DRM: To Prevent Piracy or Secure Loyalty?

The debate over the pros and cons of Digital Rights Management (DRM)—a layer of security that ties copyrighted works to a user in an effort to prohibit unlawful use or distribution—rambles on into 2018.

What started as a clause in the Digital Millennium Copyright Act of 1998 to protect the infringement of copyrighted works such as movies, books, and music, has blossomed into a full-fledged debate on who owns, who can modify, and who can repair the products consumers purchase. These products range from cell phones and cars to children’s toys and ebooks, making it almost certain that everyone has at least one DRM-protected product in their home. The companies who place the DRM on these products control who uses, modifies, and distributes the copyrighted works and products.

A popular example of DRM in children’s toys comes with Sony’s robot dog, Aibo, which was recently re-released in Japan for $1,740 with a monthly subscription fee. Sony’s original robot dog, released in 1999, faced a boycott after the company forced a customer to remove the modifying code that made the dog dance and perform other tricks not found in Sony’s code. The company made sure to “double down” on DRM for the recent release, barring all modifications and ensuring consumer loyalty through subscriptions that allow the dog to operate only on Sony servers. And yes, the new Aibo does dance.

How does this relate to publishing? DRM is commonly used to deter unlawful distribution of an ebook purchased by a consumer. However, the debate circles around if DRMs actually prohibit piracy of an ebook or simply serve to keep the company relevant. Just as Sony uses DRM to stop modifications that enhance their code and ensure customer loyalty through subscriptions, DRMs can prohibit consumers from seeking other companies to support their digital ebooks.

For example: if a customer purchases Lincoln in the Bardo by George Saunders for Amazon’s Kindle, they can only read this ebook for as long as they have an Amazon Kindle account (or the free app). If another company comes out with a newer, better ebook reader, the consumer cannot simply take their lawfully purchased Lincoln in the Bardo and consume it on the new reader, as DRM prevents this file maneuver. Writer Craig Mod aptly states:

The potential power of digital is that it can take the ponderous and isolated nature of physical things and make them light and movable….This is where DRM hurts books most….It artificially imposes the heaviness and isolation of physical books on their digital counterparts, which should be loose, networked objects.

In this instance, DRM locks files not only to prevent redistribution, but to prevent customers from moving on to the next big product down the road. The Kindle user may think twice about investing in the newest ebook reader, as that may involve losing their perfectly curated collection of sci-fi novels or giving up numerous files of crime dramas.

If copyright laws (as many judges have claimed in their copyright rulings, including the Authors Guild v. Google, the lawsuit over Google Books) are in place to promote innovation, DRM should do the same. Lawmakers should turn their ears toward consumers that wish to transfer lawfully purchased files across devices owned by different companies. The law was made to protect copyrighted works, not inhibit lawful consumer access. Infant companies should be able to strive for better readers and better ways to transfer purchasable files without worrying about big players like Amazon crushing them before inception. Innovation over monopolization!

Digital Pirates II: The Curse of the Black URL

By Rebekah Hunt
In my last thrilling, swashbuckling article on digital piracy, I explored the differences between the piracy of films and that of books. However, the most pressing question surrounding the piracy of digital content is this: does piracy of digital content hurt sales? As it turns out, opinions on this very complex issue are extremely divided. The same article from digitalbookworld.com contains two diametrically opposed viewpoints.
According to bestselling author Hugh Howey, “I love pirates. I get money from them all the time… They send me money thanking me because they loved my book. I sometimes go onto torrent sites and if I don’t see my book there I feel bad because it means I’m not in demand.”
Michael D. Smith, professor of information technology and marketing at Carnegie Mellon University, tells a different story. “Publishers can and do compete with pirated versions of their content available for free,” he says. “When ABC added its content to Hulu, incidences of piracy of ABC content decreased 37%.” That’s a compelling, if not exactly rigorously examined connection (chronology is assumed to represent causality with no other evidence shown) in the television industry, but what about books?
Smith makes reference to an “anonymous publisher that selectively windowed its ebook and print book titles to see if releasing the digital version after the print version would result in increased sales for the print version.” He concludes, “Sales of print copies increased by 0.4%—but ebook sales decreased by 52% and overall sales dropped by 22%, presumably because of piracy.”
This explanation raises more questions than it answers. For one, how did they determine that ebook sales decreased after the digital versions were released, if releasing the digital version was the experimental condition and was only measurable after it was introduced? Unless we’re in some sort of Looper situation, you can’t have a decline in digital sales if no digital sales existed before you introduced them in order to measure their effect, can you?
More important is that little word “presumably.” Once again, this argument is fraught with the failure to adequately distinguish between correlation and causation, as no evidence is given that establishes the causal link, only chronology. Smith goes on to suggest that “publishers should adopt two major strategies in combating piracy: Make their content available online and use anti-piracy laws.”
Chris Anderson, Editor-in-chief of Wired, and author of the amazing economics book Free, has a more reasoned perspective. He addresses the fear of piracy and unauthorized distribution of digital content, saying,  “All that counts as Very Scary Stuff to industry executives, and as a result they’re looking for ‘strong’ DRM before they consider letting their premier content circulate online.” He maintains that all the fear of piracy and the tactics adopted by companies to protect their precious treasures are a mistake. “If your content is uncrackable, it means you’ve probably locked the market down so tight that even honest consumers are being inconvenienced.” He advises content providers to “be careful what you ask for, because you just might get it. ‘Uncrackable’ DRM could make the P2P problem worse, by driving more users underground and depressing prices.
Anderson also claims that “zero-percent piracy is not only unattainable, it’s economically suboptimal.” He elaborates, saying, “piracy can actually let you raise your prices.” How could this be true, you ask? Because, “the pirate price is so low that it’s rarely possible to close that gap enough to make much of a difference… The usual price-setting method is to look at the entire potential market, from the many at the economic lower end to the few at the top, and set a price somewhere in between the top and bottom that will maximize total revenues. But if you cede the bottom to piracy, you can set a price between the top and the middle. The result: higher revenues per copy, and potentially higher revenues overall.”
This seems to fly in the face of traditional economic models, but as we have seen time and time again, everything about the digital content market consistently does that anyway. “The lesson,” Anderson says, is that “markets should exhibit just enough piracy to suggest that the industry has got the balance of control about right: not too loose and not too tight. That number is not zero percent (which requires protection methods so invasive they kill demand), and it’s not 100% (which kills the business). It’s somewhere in-between… Most consumers see the value in paying for something of guaranteed quality and legality, as long as you don’t treat them like potential criminals.”

