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"Just enough piracy"

Chris Anderson has posted a very interesting article discussing acceptable levels of piracy. He is worried that "uncrackable" DRM will have adverse effects on one's ability to access and manage media.

"We've seen all sorts of failures of this sort before, from dongles to laborious and confusing registration schemes. Each seems better at annoying consumers than at building markets."

This is a common complaint for those who are against DRM strategies. Obviously the trick is to find the right balance, especially since many publishers require some form of DRM. Taking a cue at FairPlay and the iTunes Music Store, Apple apparently has found a good balance. Most consumers never encounter the roadblocks put in place (e.g. cap on machines; # of burns), but the constraints do help manage risk.

Of course maybe there is not a concerted effort to crack FairPlay because those who really want free music can "circumvent the DRM" by playing another tune. They can already find what they like on file sharing networks or copy and create digital copies directly from music CDs. If all media, including every music track, film and television show, was only available with DRM locks, maybe we would see a more mainstream effort to roll-back the DRM tide.

Also included in the article is the plausible theory that by abandoning the low-end market to piracy publishers can focus price points at a higher value.

"The usual price-setting method is to look at the entire potential market, from the many at the economic lower end to the few at the top, and set a price somewhere in between the top and bottom that will maximize total revenues. But if you cede the bottom to piracy, you can set a price between the top and the middle. The result: higher revenues per copy, and potentially higher revenues overall."

Of all the points to use to convince publishers on the appropriate role of DRM, this seems the most compelling. It at least gets to the heart of the argument - how can we maximize our revenue? This is the root of the current problem. Executives are fearful the bottom is going to drop out, but they don't have a clear road-map for an alternative and possibly more profitable path.

The lesson of the day?

"The lesson is to find a good-enough approach to content protection that is easy, convenient and non-annoying to most people, and then accept that there will be some leakage. Most consumers see the value in paying for something of guaranteed quality and legality, as long as you don't treat them like potential criminals. And the minority of others, who are willing to take the risks and go to the trouble of finding the pirated versions? Well, they probably weren't your best market anyway."