An argument that we’ve made for years is that for all the whining about how the legacy entertainment industry insists it needs DRM, adding DRM takes away value. It limits the content/games/software/etc. that people purchase a license to and therefore limits the value. You don’t need an economics degree to recognize that providing less value decreases how much people are willing to pay (and how many people are willing to pay). Thus, there’s at least some economic force when using DRM that decreases the potential market for DRM’d offerings. Supporters of DRM will likely counter with some version of the argument that this decrease in value/addressable market is okay, because it’s less than the expected decrease in the potential market that happens when “OMG I CAN GET A PIRATED VERSION FOR FREE!?!?!?!??” enters the market. I’m not entirely convinced that’s true

But, one thing that hasn’t really ever been made clear is just how much DRM depresses markets. Until now. Some researchers at the University of Glasgow have just released some preliminary research (found via Cory Doctorow and EFF) specifically looking at the market for DVD players — and how things work when they come with built in DRM and without it. The findings are pretty spectacular. People are much more willing to spend more money to be able to avoid DRM.

New Research Estimates Value of Removing DRM Lock
https://www.eff.org/deeplinks/2017/07/new-research-estimates-value-removing-drm-locks

Main findings

Overall we find that interoperability has a significant positive effect on the price that consumers are willing to pay for DVD players. The average price that they are willing to pay increases by $19 USD for players with any interoperability features present. The average price increases by $30 USD for players with the specific ability to play content in open file formats like Xvid. This feature has the strongest impact on price in our study. The lack of region locks also has a moderately significant effect on price. Backwards compatibility with legacy formats live VCD had no significant impact on price in any of our models

How big is the market for DRM-Free?
http://boingboing.net/2017/07/09/dont-rock-the-boat.html

The paper was written by a team from the University of Glasgow, led by Kristofer Erickson: they scraped Amazon DVD-player pricing data, and compared the sale-prices of players with (grey market) DRM-breaking features with the ones that obeyed all the rules that DVD players are supposed to obey.

They reached a shocking conclusion: DVD players with even minimal circumvention features sell for about 50% more than similarly reviewed DVD players of similar vintage — that means that in a commodity electronics category where the normal profit would be 2% or less, manufacturers that sell a model with just slightly different software (a choice that adds virtually nothing to the manufacturing costs) pocket 25 times the profits.

In one way, this is unsurprising. People want DVD players, but they don’t want DRM.

But laws that protect DRM are indiscriminate, overbroad, and thus an invitation to mischief. Laws like Section 1201 of the US DMCA (or EU implementations of Article 6 of the EUCD, etc) make it a crime to bypass DRM, even when you’re doing so for a legal reason. Ripping your DVDs isn’t illegal. Buying a DVD in one country and watching it on a DVD player from another country isn’t illegal. But breaking DRM is illegal, and since you can’t do these activities without breaking the DRM, these activities become illegal, too.

That means that anyone who makes a product with some software in it can force you to use it only in ways that they prefer, and make it a felony to use it any other way.

This all only hangs together because the US Trade Representative has pressured virtually every country in the world into passing DRM laws that mirror America’s version

How Much Do Consumers Value Interoperability? Evidence from the Price of DVD Players
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2998767