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Archive for the ‘DRM’ Category

The Data behind why DRM sucks

Tuesday, November 29th, 2005

Oliver posted to his blog recently that his friend Damian (from OKGO) had written a guest blog post on why DRM sucks. I thought that Damian’s points were well taken, and it certainly carries additional weight coming from an artist, but is it just another emotional rant?

Last semester I had Professor Oberholzer-Gee, a veritable Strategy ninja, as far as I’m concerned. I had the pleasure of talking with him one afternoon about the Grokster Supreme Court case (before they had issued a ruling). It turned out to be a very enlightening conversation: Professor Oberholzer-Gee (along with a colleague at UNC) had published the first academic paper on the effect of P2P File Sharing on the Music Industry that had used actual download data, a paper which was later filed as a Friend of the Court Brief for Grokster Supreme Court case.

I want to emphasize that they use actual data in their analysis: they “match 0.01% of the world’s downloads to U.S. sales data for a large number of albums. To establish causality, [they] instrumented for downloads using data on international school holidays and technical features related to file sharing.”

The result? “Downloads have an effect on sales which is statistically indistinguishable from zero. Moreover, [the] estimates are of moderate economic significance and are inconsistent with claims that file sharing can explain the decline in music sales during our study period.”

The actual study is interesting, but long and dense. Fortunately, the Friend of the Court Brief is short and readable.

So Damian’s gut instinct, that “before a million people can buy our record, a million people have to hear our music and like it enough to go looking for it. That ain’t gonna happen without a lot of people playing us for their friends, which, in turn, ain’t gonna happen without a fair amount of file sharing” is 100% correct and backed up by real quantifiable evidence.

Smart Rock Star.