DRM: The Solution That Adds To The Problem (The Smooth DJ)

Guest blogging today is Yomar Lopez, Marketing Guru, Business Growth Consultant, and Creative Geek. Yomar is President and Founder of Two Guys & A Pencil (TGAP), a New York City business/marketing consultancy aimed at protecting consumer rights and helping businesses do things in an ethical, effective, and profitable manner. He can be reached at yomar@tgapdesign.com or via his personal blog. - Gautam

Digital Rights Management. It's a buzz phrase you see everywhere these days, especially as more and more people download their music. For the entertainment industry, piracy and DRM are hot-button topics. Companies are losing money solely because of evil people downloading movies and music for free, people taking money away from the artists we all love so much, or so they'd like us to believe. To them, DRM is the solution for gaining back that supposedly fading market share. Unfortunately, these companies fail to see that Digital Rights Management is sound in concept but poorly-executed in most cases. DRM is actually hurting their business more than it actually helps them.

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Buy a DVD and you almost wish you pirated!

The various facets of the entertainment industries show endless examples of DRM in actual implementation. HowStuffWorks has great information on DRM which covers both the technical and ethical implications quite well. They delve into the various implementations of DRM, stating the very thing we angry consumers are have been saying for a while now: most anti-piracy measures go against the fair use doctrine which essentially stipulates that it is perfectly legal for users to make copies of media that they purchased if it is for their use only. This is where DRM becomes tricky business. You have to take vague ideas and find ways to protect everyone's best interests while working within available framework, because new ideas scare people - it's sad but true.

One of the many implementations of DRM that I've always found to be annoying is the 'ol limited duplication mechanism found in many DVDs today. DVDs with this anti-piracy protection only allow you to copy them one or two times, which is fine, but what if your backup copies get lost or damaged? Just over a decade ago, many people still used tapes for both their music and movie fix. Duplication was never such a big concern. Why the change now? I'd say it's because these big labels, Sony in particular, have missed the point. If customers pay for something that, at heart, is a luxury, it is imperative to drive value through the product or else you lose them.

When you make it cumbersome for people to use your product or you treat your customers like criminals preemptively, you essentially force their hands. As the previous image indicates, people are annoyed that they buy a DVD and have to sit through fluff that does not pertain to them. Heck, I am one of those annoyed people! The way I see it, if you pay for something that really has no practical application, you are likely paying for an experience. Anything that takes away from that experience takes away from the perceived value and, thus, makes it less appealing to invest your hard-earned money in. I do not want to be forced to sit through 5 minutes of FBI adverts, previews, and trailers. I want to see what I paid to see. That's it.

Sony just wants to get paid... Plz??

The Sony Dream Machine. I mentioned Sony in particular as an example of one of the companies that is handling piracy the wrong way. A couple of years back, it was discovered that several enhanced discs distributed by Sony were being loaded with automated installers. These installers outfitted computers with rootkits, essentially what is referred to now as grayware, spyware, malware, and the like, software that not only degrades system performance but also opens up computers to malicious activity and vulnerabilities.

Schneier Blog wrote an excellent piece on Sony's DRM mishaps that really made me want to revisit the topic, in lieu of recent events, including more invasive anti-piracy behavior and arrogance displayed by Microsoft and Sony. The whole debacle took off around 2004-2005, when Sony took their usual arrogant approach...

Sony claimed the rootkit didn't phone home when it did. On Nov. 4, Thomas Hesse, Sony BMG's president of global digital business, demonstrated the company's disdain for its customers when he said, "Most people don't even know what a rootkit is, so why should they care about it?" in an NPR interview. Even Sony's apology only admits that its rootkit "includes a feature that may make a user's computer susceptible to a virus written specifically to target the software."

Ah yes, Sony's arrogance grows stronger every day and their cohorts seem to feed off of the ego trips as well. Sony's PR people have been known to say things effectively translating into "we know what the customers want more than they know themselves." This kind of snobbery and blind fanaticism exists in a lot of the big corporations, sadly, and it means that Sony is certainly not alone in their questionable practices. The principle to be considered here is that users do not want "trojan horses" on their computers. I won't get into the technical aspects of rootkits but I think it suffices to say that it's something unsolicited, unwanted, and unfortunate, to say the least.

The scary reality is that Sony is not the only dastardly corporation conducting such funny business. Just think for a second... The last time your computer started to act up, was it after you downloaded something from a P2P sharing program or perhaps after you popped in a CD or DVD that you purchased, legally, from a reputable store? I can't tell you how many times I've experienced strange computer behavior after using commercial products from reputable companies. Everyone takes it for granted. They think that big companies are not capable of doing bad things. They are wrong.

