Technology meant to thwart digital music pirates may actually spur them on, according to new research.
The digital rights management system put in place by the industry gave record companies control over who could and could not share music, an effort to stop digital piracy.
However, marketing researchers Dinah Vernik of Rice University in Houston and Devavrat Purohit and Preyas Desai of Duke University in Durham, N.C. found that removal of the restrictive DRM can actually decrease piracy.
The research will be in the forthcoming November-December issue of Marketing Science.
The debate pits music lovers who want unrestricted use of digial music against record companies who want control as they lose profits from digital piracy.
The researchers found that for some legal users of digial music, DRM systems backfired.
In many cases, DRM restrictions prevent legal users from doing something as normal as making backup copies of their music, Vernik said. Because of these inconveniences, some consumers choose to pirate.
The DRM system is also costly, one recent estimate from marketing research group Insight Research estimated that record companies and music distributors are expected to spend $9 billion in 2012.
Because a DRM-restricted product will only be purchased by a legal user, ...only the legal users pay the price and suffer from the restrictions, the study said. Illegal users are not affected because the pirated product does not have DRM restrictions.
The music recording industry has maintained that DRM is needed to stop the flagging music industry.
In a report issued in January, Frances Moore, chief executive of the (International Federation of the Phonographic Industry that represents the industry said, As we enter 2011, digital piracy, and the lack of adequate legal tools to fight it, remains the biggest threat to the future of creative industries. Great new legitimate music offerings exist all over the world, offering consumers a wide range of ways to access music. Yet they operate in a market that is rigged by piracy, and they will not survive if action is not taken to address this fundamental problem. This is the challenge and the opportunity for governments to seize in 2011.
The industry reps point to research that concluded that DRM systems blocked piracy.
Research headed by Che-Yuan Liang, marketing researcher atUppsala University in Sweden found that physical music sales would be 72 per cent higher and digital music sales 131 per cent higher in the absence of piracy. The researchers concluded piracy is the main cause of the decline in sales.
But the new study came to the opposite conclusion. Removal of these restrictions makes the product more convenient to use and intensifies competition with the traditional format (CDs), which has no DRM restrictions, Vernik said. This increased competition results in decreased prices for both downloadable and CD music and makes it more likely that consumers will move from stealing music to buying legal downloads.