Duke Research Advantage

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.