no third solution

Blogging about liberty, anarchy, economics and politics

Digital Rights Management

February 16th, 2007
DRM discussions are always a hoot. I was inspired by a recent post by Smilerz, who had been on sabbatical or something recently, which also references this piece at The Economist.

What is the price I’d pay for [insert album of choice]? It is a positive number, but less than the current retail price. I can’t put a number on it for certain – but by a quick estimation, maybe one-half. Some albums, I simply can’t acquire otherwise – so I buy them, like Mississippi John Hurt. But there are other albums that are hard to find, like a complete discography for H.I.M., although I could piece-meal it at Amazon. It also doesn’t “hurt” (no pun intended) that MJH only cost about $6. I also download alot of music that I’ve never before heard – and because it’s legally unreturnable, I’m less than willing to pay for music that I might not like; I’d be more willing to speculate for a more reasonable price. People are generally more inclined to buy (and hence reduce the effects of a “free rider” problem) when the prices are viewed as reasonable or fair.

Then there are the DRM nightmares – like when three years ago, I spent about $40 to purchase the Zone 2 DVD of Matthieu Kassovitz’ La Haine, which is being re-realeased in Zone 1 format, in April. I would later find out that the Zone 2 DVD (n.b., it was also not available in VHS) would not play in American DVD players. It could be played, three times, on my Laptop – after which it would self-destruct; well, actually it would reprogram my laptop to only work with Zone 2. So I spent $40 on a DVD that was absolutely unobtainable, which, for all intents and purposes was unplayable once I received it. So I did what anyone would do: I downloaded it from a P2P network. Sure, I can’t use the subtitles, but I can watch it whenever I want.

The biggest concern, and Smilerz doesn’t touch on it in his post, is that we’re being forced to subsidize an archaic distribution model that simply doesn’t work that well.

There has to be a median somewhere. Downloading music from P2P networks is expensive. Sometimes it takes a loooong time, especially if you’re after something rare. Sometimes what you get isn’t what you wanted, it’s mislabeled. And then there is the risk of viruses, adware, etc. All of these inconveniences represent real costs that P2P users are willing to deal with, because they perceive the sum total of these costs to be less burdensome than the $18 price tag on a CD at the local F.Y.E. In short, there is a price people would happily pay for fast, reliable downloads of the same file-type they can get on a CD. It is probably somewhere between the theoretical construct of inconvenience costs, and the retail price of a CD – because people generally are willing to pay a premium for a premium product. Fast, reliable downloads would be a premium over their P2P counterparts. What’s holding this progress back is record companies bent on maintaining what’s left of their oligopolistic control of consumers.

N.B., I’ve just purchased the Five Victims, Four Graves‘s E.P., after listening to some of their tracks on their myspace page. Some people want the album now, it’s not qualitatively different from the hardcover/paperback price discrepancy in print publishing.

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no third solution

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