Want to Fight Piracy? Remove DRM!

Ironically enough, one of the biggest factors causing music piracy turned out to be the security software used to prevent piracy. The researchers from Rice and Duke Universities used game theory to find out that DRM technologies that are supposed to restrict music file copying and moving in fact encourage unauthorized file-sharing.

The researchers revealed that DRM restrictions actually prevent legitimate users from doing such normal things as creating backup copies of their songs. It’s DRM that makes things inconvenient for people and pushes them to switch to piracy.

The report titled “Music Downloads and the Flip Side of Digital Rights Management Protection” explains that eliminating restrictions set by DRM could cause an increase in sales of legitimate downloads, while resulting in a drop in sales of traditional CDs and decrease in piracy. Other researchers noted that this was in stark contrast to the point of view that eliminating DRM will undoubtedly increase the level of piracy.

The researchers proved their point of view by applying an economic game model based on the “Nash equilibrium” developed by Nobel laureate. The model assumes there are a number of marketing strategies for the same product, and no one benefits by changing their plans. The researchers developed a hypothetical environment and placed there an album of music that could be bought either as a traditional CD or as a downloadable file. The economists built a market time line through which the album moved, in one case equipped with DRM and in the other not. Afterward, they made up an equation for the item depending on the joy of listening to the album but incorporating the preferences for the file format, as well as the cost of stealing and the restrictions set by DRM.

When people face the choice of purchasing or pirating, they look at costs from different points of view: while an ethical consumer considered pirating had high cost, people that don’t regard piracy as stealing thought it had a much lower pirating cost. The customers having the option of purchasing a DRM free product did exactly that, which led to a drop in piracy. Meanwhile, people who didn’t have this option chose to pirate.

Since DRM-free music downloads were successfully competing with traditional CDs, it forced the prices of CDs to move down. In its turn, this lowered the legitimate download price. That’s why Hollywood didn’t like the idea to remove DRM restrictions much. At the same time, the strategy encouraging piracy can’t benefit them either.