p2pnet - rss feed: The dollar value of DRM
p2p news / p2pnet: In Korea, the economic value of DRM is about 21 cents per track and, “For an avid music fan who downloads the equivalent of two albums’ worth of tracks per month, that’s $50 per year, or $150 per device if one expects it to be used for 3 years,” says DRM Watch.
Soribada, Korea’s largest p2p file sharing company, has just said it will introduce a downloan rental service. The news followed a defeat at the hands of the Big Four Organized Music cartel.
Fronting for Warner Music, EMI, Vivendi Universal and Sony BMG was the Korean Association of Phonogram Producers / Korea Music Producers’ Association (KMPA)
The KMPA muscled Soribada and others into agreeing to charge 500 won (about 51 cents) for users downloading music files labeled with digital right management, 700 won (about 72 cents) for music files without DRM and 250 won (ahout 26 cents) for “poor sound-quality music”.
“This licensing agreement provides a rare real-world data point into the economic value of DRM, complementing market research done by Jupiter Research (2003), the INDICARE project (2005), and Marc Fetscherin at Harvard (2005),” says DRM Watch, going on:
“The above figures can be read in a number of ways. Most importantly, they reflect the idea that users can do less with DRM-protected tracks than with unprotected ones, including some things that provide a better user experience and/or are allowed under Korea’s copyright laws. But beyond that, those figures imply that KMPA is assuming a piracy rate for unprotected tracks of 40% relative to the piracy rate for DRM-protected tracks.”
Put another way, “if KMPA assumes almost zero piracy for protected tracks, then it is assuming that for every unprotected track purchased, 0.4 tracks are illegally copied. We would be interested to know if there were any quantitatively analytic basis for that 40%.”
DRM Watch adds:
“It is quite possible that the global music industry could find a way to design a DRM system that substantially decreases piracy, while providing a decent user experience, for a subsidy amounting to a small fraction of that $150, even when amortized R&D costs are figured in. This reasoning ends up in one of two places: either the $0.21 difference between DRM-protected and unprotected tracks is a poorly-chosen amount, or the music industry’s most rational course of action should be to subsidize DRM. More data points and more experience with pricing schemes like that of KMPA and Soribada will tell us which one is true.”
The above assumes DRM pirates will be able to continue to scam clients into believing DRM can actually work, bearing in mind anything that can be seen or heard can be copied by one analog or digital means or another; and, that any so-called copyright protection technology won’t be cracked almost as soon as it appears.
Also See:
DRM Watch - Soribada to Charge Differently for DRM and Non-DRM Music Tracks, March 30, 2006
rental service - ‘New’ Sorbada: subscriptions, February 26, 2006
muscled Soribada - Korea p2p charges revealed, March 27, 2006
