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DRM May Cause Music Piracy, Researchers Say, And Low Piracy Rates May Hurt Profits

Posted by: , 16:02 AEDT, Sun October 9, 2011

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A new research paper by professors from Rice University and Duke University says that DRM may actually be increasing music piracy rates, and that lower piracy rates sometimes corresponds with lower revenue

A new paper published by researchers at Rice University and Duke University says that removing DRM could actually lead to a decrease in music piracy rates.

The paper, written by marketing professors Dinah Vernik of Rice and Devavrat Purohit and Preyas Desai of Duke, seems to suggest that DRM only affects legitimate customers, as "Illegal users are not affected because the pirated product does not have DRM restrictions," the report says.

And not only does DRM only affects legitimate users, it also destroys usability of the content being "protected". "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 paper urged for the removal of DRM, and restrictions on products to make products "more convenient to use and intensifies competition" against products that do not include DRM, such as CDs.

Most interestingly, the research paper also found that lower piracy does not always equal higher revenue, something that content owners have been arguing would be the case. "Decreased piracy doesn't guarantee increased profits," professor Purohit said before adding, "In fact, our analysis demonstrates that under some conditions, one can observe lower levels of piracy and lower profits."

And professor Vernik concludes by saying that "our research presented a counterintuitive conclusion that in fact, removing the DRM can be more effective in decreasing music piracy than making the DRM more stringent."

The report concentrates on the music industry, even though the music industry has since moved away from DRM. But the findings, which will be published in the November-December issue of Marketing Science, could also apply to other industries such as gaming and movies, in which DRM is still widely used.


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