March 6th, 2007


Postulate, for a moment, that record industry and Hollywood executives are not all stupid. Why might they insist on distributing most of their products crippled with DRM systems that don't actually work?

Existing DRM systems don't prevent piracy or Internet sharing, so that can't be the reason. But take a look at the "First-sale doctrine" in US law. If you buy something, you're entitled to resell it.

Now, suppose I set up a business where I buy multiple digital copies of the entire catalogues of all the major record labels and film studios. I will sell them at a normal price, but I'll buy them back for the same price less a modest handling fee. So the purchase can watch a movie for 50 cents by buying it and then selling it back, and the company can get that 50 cents eight or ten times a day on the same copy, since the buying and selling transactions take no time. And consumers never need to own any music or video at all except for the single track or film they're currently watching or listening to.

With bad DRM, this doesn't work, because breaking the DRM to make the sales is illegal, although the sales themselves can't be prevented. With good DRM, it can't be prevented, because the DRM will handle the authorisations to make sure that only one person at once can use it, but that person can be changed. With no DRM, a company offering this service can come up with its own DRM-style methodology for ensuring that a work can't be kept after it's been sold back.

So the music and film businesses can, in fact, only survive by having bad DRM on digital works -- not DRM-free, and (crucially) not decent DRM either (unless they can get the first-sale doctrine repealed, which they probably can't).