will buy more expensive products to support these views, but those views generally have to do with an over all social good such as the environment or human rights, and not how much a company makes. It is not a crime to charge the market what it will pay, nor is it to attempt to limit production costs to increase return. Restricting interstate commerce is a crime as is theft of intellectual capital, which is what DRM is ultimately about. That and whether even if the perpetration of these crimes as they relate to music has a negative impact on the artist or the industry.

Spin the records Mr. DJ and occasionally repeat what you read off the newspaper, but don't try to apply it ... its kind of scary.

Posted by: Accountant | February 16, 2007 5:29 PM

Radio was the first shared music and it created a market. This is only short sighted greed.

Posted by: Gary Masters | February 16, 2007 5:35 PM

I understand that you want to stick up for your proffession MR. ACCOUNTANT, but you really seem ignorant of the way that hollywood does its bookeeping.

ART BUCHWALD was the original author who sued the hollywood studios over the film, but clearly you dont know what your talking about. He was supposed to be paid from the net profits of the film, but the studios and its accountants said that the film lost money, so he sued and the Court found that the studios and accountants associated with the studios had basically cooked the books and awarded him monetary damages. That's why every star who has power always insist on a share of gross revenue not net because hollywood pictures never make a net profit. Enron was certified every year by Arthur Anderson as having a clean bill of health. Hollywood as well as record companies have creative ways to charge expenses a lot of different ways. Another example is the TV Show the Rockford Files with James Garner, it ran for 8 seasons and stopped because james Garner did not want to do it anymore. When he wanted to get some of the net profits from the show the studio told him that it lost money for them. A business wants to keep renewing a show that is a money loser? Get a reality check. Its about accounting trickery.

Posted by: niceday971 | February 16, 2007 5:49 PM

Thanks Norm!

I'm not actually at WMUC, and I shouldn't have said "local" because I'm not in the DC area. It's local to me but not to you.

I like Rob's columns, and I read them from afar. I don't recall what brought me to the Washington Post the first time.

Posted by: Tony | February 16, 2007 10:45 PM

DRM is, was and will always be bad for everyone except nosey greedy, weasely companies. When I buy a CD or DVD I expect to be able to play it, wherever, whenever, however I want to, without being spied on, monitored or otherwise molested by anyone or anything. I definitely don't want by PCs and stereos bogged down with DRM BS. If they are really worried piracy, the answer is simple, compete on price - the American way

Posted by: Citizen | February 18, 2007 9:45 AM

DRM, in principle, is not an inherently bad thing. It is in its execution where problems arise. Artists alone are the ones who should decide how and to what extent their "intellectual property" should be protected - period.
This problem stems from the fact that, in order to have a "major label" deal, the majority of artists are required to sign away a portion (often quite large) of their ownership in their own music. Once people realize that it's ultimately the artist who suffers, then perhaps we can begin to address this issue from the proper perspective, and achieve something approaching a realistic solution.

Posted by: timmdrumm | February 19, 2007 11:28 AM

It's all silly.

Some non-thinker said:
"What would happen if there were no technical restrictions placed on legitimately purchased digital music"

THERE ARE NO DRM RESTRICTIONS ON THE VAST MAJORITY OF DIGITAL MUSIC! THEY'RE CALLED CD'S!!!!!

Sorry for shouting.

But if the record companies make money on CD's, and those have no restrictions, then it follows they can make more money selling those same songs without the physical disk in the same format.

But the record companies are in the business of charging you over and over again for the same "Intellectual Property". They want you to buy the vinyl. Then the cassette. Then the CD. Then the special digital file for the iPod. The the special digital file for the Zune (for the 2 people who bought it). The the special file for the player-of-the-year-next year.

And the consumers with half a brain said "no, this must stop. I'll just rip my CD to anything I want".

The record companies yelled "Thief! You're stealing. I only sold you that CD to listen to on your CD player. You need to buy it again if you want to listen to it a different way."

We laughed at the record companies.

So in response, the record companies are saying "We were so dumb to release CDs twenty years ago with no copy protection. But we won't make that mistake again. You'll have to buy the digital files at low quality and you'll have to buy it over and over again every time you get a new player"

And we are still laughing at them.

Except for the few goofballs who spend real money on iTunes Music Store. They'll buy anything.

The record companies are doomed unless they provide music in the format we want. As far as I'm concerned they are. I'll keep buying CD's.

Posted by: Tom | February 21, 2007 1:01 PM

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