Communications - June 2009

popular i Tunes music store could only be played on an iPod due to the company’s proprietary DRM.

Entertainment businesses say they need DRM to prevent the theft of products that represent their livelihood. In practice, however, DRM has been a uniform failure when it comes to preventing piracy. Those who are engaged in large-scale, unauthorized commercial duplication find DRM “trivial to defeat,” says Jessica Litman, a professor of law at the University of Michigan. The people who don’t find it trivial: ordinary consumers, who are often frustrated to discover that their purchases are restricted in unintuitive and cumbersome ways.

In the music industry, at least, change is underway. In 2007, Amazon announced the creation of a digital music store that offered DRM-free songs, and in January 2009, Apple finalized a deal with music companies to remove anti-copying restrictions on the songs it sold through iTunes. Since i Tunes is the world’s most popular digital music vendor—and the iPod its most popular player—critics complained the deal would only further solidify Apple’s hold on the industry. Yet because consumers can now switch to a different music player without losing the songs they’ve purchased, the prediction seems dubious.

“As long as the cost of switching technologies is low, I don’t think Apple will exert an undue influence on consumers,” says Edward Felten, a professor of computer science and public affairs at Princeton University.

What about piracy? Since DRM never halted musical piracy in the first place, experts say, there’s little reason to believe its absence will have much effect. In fact, piracy may well decrease thanks to a tiered pricing scheme in the Apple deal whereby older and less popular songs are less expensive than the latest hits. “The easier it is to buy legitimate high-quality, high-value products,” explains Felten, “the less of a market there is for pirated versions.” By way of illustration, he points to the 2008 release of Spore, a hotly anticipated game whose restrictive DRM system not only prevented purchasers from installing it on more than three computers, but surreptitiously installed a separate program called SecuROM

DRm is being
“wielded as a
powerful tool”
against unapproved
technologies, says
aaron Perzanowski.

on their hard drives. Angry gamers responded by posting copies of the game online, making Spore the most pirated game on the Internet.

DRm and movies

Yet DRM is nowhere near dead outside the music business. Hollywood, protected thus far from piracy by the large file size of the average feature film, continues to employ it as movies become available through illegal file-sharing networks. Buy a movie on i Tunes, and you’ll still face daunting restrictions about the number and kind of devices you can play it on. Buy a DVD, and you’ll be unable to make a personal-use copy to watch on your laptop or in the car.

DRM has also proven useful as a legal weapon. Kaleidescape, a company whose digital “jukeboxes” organize and store personal media collections, was sued in 2004 by the DVD Content Control Association, which licenses the Content Scrambling System that protects most DVDs. (In 2007, a judge ruled there was no breach of the license; the case is still open on appeal.)

The Kaleidescape case is instructive, experts say, since it shows that preventing piracy isn’t necessarily Hollywood’s biggest concern. Entry-level Kaleidescape systems start at $10,000— unlikely purchases for would-be copyright infringers. “Instead, DRM is wielded as a powerful tool to prevent the development and emergence of unapproved technologies. In some instances, that may overlap with some concern over infringement, but as the Kaleidescape example shows, it need not,” says Aaron Perzanowski, a research fellow at the Berkeley Center for Law & Technology.

Indeed, the real question typically comes down to one of business mod-

els: Can companies preserve their current revenue structures through DRM or in court, or must they find some other way of making money? For music, the i Tunes model appears to be a viable one, though questions still remain. For movies, the path is less clear. What will happen when DVDs become obsolete? Will consumers take out subscriptions to online movie services, or make discrete one-time purchases? “Nobody knows what the marketplace of the future will look like,” says Litman. And the wholesale copyright reform that digital activists long for is years away.

One industry whose business model may soon be radically transformed is publishing. Under the terms of a recent settlement reached with the Authors Guild (which sued Google in 2005 to prevent the digitization and online excerpting of copyrighted books as part of its Book Search project), Google agreed to set up a book rights registry to collect and distribute payments to authors and publishers. Much like the collection societies that were established for musicians, the registry would pay copyright holders whenever Internet users elected to view or purchase a digital book; 63% of the fee would go to authors and publishers, and 37% to Google.

If approved, the settlement would be “striking in its scope and potential future impact,” says Deirdre Mulligan, a professor of law at the University of California, Berkeley’s School of Information. It is nonetheless highly controversial. Some, like James Grim-melmann, a New York Law School professor, believe it is a “universal win compared with the status quo.” Others are disappointed by what they see as a missed opportunity to set a powerful court precedent for fair use in the digital age, and the undeniable danger of monopoly. “No other competitors appear poised to undertake similar efforts and risk copyright legislation,” says Perzanowski.