Image Courtesy of flickr/Karen Rustad

Apple and the recording industry made the right move in announcing recently that they will suspend digital rights management (DRM) and change pricing for iTunes downloads, say Fuqua Marketing Professors Preyas Desai and Debu Purohit, who recently completed an analysis of DRM and the digital music marketplace with Fuqua PhD student Dinah Vernik.

While the music industry previously stood by DRM in order to protect profits, Desai, Purohit and Vernik predict that online music retailers and consumers will both benefit from the elimination of DRM. Their rationale is straightforward: the music industry had ignored consumer resentment of restrictions  imposed by DRM protection, as well as consumer preference for purchasing DRM-free music.

The disappearance of DRM provides consumers with a product they prefer, as they can now download higher quality music than was available under DRM, and can use that music in a variety of formats.The researchers predict that these improvements will cause consumers to purchase more music online and reduce illegal downloading and copying.

The losers in this environment will be traditional CD retailers, whose customers will be attracted to the increased quality and ease of use of DRM-free music.   The Duke team predicts that traditional retailers will be forced to lower  prices in order to be competitive as more consumers shift to digital DRM-free downloads.

Allowing joint bidding (where consumers can bid on a number of products together as a package) helps reduce potential mismatch between an e-tailer’s costs and the consumer’s bids on name-your-own-price websites like Priceline, according to new research by Duke Professor Wilfred Amaldoss and Sanjay Jain of the Mays Business School, Texas A&M University.

Their study, featured in the current issue of Management Science, examines joint bidding on sites such as Priceline where, for example, a consumer might bid on all elements of a vacation (airplane travel, rental car, and hotel) as a package. Amaldoss and Jain studied whether it would be better for consumers if they could place joint bids for all these separate items at a name-your-own-price (NYOP) retailer like Priceline, and if it would be profitable for the e-tailer to allow such joint bids.

The authors considered two possible outcomes: consumers seeking savings could drive down prices when bidding on packages, giving them a bargain but costing the retailer. Alternately, consumers might hope that by bidding on a package, they could obtain all the items in the package and offer more.

Amaldoss and Jain conclude that in many cases, joint bidding benefits both consumer and retailer, even though consumers may indeed bid more for the very same products when asked to place a joint bid rather than a separate bid for each product.

Here’s a nice summary of new work by Duke PhD alumna Rosie Ferraro, and Fuqua marketing faculty members Jim Bettman and Tanya Chartrand, courtesy of the Journal of Consumer Research:

Products with visible brand names are everywhere; many times we don’t even notice them. But how much do those unnoticed exposures affect brand choices? Quite a bit, according to a new study in the Journal of Consumer Research.

Authors Rosellina Ferraro (University of Maryland), James R. Bettman, and Tanya L. Chartrand (both Duke University) conducted a series of experiments using Dasani water and found that study participants who viewed pictures of ordinary people near bottles of Dasani were more likely to choose that brand over three other brands—even if they were unaware they had seen the logo.

“For example, on any given morning, one might pass several people with Starbucks coffee in hand. Will this repeated exposure affect an observer’s decision to select Starbucks coffee if given a choice among coffee brands? We show that the answer is yes, and that repeated exposure to a brand will lead to an increased likelihood of selecting that brand,” write the authors.

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BNET has posted a nice story about Gavan Fitzsimons’ research showing that cause-related marketing can help increase brand sales.