How DRM can guarantee a short term windfall at the cost of a long term business model
The first ten years of the 21st century have given birth to some truly remarkable technological advances for the home: the iPod, hybrid and electronic vehicles, and…the eReader?
The eReader sits in a very odd place. Not quite a computer, not quite an iPod/MP3 player, it also completely divides the opinion of the buying public. Worldwide the reception has been muted, but in America the public have taken to it in droves. On the whole, however, sales figures continue to rise.
The issue of DRM (Digital Rights Management) becomes key here. Digital Rights Management is a company’s attempt to control a market place through ‘locking down’ the opportunities afforded on its platform. The best example of this is Apple’s use of the iTunes during the iPod’s rise to prominence.
Originally any music downloaded from the iTunes store could only be played on / transferred to an Apple iPod. That basically meant that you could only use an iPod if you had a copy of iTunes, and likewise, music bought through iTunes would not work with any other MP3 player.
This, of course, throws up many issues, particularly regarding certain rights and freedoms. However, for the manufacturer it is time to cash in the cheque. For a limited amount of time, before public pressure amounts to a point where they have to allow a free movement of information, they can basically hold the public to ransom over the use of their product.
This played into the hands of Apple upon the release of the iPod, but more recently has played directly into the hands of an unlikely source…Amazon.com.
Best known for their über-successful online book/films/music store, in recent years Amazon.com has branched out into producing an eReader, the Kindle, which has preceded to dominate the market since it was first released in November 2007.
From the beginning, Amazon employed DRM policies on this product, making it impossible for the buying public to utilise the product with anything other than Amazon.com, thus making the absolute maximum amount of revenue from the product. eBooks bought through the Kindle cannot be transferred to another mobile device.
Digital Rights Management, originally used to tackle piracy, has now evolved into a platform that maximises on customer buy-in to a single product. That problematic fact remains that it limits the freedom a consumer enjoys with a product they have paid for.
The Kindle is an unfortunate example of how all of this can go wrong: Amazon withdrew copies of the George Orwell’s classic, ‘1984’, from their customer’s Kindles. What’s more, they did this remotely. Amazon did refund the purchase, but the item was removed without the user’s consent. How very Orwellian.
Cases like the Kindle and iPod clearly show the advantage of utilising DRM policies over a product upon release. It guarantees revenue, and does not break any competition laws all whilst simultaneously giving the manufacturer a clear advantage over their rivals. Provided, that is, that the product is a strong seller. However the public remain to be convinced, particularly in light of Amazon’s use of DRM policies.
As for the Kindle? Well, time will tell as to how ultimately successful Amazon’s product is, the initial uptake has been slow, but is steadily rising. However, employing DRM as they do can only last for a limited time, and Amazon’s time to recoup their development costs is, with the product already on the market for over two years, rapidly running out.