Digital Rights Management

Topics: Miscellaneous and Economics

From Cory sets DRM strawmen ablaze:

"For starters, any market-correction for DRM will surely involve informed customers making good purchase decisions about the DRM in their devices. That's what this debate is all about. The implicit, "Stop complaining and let the market sort it out" in these comments ignores the fact that complaints about DRM are vital to the market sorting it out."

This quote cuts to one of the critical issues in the current debate on digital rights management. I believe the market will most often reach the best solution. That does not mean regulators do not have a role to play, they do definitely have such a role. I tend to prefer limited regulation while relying on the market to reward the bestsolutions.

The idea that the marketplace works without debate and comment is fundamentally flawed. The way the marketplace will reach the best solution is through open and honest debate, competition and educated consumers. The emergence of world wide web and blogs do a great deal to make the market more efficient and effective. The invisible hand is more capable with more informed actors in the marketplace.

When consumers are ignorant they make decisions based on incomplete understanding of their interests the effect is to have the market's invisible hand reinforce the wrong behavior. This is a fundamental shortcoming in the market. The increase in customer knowledge will not only increase the individual's happiness but the overall performance of the economy.

The debate over digital rights management should continue (see Cory responds to Wired Editor on DRM ). I must admit I am surprised at the playing field now. I would have thought less restrictive solutions would win out in the marketplace (I actually still think they will). Right now very restrictive solutions seem to be winning. My guess is that once consumers learn more about the current path, those consumers will search for options that give them better options. Then some producers will seek to fill those desires. Advocacy from parties other than those who seek to maximize their profits in selling digital content is a very good thing. Owners of digital content should be able to seek to maximize their profits but a market solution does not mean they alone dictate the terms of the solution.

For society the best possible result is a free exchange of ideas and education of the various players in the market. Then let those players vote with their decisions in the marketplace. My guess is people will prefer to have digital works with less restriction and will reward those that offer such products with purchases that would otherwise go to those with restrictive policies. However, if consumers are ignorant they won't know the limitations imposed on the digital content they believe they are buying (or the product they buy to manage their digital content that cedes what they would think of as their right to control the content on their device to others). Individual players can suffer, as the advantage they were able to gain by taking advantage of the ill informed is lost, but overall that is the best result for society.

One interesting option in the market now is the Creative Commons.