What is the current consumer view on DRM? Perhaps they focus on the lack of interoperability between iTunes songs and most non-Apple music players, or the inability to play various music services on the iPod. While some online music services and music players are free of DRM, these issues highlight incompatibility, or fragmentation, between DRM systems. This fragmentation does not simply result from preferences of technology or content companies, but rather the business dynamics they work under.

Although standardization of DRM systems would result in lower prices for digital goods, this has not occurred as some scholars like Suzanne Scotchmer of Berkeley predict. In Fragmentation versus Standardization in the Market for Digital Rights Management Solutions (July 2006), several rearchers at Law and Economics Consulting Group ask why, and find that fragmentation of DRM solutions arises from market competition and the different uses of DRM that firms leverage. 10. Acknowledging that fragmented DRM schemes not only prevent price reducation but also limit the value of products for consumers, the researchers point out the ease enabled by low switching costs between different proprietary brands. 17. They note that users often buy several different DRM solutions at once, as content owners often release their content in many different formats. 18.

However, the benefit of fragmented DRM systems arises in competition to create products with greater functionality and value, thus bringing more innovation to market in the long term. 20. Competitors find ways of leveraging existing content sources and perhipherals, such as RealNetwork’s reversing engineering of Apple’s DRM around iTunes. 20. The DMCA may bring restrictions, yet the market has its own correcting balance through increasing the flexibility with which consumers can enjoy content. 23. Finally, as no DRM systems have become industry standard "vendors compete for more content owners by developing secure DRM solutions, and for customers by offering a wider selection of content and more flexibility with the purchased product." 20.

… when the iTunes store first opened in April 2003 songs purchased were only able to be played on 3 computers… RealNetworks, MusicMatch and Wal-mart all entered the digital download market, and Wal-mart offered downloads for a mere $0.88 that we able to be played on up to 10 computers. It is very likely that Apple’s choice to lower restrictions on its DRM protected content was a direct result of increased competition in the digital download market… although there could be a wide breadth of restrictions limiting customer’s right of fair use, the competition among online stores has increased users’ flexibility with protected content. 23.

posted by Noel Le @ 4:12 PM | DRM & Watermarks, etc., Prices, Terms, and Licensing, Standards

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