A joint study between marketing professors from Rice University and Duke University has revealed that music industry efforts to reduce piracy through placing copy restrictions -- referred to as Digital Rights Management or DRM -- may actually serve to increase the very theft they wish to prevent.
Since the advent of the MP3, the music industry has grappled with ways to stem the tide of file sharing that has caused a drop in sales, though the level of that drop varies depending on who you ask. The Recording Industry Association of America (RIAA) has employed various tactics including DRM, law suits and anti-piracy campaigns, but, according to this study, they may damaged themselves through some of these efforts.
In a joint press release, Dinah Vernik of Rice and Devavrat Purohit and Preyas Desai of Duke revealed that, in fact, DRM can slow sales and piracy does not always hurt profits.
The research challenges conventional wisdom that removal of DRM restrictions increases piracy levels; the study shows that piracy can actually decrease when a company allows restriction-free downloads.
"Removal of these restrictions makes the product more convenient to use and intensifies competition with the traditional format (CDs), which has no DRM restrictions," Vernik said. "This increased competition results in decreased prices for both downloadable and CD music and makes it more likely that consumers will move from stealing music to buying legal downloads."
"Unlike in earlier literature, we examine consumers' choices among all the major sources of music," Desai said. "By analyzing the competition among the traditional retailer, the digital retailer and pirated music, we get a better understanding of the competitive forces in the market."
The research also revealed that copyright owners don't necessarily benefit from a lower amount of piracy. "Decreased piracy doesn't guarantee increased profits," Purohit said. "In fact, our analysis demonstrates that under some conditions, one can observe lower levels of piracy and lower profits."
The professors detail their findings in the research paper "Music Downloads and the Flip Side of Digital Rights Management Protection."
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If their research is accurate, it would prove what many file sharing advocates have been saying for years and would invalidate many of the strong armed tactics employed by the RIAA.