Want to boost your sales 10%? Remove all DRM

drmCoverage courtesy of Ron Miller in Computerworld has brought to light a research paper published last month which brings fresh data points to the anti-DRM debate. Put simply: All DRM does is kill your sales. That’s all. It doesn’t protect you against piracy; it doesn’t preserve your revenues. The only thing it does is drive customers away. And if you want an easy sales hike – all you have to do is remove it.

Kevin Spacey gets it

The paper “Intellectual Property Strategy and the Long Tail: Evidence from the Recorded Music Industry,” by Laurina Zhang, a PhD Candidate in Strategic Management at the Rotman School of Management at the University of Toronto, compared “sales of similar albums with and without DRM before and after DRM removal. Using a large sample of albums from all four major record labels that includes multiple genres as well as hits and niche albums, I fi nd that removing DRM increases digital music sales by 10 percent.” Zhang’s paper, with all its detailed statistical backing, is available online, and I recommend interested readers to study it.

And lest anyone carp that the music industry is not publishing, and that conclusions drawn from it don’t apply to ebooks, then Zhang includes a reminder that: “Perhaps no industry is as visibly aff ected by digitization as the recorded music industry,” and that “the recording industry has been vocal in blaming sales reductions on file sharing technology.” And, she continues, “DRM’s sharing restrictions have countervailing e ffects on sales. While it has the potential to combat piracy, it may also hinder product discovery, both of which are salient issues in many digital markets.” And the effect, she finds, is “most pronounced for albums at the long tail of the music sales distribution, providing support for the long tail hypothesis that lowering search costs can facilitate product discovery of non-mainstream fare.” So if you’re working outside the mainstream, in niche products or minority interests, you will benefit proportionately more from removal of DRM.

Miller quotes Kevin Spacey, executive producer of Netflix Internet-only show House of Cards, on their show: “Give people what they want, when they want it, in the form they want it in, at a reasonable price and they’ll more likely pay for it, rather than steal it. Well, some will still steal it, but I think we can take a bite out of piracy.”

That hardly sounds like a file sharers’ charter. But it does sound like good sense. And, as Miller points out, DRM actually acts as a perverse incentive to increase illegal behavior. “The people it hurts most are the entertainment giants’ paying customers. It says in effect, ‘If you play by our rules and buy our content, you will be limited to a single copy, and you had better hope it never gets damaged or lost, because we’ve made it impossible for you to save a backup copy. But if you steal our content, you can use it on an unlimited number of devices and share it with all of your family members and friends’.” Don’t you suspect that some of the people who bought their copies of Disney Christmas fare legally via Amazon are now wishing that they had pirated it instead?

6 Comments on Want to boost your sales 10%? Remove all DRM

  1. For everyone that follows Teleread this is preaching to the choir.

    I have been waiting (impatiently) for publishers to abandon DRM for years. As far as I can see, all that DRM achieves is to add the cost of DRM to the end product, and to transfer that cost to the vendors of DRM software.

    However, the big publishers continue to insist that DRM is valuable to them.

    I just wish that any one of these publishers would post a response to this item, explaining their logic in deciding to continue putting DRM on their products.

  2. I think it’s long past time that we realized that the DRM/piracy issue is a red herring. At this point everyone has to know DRM doesn’t stop piracy, that it hurts sales, etc. This has been said enough by enough people that even the major publishers have heard it, so we have to consider why so many places use DRM.

    Is it that so many publishers are stupid, or being overruled by the owners, or could it be that they have a different reason for wanting DRM?

    I lean towards the third option. I think publishers want DRM in order to control the user, not to prevent piracy. Doesn’t that make more sense than publishers still thinking that DRM prevents piracy?

  3. Gary, me too. And what alarms me more is the writers and others who also insist that DRM is their only bulwark against rampant piracy. At least some of the publishers seem to have bought the argument, but the authors seem impervious to reason.

  4. @Nate, unfortunately, I have to agree with you. Publishers do seem to have this delusion that I, the consumer, am stupid enough to be willing to pay for the same content multiple times. Buy a book on Kindle and then later purchase a Nook? Great, now she’ll have to buy the book again! Sure, I can (and do) strip the DRM, but I still doubt the average ebook consumer knows that.

    Plus, as Paul said, many authors are still terrified of piracy, so the publishers can also tell their authors, “There, there, we’re protecting you from the big bad pirate wolf,” while knowing it’s a lie. And it’s inconceivable that publishers would lie to their authors, right?

  5. Sadly, the whole debacle over Disney pulling the Christmas movies on Amazon is just one more instance why the content owners want to keep their greasy paws on the goods. When they talk about “owning the customer,” it seems they mean far more than just marketing information.

  6. I’ve been reading ebooks for 10 years and DRM is only a minor inconvenience. I once had a collection of audiobooks on cassette tape that became useless over time as I moved to Cds or digital formats. Where is the outrage over that? I was able to remove DRM from all my old Microsoft Reader ebook from long ago, but I’ve never actually gone back and read one again.

    I buy a book and read a book with or without DRM the same way and in the end it will not make a deciding factor what I pick up.

    I’m not saying that DRM is useful or good or does what it is suppose to do, but I don’t think of it as a major harm either. I’ve got bigger worries in life. No reason to get excited.

    DRM is selling fear to the publishers. Someone is out to steal your stuff – use DRM for protection. But the anti-DRM folk use fear too – Amazon can take way your purchases buy DRM free for protection. Fear mongering on both sides.

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