DRM Makes Minimal Impact, Study Says

Despite the highly publicized efforts of copyright holders to fight the
piracy of their digital content, implementation of digital rights management
(DRM) solutions has been held up by outstanding issues of contention betwen
those content developers and distributions and IT vendors, a new study said.

The findings by high-tech market research firm In-Stat/MDR will likely
give further credence to “fair use” advocates like the Electronic Frontier
Foundation (EFF), which has long argued that content developers and
providers need to abandon DRM-based solutions in favor of an entirely new
business models that allow, say, movie studios to still charge its audience
but not inhibit the consumers’ ability to make copies of some types of
copyrighted content for their own personal use.

“I hope the marketplace will reject DRM solutions. DRM doesn’t stop
piracy or file-sharing. DRM is really a hopeless solution,” Fred Von
Lohmann, senior staff attorney at EFF said
during a recently conducted telephone interview.

But according to the In-Stat/MDR report, attitudes within the
entertainment industry are changing, which has led to a few small-scale,
inter-industry implementations of technology-based DRM solutions. In fact,
within the next few months, In-Stat/MDR anticipates announcements from both
the movie studios and recording industries that will “herald” new online
services that offer expanded “Pay-per-View” and “Pay-per-Listen” services.

“Unfortunately, most of these services will be virtually ignored by
consumers who are used to accessing and downloading their digital content
for free,” Mike Paxton, a Senior Analyst with In-Stat/MDR, said in a

The analyst who wrote the report wasn’t immediately available to expand on the details.

To be sure, the study comes out amid a growing acceptance for online
subscription services that now empower the users while still rewarding the
copyright holders. Just this week, Apple
took steps to block file-sharing of its iTunes music service.

Aiding to the confusion, though, is the stance by other IT vendors in the
U.S. to fight any further government regulations that would increase their
cost base, the study concluded. In parts of Europe, governments have tried
levying duties on everything from blank video tapes to personal computers to
collect money that would help subsidize content developers. But, the
technology industry insists on a market-driven solutions, not one that is

And while Microsoft
and Macrovision
have come up with their own solutions, there is still no clear cut consensus
governing the digital
streaming media realm
that would accelerate deployment.

The study also found:

  • The actual dollar amounts lost to digital piracy remain hard to
    determine. For instance, estimates of the US
    motion picture industry’s losses to piracy in 2002 range from $1.3 billion
    to almost $4 billion.
  • Consumer apathy is abundant. Most consumers seem to believe that DRM
    issues do not directly affect their lives or finances.
  • In the US, the Digital Millennium Copyright Act (DMCA) has done little
    to help define “fair use” guidelines.

The report is entitled “DRM in 2003: Are We Making Any Progress?”

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