Creative Commons and Gillmor Party on Friday

 (Pending RSVP confirmation) I’ll be at the Creative Commons book party for Dan Gillmor’s We the Media on Friday – see Lessig’s blog for the details.  If you’re in the area, I hope to see you there.

Playlist Sharing v. Weed, Wippit

Interesting new feature from a Music Store: MusicMatch now allows people to share songs with friends for up to three playbacks.  Features like this certainly add value and help differentiate the Stores.  But, with these limited sharing features, I wonder why the industry does not more aggressively pursue models like Wippit and Weed.  I know that, with Altnet, there’s plenty of legitimate bad business blood.  But Wippit and Weed are intriguing ways of linking the selling copies biz model with P2P.

People are always talking about how P2P is used for sampling.  People hear a song for free there, then go buy the artists songs.  Well, if they like the sample, why not allow them to buy it right there in the P2P environment? With Weed, you can do that. Plus, people get bonuses for sharing with their friends – it works with the mechanics of the environment.  You take the biz model to the consumers, not the other way around.

With Wippit, you do have to transplant consumers a bit more.  But you get to replicate the environment along with a feels free subscription service.  Plus, if done right, you get some cost savings by using your customers as servers.

The Practical Impact of Lock-in

Speaking of lock-in issues, I want to get back to an argument made by a few blog-commentators (Brad Hutchings among them) that, even if you accept that the DRM lock-in’s theoretical impact from business and social welfare perspectives, there is no practical impact because people can easily get around the DRM.  If they can do so, then they are by definition not locked-in.

The point most often made is that the iTunes Music Store songs can be burned to CD, ripped, and re-encoded in MP3.  You can do so without violating the DMCA and it’s trivially easy.  That’s true, but note that the same argument would not apply to Janus-wrapped songs that do not allow burning.  In any case, you can output to the soundcard and record.  There are also methods that, though illegal, are available and thus would seem to diminish lock-in effects in practive. Circumvention devices are still available, so people can go that route as well.  Moreover, there are other environmental factors that seem to limit its effects further.  The availability of MP3s over P2P does so.  To some limited extent, so does the limited competition in music services and formats.

As noted in the iTMS case study, the extent to which all this is true does indeed limit the effect of lock-in.  Whether it entirely eliminates the effects in practice is far more questionable. In fact, it appears that the empirical evidence is to the contrary.  If people were so easily getting around the DRM, why would eLabs find that consumers are frustrated by this limitation? (See Paul Gluckman, “Building Business on Legal Downloads Isn’t Easy, Panelists Say” Washington Internet Daily (Feb. 10, 2004)).  Why would SunnComm be getting similar complaints?  If the limitations of DRM were bothering no one, why would anyone complain?

Some people then take this argument and turn it into a criticism of the DRM-does-not-impede-piracy argument.  The argument goes: if people are not actually creating unencrypted copies, then DRM does limit what can get on P2P.  But this misses a critical point.  If many, or just a few, or maybe even just one user gets around the DRM and uploads a copy to P2P, the DRM is basically irrelevant in stopping piracy (save for the narrow, presently theoretical exceptions discussed elsewhere).  However, for the consumers who are buying legit and don’t evade the DRM, the DRM lock-in effect remains. 

Real’s Harmony Hype

Ernest covers the most important points  about Real’s Harmony and I chipped in a few in the comments. As we discussed, it isn’t clear that there’s a DMCA violation here – if anything, it’s an (a)(1) access control violation.  But, it seems they might have simply created a conversion tool based on Hymn without doing any circumvention or reverse engineering themselves.  If that’s the case, there no a contract issue either.  So, a widely-available circumvention device helped create a DRM evasion device that doesn’t circumvent.

Which is not to say that those are actually the facts or that Apple won’t sue.  From a more general standpoint, Apple could argue, in a twisted but perhaps intellectually consistent way, that it’s not fair for them to be able to make FairPlay files but for him to not be able to make Helix files. And then Rob Glaser could say, but you never asked. 

But how could Glaser say that with a straight face to Apple? In that dynamic, Apple has all the leverage. They have the market share in the Music store and portable player markets.  Why would Jobs care about Real’s format?  Real’s nothing to Apple.

As long as the services operate in an environment in which they must use some form of DRM, there is little incentive for them to share one DRM. The only way is if everyone decided, collectively and simultaneously, to drop their own formats and share one format. But I doubt either Apple or Microsoft would want to do that.  They have all the leverage here – it’s not in their interest to have one format here.

That’s why, in my view, ending the format conflicts won’t happen in the foreseeable future unless the music industry, not the services, choose to drop the DRM.  Even in the long term, if DRM sticks around, the format conflict will only end temporarily when enough consumers settle on a particular format, possibly creating some quite terrible lock-in; the conflict will then erupt again when a new service comes out that consumers cannot take advantage of because of the lock-in.

Regardless, will this move benefit Real in any way?  I suppose.  It’s basically a last ditch effort by them. The only reason for them to have used the Helix format in the first place is if they wanted some control over formats. Otherwise, why not just give in in the first place and license WMA?  Now, they see that they don’t have the market share to push Helix on their customers, so they have to make do.  Consumers benefit a little, but, as Ernest makes clear, Harmony is mostly hype.

Keeping up on INDUCE

I wish I had more time to talk about the INDUCE Act. Luckily, everyone on the blogroll has been full of good info, so check it out. In particular and as usual, Ernest has been on a roll.  Make sure to check out former Intel exec Les Vadasz’s op-ed, out from behind the WSJ subscription wall, over at The Importance Of.