When Sony invaded computers with their anti-piracy software, most companies supported them or just say by idly, for the most part. It seems that the smaller companies, those with the best interest of their costumers in mind, were the first to really step up. Companies like F-Secure and Sysinternals took a stand against Sony and got their nasty habits to stop. It was a huge victory but this war is far from over. The scarier reality to face (aside from how many companies do this sort of invasive anti-piracy practice) is the fact that these system compromises and intrusions are often hard to trace, cloaked very well, and disguised as things that belong on your computer.

Today, we still have Microsoft, Sony, and their many cohorts doing whatever they can get away with to protect their financial interests at the cost of our consumer experience. Microsoft has always been a fan of intrusive, annoying, self-serving security. Their priority is protecting against piracy, not protecting user data, which should be a greater priority for the money customers have to pay for their products. While we have computers taken over by hackers and fanatical interrupt marketers alike, the large corporations are trying to find more ways to crack down on piracy.

Mom, am I a commie thug if I download MP3s??

A Rude Awakening. The root cause of bad DRM and anti-piracy practice is simple: the companies are looking at the numbers the wrong way. They look at all the people downloading music and translate that as lost business, yet they fail to see that the biggest downloaders may just be file leeches, people that download as many files as possible with minimal effort, so they would not have paid a single red cent to begin with. They also fail to see that these very same heavy downloaders may become their biggest fans and spread a very viral message. With all the horror stories about people getting sued by big labels, there will always be more people in the world that will buy their music rather than risk getting caught. Heck, my buddy Frankie is one of these people: this guy doesn't even install an application without researching it with several sources and conferring with all his friends. He,
like many computer users, fears big brother is always watching him. This may or may not be a shock to the executives at these large corporations but, really, they should be happy when their artists are the most downloaded, not try to make arrests because this gets them more publicity - the good kind!

Fear not - there are great strides being made to take things in the right direction, which is good news for artists, fans, and even the corporate conglomerates. The European Union Working Party is currently calling for the protection of user rights and data - they are making quite the ruckus too! Essentially, they are demanding that any DRM implementations protect the identity and property of users. In the US, software developers have quite a lot of free reign, which means that some grayware is actually sanctioned. It is this very notion that has the EU working hard to take action.

Anyone that knows even a little bit about music knows that the European market is huge and, overall, artists tend to do much better when they go international. Having the EU in the consumer's corner is a big deal as they have much more influence than it may seem. Do you think the labels want to lose their biggest markets? Of course not. I think the EU's stern recommendations are definitely being taken into account.

Even with the EU, F-Secure, Sysinternals, and other big players on our team, everyone has to take a stand, recording artists included. Blog, share articles like this one, write your Congressman, rally, circulate petitions, and get the buzz going. Large corporations hate having to deal with negative publicity so let's inconvenience them as they have done with us, their customers.

The interesting thing to note here is that the RIAA is so adamant about ending music sharing yet it has been proven that those that share their creative work free of cost tend to get the strongest followings. If what you do shows passionate and you have an authentic story, a powerful message, to share with your audience, it will spread out like wildfire in a very organic manner. Personally, I rather have a few passionate fans than several fickle fans. The fans
that adore musicians are the ones that spread their music in a viral manner, thus making it possible for them to make a living.

The trends are right in front of us yet the "old money" executives seem to be fighting them. Amazon is selling more e-documents at astoundingly-cheap prices. Writers are offering free audio books in the form of Podcasts and MP3 downloads (check out Scott Sigler's Podshow for an excellent example of how well this works). Web sites like LunarMusic and Pandora are appearing more and more, attracting tons of attention. Musicians, especially independent artists, can save money by creating immersive web sites that sell the experience of their music, the same way CDs and DVDs do. Maybe this is what scares the labels: they know they can lose their precious money makers if they do not give them a system worth plugging into.

Total Multimedia Immersion. As popular as MP3s have become, there are still many more people that buy CDs and DVDs instead of downloading their favorite music. There are even music purists that will not get anything on anything but vinyl. When you buy that album, in whatever medium you prefer, there are common elements that always stick out: distinct cover art, album inserts, lyrics, factoids, and so much more. You can't duplicate this in
the digital format, though you can certainly compliment the experience and provide something just as distinctive and interactive, perhaps. Just look at Beck's recent release, "The Information", and how brilliant the marketing was on that. The stickers that were packed in with each CD started a buzz in the online community. People started to compare their album cover designs and brag about how they got the limited edition stickers that no one else got. Each copy came with a random assortment of stickers. It made people feel like VIPs - they have something different that no one else can claim to have!

