The following Literature Review is a accumulative update of the major ideas, concepts and accepted statistical data surrounding the state of Digital Rights Management (DRM) and its effectiveness for protecting the Intellectual Property (IP) online. By bringing together academic research, industry data and contrasting arguments regarding the use of DRM in the distribution of digital products, this document hopes to bring the reader up to speed with the current contributions to the DRM debate and the laws and economics that surround and inform it.
What is DRM and what does it do?
Over the past 10 years authors and researchers have collectively defined DRM by encompassing the strategies and technologies involved in safeguarding the Intellectual Property (IP) within digital goods and services disseminated online. Gillespie (2007, p7) defines DRM as a system of digital technologies that build the “legal standards of copyright” into digital goods (Gillespie, 2007, p7). Chaudhry et al (2011) breaks down the technology of Gillespie’s (definition and states that DRM takes the form of either; digital watermarking, digital fingerprinting, software splitting and virtual leashing or brand protection software architecture (p266 – p268). At a practical level, DRM manages the licensing agreements of copyright holders by incorporating surveillance technologies into copyrighted goods and services such as games and movies (Deveci, 2012). Deveci (2012 p2) states that: “The expression ‘rights-management information’ is defined to mean any information which identifies the work, the author, the copyright owner, or information about the terms and conditions of use of the work, and any numbers or codes that represent such information” (Deveci, 2012 p2). In effect, DRM imposes restrictions on what an end-user can do with a purchased product to make sure licensing arrangements are not being broken (Kumic, 2001). Typically a user of copyrighted material that employs a DRM strategy will be authenticated by an online database that communicates with the surveillance technology embedded into the digital good or service (Kumic, 2001). In theory, this process ensures that individual end-users or customers, are accessing the digital good or service in accordance with its licensing arrangements (Kumic, 2001); if an end-user is not authenticated, the inbuilt surveillance technology will ‘shut down’ the digital good or service, rendering it unusable (Kumic, 2001).
Yu, (2011) writes that consumers have become confused about the rhetoric around digital piracy and why their media ‘shuts down’ on them if not used correctly. He reports that consumers are unsure of their rights when it comes to using their legally purchased digital entertainment media (Yu, 2011 p883). This consumer confusion Yu (2011, p917) states, has led to a distrust of the messages associated with the protection of digital goods and DRM. Herman (2012), found that while the software that circumvents DRM technology has been made illegal in many countries, it remains widely available across the World Wide Web giving consumers the option to hack their media. Vernik, Purohit, and Desai (2011, p1020) found that many legal consumers turn to this type of technology because they feel punished by the restrictions DRM imposes on their freedom to do what they like with the media they have purchased. Desai et al (2011 p1020) found that DRM technology had reduced the value of digital products in the eyes of the consumer (Desai et al, 2011, p1022). Sudler, (2013) states that: “Under these new ecosystems, digital rights management (DRM) has proven ineffective at stopping piracy. Furthermore, DRM systems have been shown to discourage legitimate buyers” (Sudler, 2013). While many have written about the failing of DRM for both consumer and industry, others have focused on the success of DRM and how to better implement current technologies and management strategies.
Chaudhry et al (2011) claims the DRM technology that has failed to prevent piracy could be successful if combined with other strategies. In effect Chaudhry et al (2011) found that companies who invest in the development of new DRM technology and strategies could benefit from combining their research with other companies invested in the same endeavors. Sudler, (2013) agrees with Chaudhry et al (2011), and asserts that innovative combinations of the current DRM strategies and technologies is needed if content creators and producers are to bring the flow of access to digital goods and services under their control. Sudler (2013) sates that: “Industries can address online piracy by combining appropriate technology, innovative business models, and piracy analytics in the evolving supply chain ecosystems” (Sudler, 2013). With so many DRM strategies failing to prevent the unauthorised use of digital goods and services, Deveci’s (2012) research focused on the possible benefits of combining technologies and innovative management strategies to enhance the copyright protection of digital goods and services. While Deveci (2012) found that a successful implementation of DRM can lead to a reduction in unauthorised use of digital goods, others argue whether the cost of research, development, implementation and the eventual legal action pursuing those who flout copyright and intellectual property protections, does makes economic sense.
While DRM technology remains easily hackable using tools that are freely available online, some academics, industry commentators and insiders have begun to question the true impact of DRM and if the associated costs in prosecuting breaches and developing technologies that outpace the pirates and hackers. On the Australian Council website for New Media, Fingleton, Dena and Wilson (n.d) claim that digital goods and services containing DRM technology have become a target for online hackers, simply because they pose a challenge. Echoing Dena et al (n.d), Desai et al (2011) claim that “copyright owners do not always benefit from making it harder to copy music illegally” (Desai et al, 2011 p1), and should at least consider alternative methods of protecting their copyright. Dena et al (n.d) also claim that the use of DRM limits a products market due to negative impacts on usability as “DRM makes the files clunky and annoying to download” (Dena et al, n.d).
