The Federal Trade Commission (FTC) recently hosted a workshop in Seattle that dealt with how digital rights management (DRM) has affected consumers of products ranging from music, to movies, to video games. While the workshop did not produce new regulations, individuals and organizations representing the various sides of the DRM debate made their cases. The Motion Picture Association of America was quick to point out that DRM technology prevents unauthorized copying of its members’ movies and other digital works. On the other side, the Electronic Frontier Foundation argued that DRM fails to stop piracy and instead harms consumers who legitimately purchase content. Of particular debate at the FTC workshop was whether or not consumers are being fully informed of the limits that complex DRM technology often places upon a purchase. Consumers who purchase movies are unhappy when the movie cannot be watched on their favorite devices, be it a plasma TV or an iPod. Conference attendees even discussed the recent Obama administration gaffe where a gift of American DVDs to British Prime Minister Gordon Brown would not play in a European DVD player because of DRM region encoding.

DRM has had a negative impact on Vanderbilt’s campus as well. In February, the Ruckus music service that Vanderbilt had made available to students shut down abruptly. Students might not mourn the loss, as the available music was encoded in a low-quality format and the DRM only worked with Windows computers, which left out the large campus population using Macs. Ruckus was “free” to the students–in as much as they were forced to pay for it via tuition fees–but due to DRM restrictions the content vanished without any recourse for the students who had finally done what the Recording Industry Association of America demanded and paid for access to content. While the musical selections of Vanderbilt students may not seem important, imagine what would have happened if a similar service provided limited access to a decade’s worth of medical research or other valuable information. This is not as far-fetched as it sounds as e-textbooks that use DRM to prevent resale are already a reality.

Using technology to prevent illegitimate copying has generated controversy in the past, particularly with Apple’s popular iTunes music service. Bowing to public demand, Apple recently announced that it will offer some music that is not encumbered by DRM and will offer higher sound quality. This move may be in response to competing online music services like Amazon.com’s service that offers DRM-free music that plays on any computer or portable player without putting restrictions on the customer. In the burgeoning video game market, Electronic Arts announced that it will use less intrusive copy protection in its upcoming Sims 3 title. Once again, consumer pressure may be responsible in light of the recent debacle regarding intrusive DRM with the Spore title that may have actively discouraged legitimate purchases of the game.

As a practical matter, DRM has failed in its intended goal. Determined pirates are more technically proficient than the creators of DRM standards, and there are even commercial products that can crack the newest Blu-ray movies. The FTC workshop was right to point out that consumers need to be aware of what DRM will prevent them from doing before paying money for products that may not be all they appear to be. Given the difficult economic conditions at present, a music or movie retailer who can make it easy to get music at affordable prices, or who will offer a higher-quality download that is not tied to one company’s music player could be a winner. Companies within the content industry that learn to treat paying customers with respect will stand a much greater chance of surviving the bad times and having a loyal customer base when the economy recovers.

– Chuck Fox

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