Digital Rights Management's days are numbered, and the dawn of the pirate market approaches. Some will consider it a long-overdue market adjustment that has been on the horizon for decades; others will see it as simply the result of our changing technologies; and yet others will scream bloody murder at the injustice of it all. Regardless of what you think of the approaching death of DRM, it's going to happen.
It has been common knowledge since at least 2004 that DRM systems don't work, are bad for society, are bad for business, and are bad for artists.
The copyright infringers -- pirates -- have numbers, a better mastery of technology, and public opinion on their side. It's no longer feasible to fight them, and intellectual property and media owners must adapt to the new pirate market or die.
Fear not: It's not as bad as it sounds. It will be different, and there will to be many changes. But first, let me explain why the pirate market is inevitable and why DRM is going to walk the plank.
Reason No. 1: You can't compete with Santa Claus.
If Santa Claus were real, he'd probably be an outlaw today. He and his elves would be making perfect copies of any gift or toy despite the efforts of patent holders and copyright owners, and delivering them -- for free -- to good people across the globe. Businesses would scream at the loss of profits each and every year: partly because the most commercial holiday of the year would no longer be so commercial, and partly because Santa empties out the reindeers' pens into their stockings. They would do their best to outlaw these free gifts by putting restrictions on chimneys, outlawing the hanging of stockings by the fireplace, and forcing the registration of any and all gifts received Christmas morning. They'd try smear campaigns, painting the jolly old elf as a criminal and thief and claiming he's destroying the economy. But in the end, people are going to side with the fat old dude giving out free stuff. Besides, fighting Santa lands you on the "naughty" list.
Reason No. 2: Technology favors the pirates.
DRM costs money and takes time to develop. One estimate a few years back suggested that DRM costs could hit $9 billion by 2012. On top of the costs, there are many ways to bypass the restrictions; and pirates only have to do it once. Once the DRM-free versions hit the Internet, it's impossible to kill them. It's more economical to put tech to good use than to try to stomp it out because of the way it can be used.
Reason No. 3: Dinosaurs are lousy rat-catchers.
Rats can't take down a dinosaur -- they're too small to fight one-on-one and too disorganized to swarm it and kill it with numbers. On the other hand, dinosaurs are large, loud, lumbering creatures and can maybe only kill a handful of the slowest rodents while the others scatter to safety. This isn't just an analogy about lawsuits against individuals, as pirate networks themselves are too numerous and too nimble for big business to take down. Rather than make enemies of these networks, doesn't it make more sense to turn them into advocates?
Since the pirates have cost, numbers, technology, and efficiency advantages over the traditional market, it's pretty clear that piracy will be the inevitable winner, and fighting it will only waste resources.
Marketers need to adapt to the new climate, rather than fight a losing battle to hold back change.
— Scott Kinoshita was originally a computer programmer, who retrained to marketing after realizing his big dream was to make online marketing that didn't stink.
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Creative Commons licenses are now going to appear on YouTube.
There’s still the standard YouTube license, which is fairly restrictive, and now there’s a new option: Creative Commons (with attribution). In short, you can now give other people permission to use your footage however they’d like, provided to include a link back to the source.
Licenses are a tricky business (there are six different Creative Common licenses) but YouTube is hoping to reduce confusion by limiting users to one option, which requires attribution and does allow for content to be used for commercial purposes.
One of the comments you made that I take exception to is the fact that pirated songs are not lost sales. You simply have to look the numbers of the record companies, which have be on the decline for years. I will agree that not all pirated songs are lost sales, as many would not have otherwise had a strong enough interest to purchase the song.
I will be interested in seeing what you propose for the business models, and hopefully, you will address music, books, movies and even newspapers.
I agree with you. You make some very good points. I didn't hear about the freebie King novel. I haven't read one in many years. I have the same questions about this release.
Seth Godin has been successfully giving stuff away for years. By successful I mean he's getting plenty of sales even though he's giving away freebies. Nine Inch Nails released a portion of thier instumental album, Ghosts, free and with great success. Paired with the success of Radiohead's In Rainbows this model looks pretty good. However, not every band has the following this kind of success requires. This is why I believe others are sticking to more traditional marketing methods.
DRM is a funny thing. Currently, there is no standard method of delivery. In the case of digital movie copies, I have yet to get a clean and usable digital copy downloaded via a special DRM site provided by studios who will remain nameless. These special DRM sites are buggy and work as though they were built for robots. The user interface is confusing, even for a computer literate web geek. +1 to piracy when DRM software is difficult to use.
Ariella - I think the way that system works (and other writers have used it) is that consumers pledge to pay a certain amount, and the money gets delivered when the artist delivers. So I guess there's a lot of honor system involved.