Consumers need that. It's the little fanboy inside all of us that treat our favorite artists as heroes because, to many of us, it's the last pure thing left in the world. We love musicians that love making good music just for the love of it! That makes us want to support them. Why don't the music labels get this? Well, like I said, it's all a matter of perspective. They see lost business instead of thinking about market penetration and free marketing. The few leeches that will never pay for anything regardless should not overshadow the thousands of people that will tell their friends about their awesome recent experience.

Sadly, the RIAA is still pursuing individuals and innovative music-sharing sites, Pandora included. I find it all funny because, in the early 90's, there were some labels that tried to be innovative and use the PC front as a publicity channel for their music. The >em>multimedia computer was created as a result. Now, they're saying that the popularity of music on the computer has become too great and they do not want it. If MP3s stick around, they need to
be regulated and profitable. All their efforts, in actuality, push people into piracy. The irony here is bountiful, to say the least!

DRM Alternatives. As an earleir SmoothDJ piece indicates, EMI (home of Kraftwerk, LCD Soundsystem, and other great artists) and Apple are working on premium MP3s that will entice users to download their music and pay roughly 30-40% more than they would on a standard MP3 on iTunes or some other music service. The justification? Higher quality rips. Sadly, they haven't seen sites like this one:

MP3 Tech Tests

Once you break the 112kbs mark, the differences become very subtle. This depends on what the piece is, of course. For example, electronic music doesn't really require a natural sound so even 96kbs sampling works. With this price model, you are creating a bigger price tag for something that people are already feeling hesitant about paying for. Quite often, it's much cheaper to just purchase the CD and rip the songs yourself. You have to wonder how these MP3 download pay sites even work!

What I rarely see from the MP3 providers are flexible price models. Where are the bulk rates? Where are the monthly and yearly subscription rates? Pay-as-you-go is great but it doesn't do a particularly good job of encouraging people to keep using your service. Now there are talks about people paying a premium per song in order to be able to share their downloaded music. Even if the raised price is only slice, I don't think the perceived value is really that compelling for everyone. Something else definitely needs to be done to entice people of all backgrounds to pay for what they may already get for free, and never get caught for. Honestly, the RIAA can't apprehend everyone, not even most offenders, so it's a foolish pursuit for them. Scare tactics only go so far.

Microsoft's recent MP3 device entry was a catastrophe, to say the least, but they had some good ideas. If you pay for music, why not be able to share it with friends? If you make it easy for people to do and encourage it, you can spread your brands, your messages, rapidly and save on marketing costs. The Zune had a nice little feature for sharing music. You can send songs wirelessly to nearby Zune units. People could keep the song for around 5 days and 3 listens, whichever comes first. Microsoft almost had it. A time-bomb DRM system could be a nice way to share music openly while limiting how many people leech. This solution does not come with any intrusive software, which is a big plus.

Of course, the easiest solution, in a perfect world, would be for the RIAA to find ways to bring customers back to CDs by throwing in bonus materials. Like I said, people buy CD's for the complete experience and to support their artists. You can't get the full effect from even a copy of an original CD and the true fans don't want to seem like bad supporters, so they'll do their part. All those lost sales the large corporations are worried about were never real prospects to begin with. Some people will hold on to their last penny 'til they die. You can't change buyer habits but you can certainly accomodate them and create segways. It's really not that difficult to do things the right way once you have a different perspective on things.

What the RIAA and all the companies in this ubiquitous entity must do is focus on marketing and the expansive potential that there is in sharing the music for free. I can personally attest to the fact that many people will buy a CD even if they downloaded it for free, maybe illegally, beforehand. The complete, immersive multimedia experience really matters. Call it a fetish, but I like the smell of CD inserts after the packaging has been cracked and that fresh-press scent has been released after a long time. I read the thank-you's, check out the lyrics, get lost in the art, and just enjoy all the little things that you don't get in an MP3.

Before writing this article, I talked with several friends and colleagues and they all felt the same way about the RIAA and their incessant efforts to crack down on freeloaders. Rather than punish people, they should embrace, maybe even pay them, for doing free marketing. I'll end on a fun little fact: all of my recent CD/DVD purchases have been sparked by recent free downloads of a questionable nature. Eat that, RIAA!

The Smooth DJ

Musings on Digital Media and Technology

DRM: The Solution That Adds To The Problem

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