DRM and copyright law
In 2009 Dr Grace Agnew recorded a video on the use of DRM to prevent online piracy and unauthorised use of digital goods and services. In the video Agnew (2009) declared that current DRM strategies and associated technologies went beyond the reach of copyright law, which was originally intended to protect both the creator and consumer of digital goods and services. She argues that DRM technology puts the rights of creators and producers above the rights of consumers and end-users (Agnew, 2009). Deveci (2012) agrees with Agnew (2009), and argues that while DRM technology presents an opportunity for better protection of digital goods and services from piracy, its reach is often excessive: “Apprehension over the excesses of DRMs is logical, but it is equally proper to consider the potential fusion of law and DRM technology to generate affordable access to information” (Deveci, 2012). Therefore, Deveci (2012) asserts that copyright law and DRM strategies need to be brought into line for the protection of the rights of both copyright holder, and consumer or end-user, to be successful in implementation and application. Sudler (2013) agrees and finds that rather than pushing forward with the management of digital goods and services through technological restrictions, a new paradigm between copyright law, creator and consumer must be reached in order to move forward in the ‘new economy’ that is unrestricted by the physicalities of space and time. Sudler (2013) states that: “A new approach to piracy is needed to account for recent changes in supply chain ecosystems”. The findings of Agnew (2009), Deveci (2012), and Sudler (2013) have led these and other academics to question what constituted end-user piracy, and if the World Wide Web had in fact changed the way consumers behaved and whether the distribution of digital goods and services via the Web, and the inherent freedom of access expected by consumers, has in fact turned these consumers into digital pirates?
Sudler (2013) found that while increases in piracy could be attributed to the popularisation of the World Wide Web, its existence did not actually change consumer behavior. Therefore, Sudler (2013), quoting Lessig (2011), argues that consumers had always sought to control the flow of what they consume themselves, and the World Wide Web just gave them better tools to do this. Suddler (2013) states that: “Trends in online piracy have reached record levels and threaten traditional industry supply chains. Music, motion pictures, print media, and software are some of the most vulnerable content pirated online. Recent increases in piracy can be historically traced to the digital revolution, introduction of the World Wide Web, and growth of broadband technologies, rather than a sudden shift in consumer behavior” (Suddler, 2013). Because the research indicates that consumer behavior has not changed due to the advent of online dissemination of digital goods, Desai et al (2011) argues that the economics of piracy are misunderstood therefore DRM stratergies are fighting a war that is not taking place.
DRM and the economy
While debate goes on over the correct implementation of DRM and how best to protect Intellectual Property and profits from online piracy, there has also been some research into the impact of distributing digital goods and services online that are free of any DRM technology. Recent research indicates that by removing DRM technology from digital goods and services online, can activate online consumers and have an effect to lower industry prices (Desai et al, 2011). Desai et al (2011) challenge the assumption that DRM is necessary to prevent unauthorised use and piracy and believe in certain instances “eliminating DRM restrictions can lead to an increase in sales of legal downloads, a decrease in sales of traditional CDs, and a decrease in piracy” (Desai et al, 2011 p1022). Desai et al, 2011, say that this reality is “in stark contrast to the view often that “eliminating DRM restrictions will unconditionally increase the level of piracy ”(Desai et al, 2011 p1016). They found that by illuminating the restrictions that DRM imposes on legally downloaded entertainment media, the value of product, authorised or not, was equalised. (Desai et al, 2011 p1022). Therefore, Desai et al (2011) asserts that a digital good or service purchased without DRM, would in theory be of equal value to that of a pirated good or service because neither product enforced restrictions on its end use. This shift in value they argue, has seen consumers compare legal avenues of downloading entrainment media with their unauthorised cousins: “This competition between the traditional and download formats lowers prices such that some consumers move from stealing music to buying legal downloads” (Desai et al, 2011 p1022). Therefore Desai et al (2011 p1022) argues that people are more likely to pay for unrestricted, DRM free digital goods and services because they offer the same value and usability as the hacked or unautherised versions.
While the work of Desai et al (2011) focused on how removing DRM can equalise the value of the authorised and unauthorised version of a product, Sinha, Machado, and Sellman (2010) also found that DRM-free media had the potential to move consumers from authorised points of access to legal ones (Sellman, 2010). In effect turning pirates into consumers. Machado et al (2010) argued that the inclusion of restrictive DRM, and not access to the World Wide Web, was to blame for the increase in end-user piracy . Machado et al (2010) wrote; “Based on two large empirical studies and a validation exercise with a large sample of more 2,000 college students, the model results indicate that the music industry can benefit from removing DRM because such a strategy has the potential to convert some pirates into paying consumers” (Machado et al, 2010). While the findings of both Machado et al (2010) and Desai et al (2011) are encouraging to those invested in the protection of Intellectual Property and prevention of unauthorised access to digital goods and services, Desai et al (2011) argues that its removal does not necessarily guarantee increased profits for industries. In effect Desai et al (2011) argues that while DRM-free media will see pirates move to authorised consumption, the value of digital products will not increase, and therefore industry profits will remain where they are. While negative industry profits are often the focus of literature and industry commentary surrounding the DRM debate, Yu (2011), Sudler (2013), and Moses (2011) all find that the industry figures are often badly reported, overstated and often misunderstood.
