Current DRM developments may raise implications for DMCA policy proposals, specifically those advocating repeal of DMCA Section 1201. If market forces can affect usage of DRM in the digital music market, or force DRM deployment to enhance interoperability beyond some existing service-device business models, does that suggest that the market can provide a more effective and efficient solution to the drawbacks of DRM, than repeal of Section 1201?

For many reasons, allowing the market to shape the presence of DRM in the digital media landscape is preferable to repealing Section 1201. Below, I offer my arguments for letting the market sort out DRM issues, and invite readers to present their views.

First, a market solution addresses the fact that current DRM developments indicate little in the way that DRM is not valuable in facilitating business models. Consumers and producers have benefited from a range of DRM offering in digital books, music, movies and other types of media. To repeal Section 1201 also ignores the possibility that DRM may be important for future business models, enabling the creation of diverse offerings and revenue streams. Producers should have option to the widest array of business models, such as those facilitated by leveraging DRM, with further legal recourse through the DMCA.

Second, digital media outside of the music market leverages DRM, including computer apps, books, games and movies. Repealing Section 1201 based simply on the (possible) pullback of DRM in music can be injurious to those other markets. DMCA critics may argue that it takes less capital and risk to create music than a movie or video game, and thus music may require less recoupment by producers, but repealing the Section 1201 affects all media industries. I don’t believe these critics have thought through the practical implications of repealing the DMCA based solely on evidence from the digital music industry.

Third, policy commentators should be wary of calls to repeal Section 1201 based on claims of lost “consumer freedom” or stifled innovation-competition in digital media markets. Nobody forces consumers to buy songs from firms like Apple, thus nobody forces consumers to become potentially locked into specific devices and services. If consumers feel harmed with existing media offerings, that suggests the development of a market to challenge the DRM practices of current industry big-hitters. Such a market is not deterred by the DMCA, as the case law has provided clarity on 1201(f). If anything has deterred the creation of alternative markets, its the doomsday genre of DMCA commentary arising from misunderstanding of DMCA decisions.

Fourth, the frequent claims that DRM is not important to the major music labels and Apple because songs on iTunes are readily available in non-DRM copies, suggest that consumers already have choices on where-how to obtain music with Section 1201 in the digital media landscape. Further, what is optimal or most convenient for consumers (i.e. playing songs from iTunes on any music player, playing non-Apple DRMd songs on the iPod) should not drive policy considerations if producers, whose harm would in the long run harm consumers, are not given the proper consideration. The real “optimal” solution must figure the interests of all parties involved.

Fifth, the notion of prima facie consumer harm by the very existence of DRM business models needs to be re-examined. Consumer harm (and benefit) occurs in the market, not on flowcharts resembling: DRM-> non-optimal offering-> consumer harm. Notions of consumer harm need to get beyond the abstract level and consider real macro-economic effects. I’ve argued before against holding abstract concepts as the end-all goals of policy, especially when they result in recommendations that seek ends such as “perfectly free markets” and “perfectly competitive markets;” which have proven themselves virtually nowhere in the world.

There are various developments surrounding DRM I do not agree with. These include Apple forcing musicians to deploy their songs with DRM, Microsoft not having backwards compatibility with Zune and Steve Jobs trying to push blame/costs onto the music labels for a problem that Apple could solve simply by waiving some rights under Section 1201. However, these faults rest with how DRM is leveraged, and business decisions affecting DRM, rather than DRM itself. There remain reasons to expect that the deployment of DRM in the digital media industry will mature under DMCA Section 1201, to the benefit of consumers and producers.

posted by Noel Le @ 7:00 AM | DRM & Watermarks, etc.

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