Tag This Rerun

If you caught my exchange with Cory Doctorow recently (reLink) you’ll recall the disconnect I pointed out regarding the Creative Commons license he and his publisher, Tor, apparently use on his books. In summary, Creative Commons is a rights management system that depends heavily on what I call Inherent Rights Management (the inability to replicate a physical object) and on the threat of legal action should I attempt to use the content in a commerical endeavor. It’s a two-pronged approach that’s probably effective for book publishers right now.

In some ways this isn’t all that different from Digital Rights Management. Plain and simple, they’re both about control. However, because digital products aren’t inherently difficult to replicate, it opens the door to abuse. In order to prevent that abuse, content providers are effectively attempting to emulate some aspects of tangible products and thus control the content to which they have the legal rights.

In other words, they have mostly the same legal options available to them, but they don’t have the one thing in common that’s turned everything on it’s head from day one: the ability for anyone to make perfect replicas of a product at home.

The argument of course is that replicating a digital good costs nothing and therefore the company doesn’t lose anything. Rather than try to explain how simplistic that is, let me use an example. Let’s imagine that a filmmaker has an idea for a movie. To make this movie it will require a small army of highly-skilled individuals, equipment, hardware, software, talent, etc etc. Let’s imagine the cost estimate for creating this movie is $100,000,000.

From where does that money come?

The answer of course is that it’s investors who front the money. And of course investors don’t lend money without expecting a return on their investment. If you had that money you might have to choose between the $100M film or a blue chip stock on the NYSE. The blue chip by it’s very nature is a trustworthy investment; the film is a potential crapshoot. The greater the risk, the greater the potential reward. An investor weights this risk-to-reward scale and basically guesses; this is no different than anything else. So while that movie might cost $100M, it has to bring in more to pay for itself and reward the investor for taking the risk.

Let’s now imagine that after 2 years of work, the film comes out and doesn’t do badly, but doesn’t do all that well either. For the sake of argument, let’s say the film makes $80M (a good haul for most movies; they are all, after all, light projected onto a screen in a darkened room). So this expensive flick didn’t make back enough money to pay for itself and didn’t reward the investors for the risk they took. Let’s say that in order to merely break even (including paying the interest on the money loaned by the investors), the movie has to pull in $110M. So it’s $30,000,000 short.

Now, from where could that money come to pay off the loans and reward the investors? One major source of potential revenue is DVD sales. However, now imagine that someone gains access to the digital copy and uploads it to the net. It’s a digital product at this point. It costs nothing to reproduce so let’s all download it, right? Imagine that everyone believes that the distribution of a digital copy doesn’t hurt the company – and as a consequence no one purchases the DVD.

The result of lost sales should be apparent: the movie fails to meet the financial expectations on which it received funding to be made in the first place. The workers who crafted the film got paid, but the investors LOST money. So the next time some filmmaker comes to these same investors with an idea (e.g. “I have this admittedly crazy idea for making three movies based on Lord of the Rings.”), they decide to go with the safe blue chip corporation cranking out widgets that can’t be pirated by internet thieves.

What does this leave us?


Let’s not tag DRM so quickly. It’s a system. It’s neutral. It’s all of us – corporations and consumers – who will determine through our behavior the form it eventually takes. And there’s no reason to believe that a Digital Rights Management system can’t be something with which we’re all comfortable.

5 thoughts on “Tag This Rerun

  1. I like the example you give, Sven. The issue seems to be with the perception of duplication costs with no understanding of production costs. Perhaps most people don’t understand that the cost of that new widget is determined not only by material and processing costs, but also the design, development, and tooling costs that went into making the widget a reality. Ever wonder why last year’s model is cheaper than the new model? The tooling is paid for, the process is mature and more efficient than it was during the initial production runs. The company can afford to charge less because their development costs have already been covered.

    A quick thought about digital distribution. I have big problems with the way the music business works in general. Artists aren’t usually compensated as well as I think they should be and the businessmen make a killing. Personally, I think this is a challenge that the industry needs to embrace. I’m hoping they come up with the infrastructure to effectively and fairly manage and enforce the rights of digital data. I’m sure you can reLink to a few posts discussing the inevitable digital distribution of product data. When the average consumer can buy a 3D printer and get custom PCB’s made cheap the widget companies will be facing the same challenge the entertainment companies are facing now.

  2. I think I once commented that as America becomes increasingly Service Sector and less Manufacturing, the appreciation for the effort and cost that goes into making a real thing is lost on our society as a whole. That’s unfortunate, because I agree in that people have little understanding about the production costs involved.

    My favorite is still the anti-DRM/music industry journalist who tried to claim in emails with me that vinyl was relatively high cost (accounting for inflation, etc) because… PVC trees are rare and only grow in South America. That’s classic.

    And I agree, the music industry has to adapt. It’s just unfortunate that the artists are caught in the middle.

  3. “And I agree, the music industry has to adapt. It’s just unfortunate that the artists are caught in the middle.”

    This is why we, as designers, need to think ahead. We, as designers, will be caught in the middle when our digital data is “free” the way music and movies are “free” now.

  4. Pingback: Velcro City Tourist Board » Blog Archive » Links for 07-10-2006

Comments are closed.