In 2011, the Motion Picture Association of America (MPAA) reported that its stakeholders were now loosing $58 billion to online piracy annually (MPAA, 2011). The MPAA (2011) claim that this financial loss has cost more than 37,000 industry jobs, and that the downward trend is continuing with no end in sight. Much of the losses are attributed to online sharing of digital goods that contain no embedded DRM. Moses (2011 p.6). claims that these figures are grossly exaggerated because bodies like the MPAA count every unauthorised download as one less product they will sell. Yu (2011 p889) agrees with Moses’ assessment and states that: “Thus far, there is no evidence that the sky is falling, as far as the negative impact of the Internet and online file sharing is concerned. If anything is falling, it is the outdated business model that the industry developed before the arrival of the World Wide Web”(Yu, 2011 p889). The modeling completed by Desai et al (2011 p13) shows that both Moses (Moses, 2011 p.6). and Yu (2011) are correct in that the availability of unauthorised downloads online does not change consumer demand. Desai et al (2011 p13) believe that “piracy does not contribute directly to consumer utility; instead, it has a positive effect based solely on how it affects prices of the legal products in the market” (Desai, 2011 p13). As reported figures of loss due to piracy remain questionable, Desai et al (2011), Moses (2011) and Yu (2011) all agree that the true impact of DRM on the digital goods and services industry will never be fully understood.
This Literature Review has presented the current arguments of academics for an against the use of DRM and its effectiveness at protecting Intellectual Property (IP) online. While much of the focus has been on the failure of DRM strategies and associated technologies, the research presented by Desai et al (2011) has opened the gateway for more exploration of process of distributing DRM free digital goods to shift consumers from piracy to authorised consumption. But as Yu’s (2011) research suggests, industry business models must change in order to fully understand the impact of piracy and DRM on the digital goods industry. Many like Moses (2012) and Machado et al (2010) have argued that until the industry can be honest with itself and their consumers about the real cost of piracy and the DRM that fights it both consumer and industry will be unable to move forward.
Agnew,G. (2009). Restrictions of Digital Rights Management. Video File. Retrieved from http://www.youtube.com/watch?v=aRfX2gPwXMo&feature=youtube_gdata_player
Chaudhry, P. E., Chaudhry, S. S., Stumpf, S. A., & Sudler, H. (2011). Piracy in cyber space: consumer complicity, pirates and enterprise enforcement. Enterprise Information Systems, 5(2), 255–271. doi:10.1080/17517575.2010.524942
Deveci, H. A. (2012). Can hyperlinks and digital rights management secure affordable access to
information? Computer Law & Security Review, 28(6), 651–661. doi:10.1016/j.clsr.2012.09.002
The 1998 Digital Millennium Copyright Act, or DMCA,
Fingleton, T. Dena, C. Wilson, j. (n.d.). Copyright in new media. Retrieved March 25, 2013, from Australia Council website http://www.australiacouncil.gov.au/writersguide/copyright_in_new_media_industry
Herman, B. D. (2012). Taking the copyfight online: Comparing the copyright debate in congressional hearings, in newspapers, and on the web. Journal of Computer-Mediated Communication, 17(3), 354–368. doi:10.1111/j.1083-6101.2012.01575.
Moses, A. (2012, April 01). Piracy are we being conned?. The Age Retrieved April 01 2012, from website: http://www.theage.com.au/technology/technology-news/piracy-are-we-being-conned-20110322-1c4cs.html
MPAA Press Release Dec 16 2011. Scribd. Retrieved March 25, 2013, from http://www.scribd.com/doc/85454091/MPAA-Press-Release-Dec-16-2011
Sinha, R. K., Machado, F. S., & Sellman, C. (2010). Don’t Think Twice, It’s All Right: Music Piracy and Pricing in a DRM-Free Environment. Journal of Marketing, 74(2), 40–5Dr. Grace
Sudler, H. (2013). Effectiveness of anti-piracy technology: Finding appropriate solutions for evolving online piracy. Business Horizons, 56(2), 149–157. doi:10.1016/j.bushor.2012.11.001
Vernik, D. A., Purohit, D., & Desai, P. S. (2011). Music Downloads and the Flip Side of Digital Rights Management. Marketing Science, 30(6), 1011–1027. doi:10.1287/mksc.1110.0668
Yu, P. (2011). Digital Copyright and Confuzzling Rhetoric (SSRN Scholarly Paper No. ID 1775886). Rochester, NY: Social Science Research Network. Retrieved from http://papers.ssrn.com/abstract=1775886