Nick Carr has commented on the possible demise of DRM. As usual, Carr is well spoken but I disagree with several points he makes. A close reading of Carr's article suggests little on DRM leaving the digital entertainment market. Rather, there is evidence that the current DRM landscape may meet a balancing reaction by services selling copyrighted works in MP3 format.

Carr has several important insights. First, DRM is, foremost, a business strategy, rather than “police action” aimed at stopping piracy. Criticisms of DRM that call it ineffective in eliminating piracy while imposing costs on consumers often miss this point. Second, the dominence of the iPod may be pushing some services towards selling songs in MP3 format. Music services want wide consumption of their offerings, and unless they license Apple's FairPlay DRM, the alternative is MP3. The more *open* format, would serve as a balance against the restrictions of DRM protected content.

Carr does not mention either Real Network’s or “DVD John’s” efforts in making non-Apple DRM formats compatible with the iPod; a surprising ommission given that they address the very market failure that underpins his article.

Several questions arise from Carr's assumptions. Citing stalled sales growth under the “DRM model” for digital music services, Carr writes non-iTunes services will leverage the MP3 format to hike up revenue. The theory is that consumers will buy more songs from non-iTunes sources if they know they can play them on the iPod. However, we must ask whether, as sales for non-iTunes music services have declined, how do those artists or labels fare in sales from iTunes? If sales from iTunes do not lag, then Carr is right that non-iTunes music services are at a disadvantage to sell songs incompatible with the iPod. However, if sales on iTunes are down, then DRM has little to do with sluggish sales growth for non-iTunes services.

The idea of MP3 as a balancing force to DRM is not an entirely new concept. Professor Robert Merges has spoken of FOSS as a reaction to a software industry purportedly oppressed by IPRs. Merges has also written of bio-tech firms leveraging laws surrounding the public domain to curb over-propertization in that industry.

The implication from Carr and Merges is that the market will naturally sort things out by supporting activities that balance perceived costs of *oppressive* constructs. Carr implies, and Merges calls, the ability for private action evidence that arguments for drastic policy reforms may be getting ahead of themselves (i.e. eliminating software patents, repealing the DMCA).

If seen as a balancing reaction to DRM, there is little to suggest MP3s will overtake the digital music market or render DRM obsolete. MP3 use will diffuse to the extent supported by market incentives. Note that in Carr's article profit motive underlies non-iTunes music services leveraging MP3s. We may be witnessing simple market dynamics, rather than any paradigmatic shift that spells the end for DRM.