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Economists Join Apple in Call for End to Music DRM

Apple CEO Steve Jobs says Apple would support an open online music marketplace if large music companies stop using DRM (digital-rights management) software to prevent copying of music sold online. An economist who studies hidden costs of intellectual property rights agrees with Jobs, suggesting his challenge signals the coming end of copyright as we know it.

Jobs’ challenge, which some consider shocking, is just the latest brick to fall in the inevitable collapse of a legal wall that since 1999 has been obstructing technological progress and preventing people from enjoying more and better music at a lower price, suggests Michele Boldrin, an economist who studies the hidden costs of intellectual property right protections.

Boldrin and David K. Levine, both professors of economics in Arts and Sciences at Washington University in St. Louis, are co-authors of a number of academic articles and a forthcoming book arguing that intellectual monopoly – patents, copyrights and restrictive licensing agreements – should be swept away.

Music companies, Jobs argues, receive few benefits from selling 90% of their music on CDs, which don't have DRM software built in, and the remaining amount online with DRM technology. Meanwhile, Apple's iTunes Music Store is currently listed as the world top-selling online music store with more than 2 billion songs sold.

Boldrin and Levin argue that there is plenty of money - in fact: probably more money than there has ever been - in distributing and selling digital content via the web without the obstacles created either by DRM or by any similar attempt to prevent people to do what they want with the digital files they lawfully purchased.

“Digital content can now be sold very efficiently and in very large quantities via the web,” Boldrin explains. “Copies of that same digital content can easily be made and distributed via the web - hence they should be allowed to be made – without the obstructions that current "anti-piracy" regulations impose upon this economic activity.

“The cost reduction that digital-web distribution of music makes possible is so large, that a competitive market for music could leave plenty of room for charging the lawful purchaser of originals for the implicit value of the copies he/she will eventually donate or sell to others, again via the web.

“Imposing copyright protection and anti-piracy restrictions, such as the DRM software, on this flourishing economic activity is a costly, silly and eventually useless tentative to block economic progress. To preserve the old rents of a few incompetent people who cannot, or are not willing to, adapt to the new ways of doing business is not the goal of a good property right legislation.

“One brick at a time, the wall is coming down,” Boldrin concludes. “It had to come down. Tower Records is gone, and soon the music industry as a whole will realize that distributing music via CDs or similar devices is also gone for good.

“The movie industry is, apparently, slowly learning the same lesson as Wal-Mart is entering a partnership with all of the six major Hollywood studios to sell digital movies and television shows on its Web site,” Boldrin adds. “The bricks are being removed, one at a time, but the process is made slow and painful by the silly resistance of vested rent-seeking interests.” [ABI Research]

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