The commercial logic for legal DRM free access to content on the web

By January 24, 2007Content, Music, MySpace, PCTV, Video

Ebooks 

In a comment on yesterday’s post Indie labels to sell music on MySpace mspoke reminded me that a large and increasing proportion of music artist’s revenues come from live performances and merchandise (I have posted before in Experiences not products). 

As per the MySpace post indie labels will be selling unprotected MP3s on MySpace.  The hope will be that removing DRM stimulates more MP3 sales, but even if it doesn’t and instead there is rampant copying, bands and labels will know that simply reaching more fans will drive sales of t-shirts and concert tickets.

There are signs of something similar happening in the world of books.  James Boyle has written a long post on the FT blog about this.  (Ironically this is the first unprotected FT article I have been able to link to.)  He lists quite a few examples of authors and publishers making entire books available on the web for free under a Creative Commons license (under a Creative Commons license you are free to copy, print and share books without commercial purpose).

For example Yochai Benkler offers you the choice of paying 323.75 for his book about the networked economy The Wealth of Nations or of downloading it for free (I wonder how many people have downloaded it by accident, I just did).

James describes the commercial logic thus:

  • People hate reading a book on screen [or presumably on A4 printouts] but like finding out if it is worth buying – so allowing sampling should increase sales overall
  • Professional authors also make money from options on film production, commissions from magazine articles, consulting, teaching and speaker fees – all of these are aided by wider exposure
  • Digital distribution is almost free – the cost is limited to the gamble over lost sales

In the words of Boing Boing editor and science fiction writer Cory Doctorow this approach makes sense for authors “whose biggest fear is obscurity not illegal copying”.

Adopting this model makes sense then for up and coming authors, but not for established ones.

This also applies to musicians.  Mega stars have all the exposure they can handle and sell out their gigs in minutes, so there is little marginal benefit to them in a few extra fans having a copy of their music.  They will be better off with one extra CD sale.

Wrapping this up, I guess what we are starting to see is the long tail of music artists and authors eschewing DRM in the hope that sales will increase as and the belief that wider exposure will bring other benefits – probably including a faster rise to star status.

Turning to video, I don’t know if the same logic can apply.  I’m not sure if there are any meaningful revenue streams for long tail film producers beyond cash at point of consumption (via pay per view or advertising).