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Word Count: 1282 Today, legal music and movie downloads must compete with free illegal
alternatives. Inconvenient for users and ineffectual for rights holders, Digital
Rights Management (DRM) technologies will not protect existing business models.
The media is abuzz with reports of illegal music and movie downloading,
peer-to-peer file sharing and the related legal and legislative battles being
played out in courts and in Congress. Many of these discussions perpetuate a
myth that existing, or soon-to-be developed, digital rights management (DRM)
technologies are the key to solving the entertainment industry's piracy woes. As
support for this notion, many people cite Apple's successful iTunes music
download service. The conventional wisdom is that since iTunes uses DRM and
iTunes is successful, then DRM must have been instrumental in that success. The
truth is that Apple's DRM technology, called FairPlay, was indeed instrumental
in Apple's success, but not because FairPlay prevents piracy.
For preventing piracy, FairPlay is not only totally ineffective, it was built
that way on purpose. The iTunes client software enables consumers to burn the
songs that they purchase to audio CDs. Once on CD, songs are unencrypted,
unprotected and completely beyond the control of FairPlay. You can copy the song
to a file share; make a million duplicate CDs; or re-encode the song in another
format by using legitimate tools like Windows Media Player. So, since the notion
that FairPlay prevents piracy is simply not factual, why did Apple bother to
include it in iTunes?
There are two very logical reasons for Apple to use FairPlay. One has nothing to
do with the effectiveness of its anti-piracy features and everything to do with
marketing. That is, having a DRM-based copy protection illusion made it much
easier for Apple to convince record labels to distribute their music through
iTunes. Another reason for FairPlay's existence has nothing to do with
protecting rights holders from piracy and everything to do with protecting Apple
from competition. Apple's iPod player and iTunes service were designed to work
together. FairPlay is used to keep out interlopers. Any would-be iTunes or iPod
clone maker would almost certainly have to reverse engineer FairPlay, which
makes the task of creating a decent clone much more difficult and gives Apple
both technical and legal counterattack options. Apple showed its cards when
RealNetworks announced Harmony, a technology it developed to enable iPod users
to buy songs from Real's on-line music store. Apple responded by threatening
that future software upgrades will probably break Harmony's compatibility. Apple
also suggested that Real's actions may have been a violation of the law because
the Digital Millennium Copyright Act (DMCA) makes circumventing copy protection
illegal. While the validity of Apple's legal argument is far from certain, one
thing is clear: Apple intends to use its DRM to protect its own commercial
interests, which have absolutely nothing to do with protecting rights holders
from piracy.
Hackers have found technical ways around FairPlay. Digital content pirates,
however, do not have to crack FairPlay; they can simply take advantage of a
gaping, built-in hole. But even if we disregard all past experience with copy
protection and assume that FairPlay could be made foolproof, it would still
provide little or no protection from piracy to rights holders. Copies of digital
content are exact copies. They do not degrade no matter how many times you
duplicate them. Consequently, even just one unprotected copy of a digital work
can be perfectly duplicated millions and millions of times while being
distributed by using file sharing technologies. Since many of the latest file
sharing technologies, which include the wildly-popular Bittorrent, are freely
available in source code form to anyone, the tactic of litigating against
proprietary P2P software and service companies is becoming much less effective.
The entertainment industry has started going after the operators of Bittorrent
servers, but as soon as one is taken down, more spring up. Technical measures
for thwarting file-sharing have also been attempted, but countermeasures are
created almost as fast. The inescapable conclusion is that, short of a complete
government-enforced lock-down of the Internet, entertainment businesses will
increasingly have to face the challenge of competing with free.
Another challenge for DRM is its negative value proposition for consumers. In
the real world, a significant number of microwave oven clocks blink 12:00 for
years on end because consumers are either unable to learn how to set their
clocks, or they are just unwilling to bother. Yet some in the entertainment
industry continue to flirt with the idea that consumers will not only tolerate,
but also pay for, complex DRM-based solutions that are terrible for preventing
piracy, but pretty good at inconveniencing the very consumers upon whom
commercial success depends. This notion that DRM can protect rights holders and
help them to compete with free is perpetuated by the purveyors of multiple
incompatible DRM solutions. These vendors find an eager audience with some
executives who are so desperate to insulate their business models from change
that they are willing to believe that DRM snake oil is the answer.
In order to create a service that consumers would use, Apple had to provide
burning capability in the initial implementation of iTunes. One cannot be
certain, however, that such a feature will always be available. At some future
point, Apple could decide that it is in Apple’s best interest to remove the CD
burning feature. If that happens, the only way for customers to get Fairplay-encrypted
music out of iTunes will be to circumvent Apple’s DRM, which is illegal due to
the DMCA anti-circumvention provision and similar laws in other jurisdictions.
It is also important to note that burning capability is notably absent for
iTunes video downloads. With the growth in popularity of Apple’s iPod, there
has been a corresponding growth in Apple’s market power. You can expect Apple
to do everything possible to increase that power and erect barriers to
competition. With laws like the DMCA on the books, a critical barrier to
competition has the full backing of the government’s taxpayer-funded law
enforcement resources.
Apple's iTunes has demonstrated that you can indeed compete with free. But as
this document has shown, the actual effectiveness of Apple's DRM in thwarting
piracy played no part in that success. It is important to note, however, that
iTunes could not be successful solely by using proprietary encryption to lock
out competitors and by promoting its DRM to rights holders as an elixir to
piracy. The other half of the iTunes formula for success is completely dependent
on peoples' behavior: if consumers did not recognize value in iTunes, they would
simply not use it. Moreover, virtually every song legitimately purchased through
iTunes can be acquired for free via illegal means. Apple's iTunes service, in
combination with the iPod player, offers consumers a complete and integrated
solution that is easy to use, flexible (e.g. you can burn songs to CD) and
stylish. iTunes is attractive to consumers, not because FairPlay DRM is
restrictive, but in large part because it is not.
Vendors and pundits are doing a profound disservice to the entertainment
industry by perpetuating the DRM myth and holding up iTunes as an example. With
iTunes, Apple has demonstrated the value of DRM for neither consumers nor rights
holders. Apple has shown, however, that you can successfully compete with free,
and get consumers to open their wallets, if you offer them something better. The
entertainment industry should take heed from the real iTunes example: create
something that provides convenience and value, not costly complexity, and and
you just might take away the incentive to acquire works illegally. That would
make digital piracy obsolete.
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