Monday, June 25, 2007

iPhones, Hollywood, and the DRM Question...

This Friday Apple will finally release the iPhone after months of endless hype and speculation. The device, which acts as a cell phone and music/video iPod, has caused ripples in at least three major industries already, despite the fact that it still hasn't even been released. But as Hollywood gears up to sell videos geared towards iPhones, the question begging to be asked is: Will Apple and Hollywood heed the lessons that the DRM disaster wreaked on the music industry, or will it repeat history by tightening controls even further?

When the iPod first came out a few years ago, Apple struck a deal with the music labels so that all songs sold over iTunes would be encrypted with special copy-protection known as Digital Rights Management (DRM) software. They figured this would make piracy much more difficult, however it also stripped away consumer rights that had been well established for years - such as making a backup copy of music you legally purchased in order to play it on different devices. The DRM strategy backfired, piracy increased, sales plummeted, and only recently Apple and EMI reversed course and announced that they would sell songs without DRM because the copy-protection was leading to the record labels selling, in effect, a poorer quality product for their customers. Contrary to the apocalyptic predictions of rampant piracy, since they decided to sell songs without copy-protection, sales have actually increased.

Which brings us back to the iPhone. As this NY Times article explains, Hollywood is hoping the iPhone's multimedia features will make it easier for people to watch their favorite television shows and movies, and even "swap videos". This seems to hold tremendous promise, both for consumers to have a fantastic product and for the motion picture and television industries to sell their wares in an entirely new mass market. Hollywood wouldn't be so stupid to blow this by repeating the same DRM mistake that the music industry made a few years ago, would it?

Apparently, indications are that they will be selling their videos for iPhones with similar copy-protection schemes, after all. The power politics surrounding the iPhone - which involve the high-technology, cellular telecommunications, and media industries - are already playing out, and a betting man might see a negotiated agreement eventually determining which technologies and products will be available to consumers. It's a shame that genuine market forces won't be the deciding factor, but rather a small oligopoly acting in collusion as an illegal trust. If left up to a true capitalist marketplace, the previous DRM experiment has already proven that consumers would absolutely prefer to legally purchase their music and movies as long as the product is not excessively limited. After all, nobody wants to buy the same song separately for each device they own.

Why the big media corporations have such a knee-jerk instinctive impulse for greater control, even when giving it up a little would raise their profits, is why they may be headed towards an inevitable downfall - and with it, bringing to resounding fruition a self-fulfilling prophecy of piracy and decline.
  

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