Thanks for looking into it, Mitch. If that's the way it worked, what would have happened if people paid but not enough in his estimation. Would they be out the money and not get the next chapter? If it were published that way -- a modern version of the serialized novel, I suppose -- then he may have banked on people wanting to find out what happens next. But people want to be certain they will be able to get the whole story before they commit themselves -- even if they didn't have to pay for the privliege.
smkinoshita - I don't like the word "laziness" in this context, because it implies a judgment, like people SHOULD be spending their time hunting around for pirated media. I prefer "other priorities."
As I alluded to in my blog post about buying a new TV, why should I spend all the time needed to figure out where to find my favorite shows on BitTorrent, download them, figure out how to transfer them to my TV somehow or watch them on my laptop (all of which contains a small, but non-zero risk of getting in trouble with teh authorities), when I can just write an affordable check to my cable company? If I write the check, I have the convenience of getting the video downloaded to my DVR to watch at my leisure, no risk of getting in trouble, and I'm supporting a business model which, deeply flawed though it is, brings me the shows I enjoy.
I'll admit that the approach for an established name is very different from an unestablished one.
However, my proposed approach is different from the given situation:
"He said he's being asked to do documentaries, interviews, host a radio program, all for free or for nominal payment, all in the name of publicity and marketing."
My proposal is that the "pirates" are the ones tasked with the marketing. Not that the pirates are the ones doing documentaries or interviews, but that the authors have the pirates handle the spreading publicity and marketing for them.
I think the actual revenue generation from recogntion will vary greatly from author to author, depending on subject, genre, and the demographic profiles of the fans.
1. Would they have paid if given no other choice? "I haven't asked the question because it wasn't necessary for the class discussion we were having. However, if there is a free option, there will be those that avoid paying because it is available for free. There are probably others who wouldn't have bothered to purchase the song, but now will download it because it is free."
So the short answer is "no", which was what I was expecting. There are too many substitutes. Which means pirated songs aren't lost sales at all.
2. How different is it from the radio? "The difference with radio is that it has a built-in business model whereby royalties are paid to the record companies and artists based on play time. The current business model for CDs, and I am not saying it is the appropriate one for the 21st century, is substantially different. Songs ripped and posted to a server on the Net and made available to all for free undermines the existing business model. With the shift in where artists make money to concerts and away from CDs, the artists are protected, but record companies who have invested in the artists with production, marketing and merchandising are the ones who are most negatively affected."
And that explains how RADIO pays the labels (and eventually the artists get their take) but it's NOT the CONSUMERS who are paying for it. Thus, from the perspective of the consumer, radio is no different than getting the song for free. Paying for something they can get for free from the airwaves seems strange, which is why people are naturally drawn to the free alternative.
3. Geographic and demographic information for context?
"The class I referred to is in Canada, and I think culturally more similar to the U.S. As to the demographic composition of this group, they vary in age from early 20s to early 40s, and it also involves foreign exchange students from Asia, Latin America and the Middle East."
I'm Canadian, so since it's my own culture I don't need any more context. ;)
"One of the arguments made by some is that the free downloading pushes people to purchase other songs by this artist--the logic of this argument doesn't pass the smell test."
The logic I'll be using also takes advantage of some of the weaknesses in the pirate network and the also of the laziness of people. Other people's laziness can be a clever business person's friend... and I'm betting that people will trade in micropayments for convenience over free. Do pre-made salads and fast food past the smell test? We'll see if it applies to media, too...
The problem with the give-it-away-in-exchange-for-marketing model is that authors are ALREADY being asked to do a lot in the name of promotion, and aren't finding the payday.
A writer I know who's semi-famous lamented this to me once. He said he's being asked to do documentaries, interviews, host a radio program, all for free or for nominal payment, all in the name of publicity and marketing. Meanwhile, his book royalties are drying up. "When is the engine going to come along that's going to pull this marketing train?" he asked.
I bring this discussion back to books because (1) I care a lot about books and (2) I'm a writer myself so obvously I have a vested interest, even though I do not yet write books and (3) It's the business model that seems most problematic. Musicians can make money giving concerts and connecting with fans (but what about studio musicians? That's an ongoing problem), TV can be supported by cable subscriptions and advertising. Movies will do fine, because they are a crowd experience. But what's the business model for books in this brave new world?
Ariella - If I recall correctly, Stephen King attempted to publish a book online with people paying on an honor system and was very disappointed in the results.
If I recall correctly, that was in 2000 -- different market then -- and the book was Riding the Bullet. King wasn't going on the honor system, but rather a system where he asked people to pay and if people paid enough, he'd write another chapter. People didn't pay enough, but he finished the book anyway and published it conventionally.
I could be wrong about all of this. I'm running from memory here. Quick Googling didn't turn up much information.
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