DRM is Poisonous

I will admit that I used to think DRM was an enabling technology, especially for unlimited music subscriptions. Without DRM, nobody will let you download an unlimited amount of content. Without an unlimited amount of content for a fixed price, music consumption is bogged down with any number of 99 cent buying decisions. An a la carte permanent download (PDL) world is just not how music should be enjoyed.

Unfortunately, users do not want subscriptions to music. They've never really subscribed to music: radio is free (paid by advertising on a fixed and predictable compulsory license rate structure); and LPs, singles and CDs were purchased a la carte giving the customer a sense of physical ownership. Thankfully, now to the rescue of unlimited consumption comes streaming and an always-connected broadband world. Now DRM doesn't matter - services can still provide an "all you can eat" experience without too much worry that the user will walk away with your entire catalog. To limit or turn off consumption, just turn off streaming access.

So back to the thesis of my headline: DRM is poisonous. Not only was customer support for Microsot's DRM expensive, most companies who have tried a DRM music service are now feeling the pain of what it means to migrate, sell, or shut down their DRM services. MTV's Urge, Microsoft's MSN music store, Yahoo!'s Music Unlimited, and Wal-Mart's a la carte store have all had their customers revolt after attempting to shut off DRM re-licensing for PDLs they sold. This is a brand manager's nightmare.

And those are the DRM service that have already closed. What will happen when Napster is sold or shuttered? What will happen with Rhapsody decides to change its business model? What happens when Apple wants to change its delivery method? Yahoo! has announced they will be giving coupons to re-purchased music on Rhapsody to customers whose PDL licenses have been lost. Wal-Mart has decided to keep its DRM license servers up longer. In an already razor thin margin business, dealing with DRM customer service issues, and keeping servers running after a service has been shuttered turns music into a money-losing weight on distributors.

Next up is what happens to the CinemaNow and Movielink movies you have purchased? Movie studios understandably want to protect their content, and in their case, streaming is not yet an option for high resolution HD 720p or 1080p video. Netflix, Hulu and others seem to be able to stream decent video quality, but customers will soon demand higher resolution as they convert over to newer, larger flat-screen and home theater displays.

So I'm converted: DRM is evil.

Common Licensing Authority

Movie Labels (sic) To Launch New "Open Market" Play Anywhere Scheme As Last Ditch Effort To Save DRM

Here's a link to an idea Sony is pitching to help simplify delivery of DRM-protected rights. It's a media delivery concept that's been kicked around for a while: common licensing authority. The idea is that some transparent, neutral third party is authorized by content owners to supply rights (i.e. DRM licenses) to retailers' customers. The third party would ensure rights are delivered properly, and report to retailers and content owners on the number of licenses delivered. Content owners can then reconcile those numbers with reports from the retailers.

It's a fun idea in theory and similar schemes have been pitched to the music labels with no results, but it will never work for several reasons:

1. DRM is inherently customer unfriendly. Microsoft's disasterous marketing of its DRM and logo program (WM DRM, Janus, "Plays-for-Sure") shows that too much choice is actually a bad thing for the user experience. Unless you implement a seamless vertical like Apple/iTunes/iPod/Fairplay has, DRM ultimately gets in the way. DRM is not easy - not for customers, and not even for distributors. Content owners will continue use DRM as a crutch to remain lazy, anti-consumer, and kill innovative new distribution models.

2. A common licensing authority must be seen as a neutral player. It could be set up as a disinterested industry consortium, but if Sony is seen to be controlling it, distribution will be limited.

3. Licenses must work across platforms or consumer messaging will be prohibitively complex. This is not as easy as it sounds. The DRM must work the same on anything: Windows PCs, Mac PCs, Linux PCs, cable set-top boxes, DVRs, auotomotive entertainment systems, mobile phones and PDAs, portable devices, etc. The complexity matrix is daunting.

4. The DRM market is fractured. Microsoft won't license its DRM for Linux desktops. Apple won't license its DRM to anyone. 3rd party DRMs (like Macrovision's) have some support from the studios, but the market is too fractured. Macrovision is currently the only company positioned to offer a common DRM. Content owners are afraid of Microsoft, and would shy away from declaring its DRM as the standard.

5. Common rights will commoditize distributors who will reject the inability to leverage brand advantage. The alternatives, like charging more for additional rights or granting exclusive rights, will only increase the complexity of consumer messaging.