Piracy in Perspective

By Rebekah Hunt

Digital piracy is the topic du jour for almost every media outlet. Want to stop people from changing the channel when your news broadcast comes on? Promo a story about digital piracy. Want to beef up hits to your news/gossip/blog site? Toss up an infographic with some digital piracy stats. Digital piracy is the MSG/asbestos/radon gas of the 2000’s. And sure, it’s an important issue, but not for the reasons you might think. Of course, piracy is a manifold problem with many ins and outs that I won’t have space to discuss in one blog post, so I’ll focus on one facet at a time.
The two lists below represent the most pirated ebooks of all time (according to Galleycat) and the most pirated films of all time (according to TorrentFreak).
Most Pirated Ebooks
1. “1000 Photoshop Tips and Tricks” [no ranking found]
2. “Advanced Sex: Explicit Positions for Explosive Lovemaking” [Amazon Best Sellers Rank: #1,354,367 in Books]
3. “What Did We Use Before Toilet Paper?: 200 Curious Questions” [Amazon Best Sellers Rank: #424,881 in Books]
4. “Photoshop CS5 All-in-One for Dummies” [Amazon Best Sellers Rank: #67,454 in Books]
5. “What Rich People Know & Desperately Want to Keep a Secret”[Amazon Best Sellers Rank: #1,033,662 in Books]
6. “101 Short Cuts in Maths Any One Can Do” [Amazon Best Sellers Rank: #12,426,545 in Books]
7. “Touch Me There!: A Hands-On Guide to Your Orgasmic Hot Spots” [Amazon Best Sellers Rank: #1,550,645 in Books]
8. “How to Blow Her Mind in Bed”
 [Amazon Best Sellers Rank: #1,182,856 in Books]
9. “1001 Math Problems”
 [Amazon Best Sellers Rank: #181,136 in Books]
10. “How to Make People Like You in 90 Seconds or Less” [Amazon Best Sellers Rank: #11,858 in Books]
Most Pirated Films
1. Avatar: 21 million [$2,782,275,172]
2. The Dark Knight: 19 million [$1,001,921,825]
3. Transformers: 19 million [$709,709,780]
4. Inception: 18 million [$825,408,570]
5. The Hangover: 17 million [$467,483,912]
6. Star Trek: 16 million [$385,680,446]
7. Kick-Ass: 15 million [$96,188,903]
8. The Departed: 14 million [289,847,354]
9. The Incredible Hulk: 14 million [$263,427,551]
10. Pirates of the Caribbean: At World’s End: 14 million [$963,420,425]
The very first thing that jumps out at you is the gigantic disparity between the commercial success of the films and books in question. The most pirated films are among the top grossing, while the most pirated books had such negligible impact on the market that I couldn’t even find sales data, and had to go by their Amazon best seller ranking. And those rankings aren’t good. The best selling one is number 11,858 on Amazon’s sellers list, and the worst off is number 12,426,545. The lowest-grossing film on the most pirated list, however, made $96,188,903 (Kick-Ass) and the most pirated film was also the highest grossing film of all time, at $2,782,275,172 (Avatar, second highest when adjusted for inflation).
So what exactly does this say about ebook piracy versus piracy of other media? The most pirated books are a slush-pile of word waste, riddled with self-help sex books and Photoshop how-to’s, while the most pirated films are among the top grossing. A variety of possible causes have been discussed, including DRM on authorized ebooks discouraging piracy, but none of them seem quite satisfactory by way of explaining this odd phenomenon, particularly in the case of the Harry Potter series, since the ebook version is not protected by DRM.
The most likely case is covered in Chris Anderson’s excellent book “Free,” which discusses the evolving economy of giving things away for free and how businesses are making money doing it. The section on piracy essentially says that most of the people who are going to pirate a piece of media are those who were never going to pay for it anyway, regardless of the price, and the others do it because they don’t feel the product is worth what it is sold for. Since this is such a complex issue, I will have to break it down as a series of blogs. Next time, I’ll start with the top reasons for piracy and dig into the impact it has on book publishers versus the impact on other media outlets (film studios, record companies, etc.) and what this means for the publishing industry. For now, I hope this got you thinking.