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Case Title:

Digital Rights Management – Time to Evolve or Phase Out?

Publication Year : 2010

Authors: M Bhattacharya, B Gopal and A Syed

Industry: Internet and e-commerce


Case Code: GBE0086IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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During the 1990s, the music industry struggled to adapt to a digital market place. The industry exclusively relied on an access control technology called digital rights management (DRM) to protect digital contents from illegal distribution. In particular, the music companies made it easy to buy DRM-protected music legally from on-line music stores, but the authentication process behind the scene annoyed the legal buyers in a myriad of ways. The use of DRM introduced several other controversies. The technology did little to prevent digital content piracy, instead it had the undesirable impact of alienating consumers. The product lock-in feature of DRM did not benefit legitimate buyers. The rigidity and the lack of interoperability made consumers confused about the fair use of digital files. Consumers felt retailers were treating them as pirates. Music retailers blamed music companies for making them sell DRM-enabled songs. Music companies passed the buck and accused consumers of music theft. However, although digital music sales increased compared to CD sales, it failed to compensate for the losses incurred from CD sales. Major music companies started dropping DRM and initiated several untested ways of selling their product. Would dropping DRM help the music industry to boost on-line music retailing in the presence of free file sharing services? Would they be able to come up with a new business model that would satisfy customers and provide adequate compensation schemes for artistes, producers and distributors?

Pedagogical Objectives:

  • To DRM as an access control technology.
  • To the impact of DRM on the music industry.
  • To the controversies associated with DRM.
  • To the future of DRM in the media business model.

Keywords :  Digital rights management (DRM), Media business model, Digital download sales, Analogue media, Evolution of digital media, Optical recordings and recordable CDs, The big four - Sony, EMI, AOL-Time Warner and BMG, Peer to peer file sharing services of Napster, Kazaa, Apple's iPod, iTunes, The Recording Industry Association of America (RIAA), Microsoft's Zune marketplace, Subscription, renting, pay-per-download, DRM-free music, Watermarking, MySpace, Amazon's MP3 store

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