How The Sony DRM Debacle Can Benefit the Digital Music Market

In discussing the impact of the Sony DRM debacle, Paul Resnikoff made
a fairly bizarre assessment: “But just how aware is the average consumer
in all of this? … A worst-case scenario would involve a high level of
awareness, and subsequent drops in CD buying. That is a problem for
everyone, because most buyers are unlikely to
make finer distinctions between various major labels and specific
protection schemes.”

To the contrary, the best-case scenario is a high level of consumer
awareness.  No matter what you think of the DMCA or what DRM’s
role should be in the market, we should all be able to agree on that.

DRM proponents often argue that DRM’s limitations will never be
unacceptably invasive or strict, because consumer desires will never
allow it.  If one music supplier uses DRM in a way that is too
restrictive, another supplier will exploit that opportunity, offering
music with less restrictions and drawing consumers away.  In sum,
the competitive market solves all.

And what do you need to get a competitive, efficient market?  Full information.  Perfect
information and perfectly competitive markets don’t exist outside of
textbooks, but we’d like to get as close as possible to those goals.

If consumers come away from the Sony debacle deciding to never buy
another DRMed CD again, that’s the market at work.  To the extent
this provokes consumers to be more critical when buying any DRMed
product, and they reject DRMed products on that basis, that’s the
market at work.

Resnikoff’s fear seems to be that this one incident teaches a false
lesson because this is an exceptional instance, and thus consumers will
in some sense be improperly informed. First, this is not completely exceptional.  Sony CD DRM certainly is an
extreme example of the harm DRM can do as well as a situation in which
people were buying DRMed content without fully understanding the
restrictions.  However, all the major online music
services are misleading in the way they advertise their services,
obscuring how restrictive their DRM actually is.
We should hope that consumers come away from this scandal more critical
about DRM in general; if they decide to purchase music from the online
music services, they should do so knowing what they’re buying.

Second, if this is a false lesson, then the solution is more
information about DRM. The onus is on record labels, online music
services, and DRM proponents to make those “finer distinctions” and
explain to consumers why they should buy DRMed products. If you think
current music DRM restrictions are not so bad, I challenge you: start the “say yes to DRM!” campaign. And if consumers don’t buy your message, take that as a signal from the market.

3 Responses to “How The Sony DRM Debacle Can Benefit the Digital Music Market”

  1. Brett Morgan
    November 19th, 2005 | 2:02 pm

    You are making a serious assumption. You are assuming one label’s music is equivalent to another label’s. So not true. I go into a store wanting to buy Placebo, i can only buy that from one label. With drm. Or not buy it at all.

    So the music label sitting there staring at their sales reports will never know that i stood there, with their cd in hand, willing to hand over my dosh, bar the fact that there was a drm symbol on the disc. A shame, as they say.

  2. Ashley Bowers
    November 24th, 2005 | 5:51 am

    I think this may be Sony’s last mistake. If every state follows Texas and sues Sony with a penalty of $100,000 per cd times atleast 1 million cds would equal bankruptcy for Sony.

  3. Paul Resnikoff
    December 2nd, 2005 | 12:59 am

    It’s funny sometimes when something is read back to you, it appears totally different than what you intended. I was assessing the issue from a label profitability standpoint, not the consumer perspective. But yes, wider awareness of the issue will save a lot of hard drives right!? But what is really interesting, is that many consumers are totally unaware – but they don’t care! Well, that’s some of the word from the street.. go figure….