December 20, 2006
Bill Gates Comments on Digital Rights Management; ABI Reports a Lack of Interest in Movie Downloads

Various members of the C3 team sent me some interesting stories in the news over the past week. Two items in particular are interesting in relation to discussions surrounding digital rights management.

First, as reported by BBC News, Bill Gates on Thursday told an invited group of bloggers and Web developers at the Microsoft headquarters that digital rights management is not effective and has been, according to the story, "too complex for consumers." He said that, while Microsoft uses DRM for the Zune and various other outlets owned by the companies, his short-term advice for people wanting to transfer songs was still to "buy a CD and rip it" because the content would then lack all the angering DRM restrictions. However, the comments do not apply to British listeners as they do to Americans because, as the BBC points out, it is illegal to copy CDs in the country, "although the music industry has made clear it will take no action against people copying their legally bought CDs to their computers or music players."

However, many critics--such as Suw Charman with the Open Rights Group quoted in the BBC story--found Gates' knocking DRM to be a "bit rich," considering how heavily Microsoft uses DRM. She pointed specifically to the way "DRM is stuffed into Windows Vista."

Steve Rubel at Micro Persuasion documented the Thursday meeting, and it's worth looking at all the interesting comments that are not related to the few remarks about DRM.

But our research manager Joshua Green was perceptive to link these comments from Gates to a story Geoffrey Long brought to my attention--a new study which claims that less than 5 percent of people polled--all of whom watch video on the Internet--have rented or bought a digital movie download. The study, from ABI Research, was a Web-based survey of 1,725 U.S. adults, found that 70 percent of the people polled, however, watch video online in one form or another.

Antone Gonsalves with InformationWeek reports on the study's release, which came out last Monday. "Nearly half of the online consumers interviewed by ABI said they would never purchase a movie online for download, because they were happy with the status quo," Gonsalves summarized. The report also points out that, since current modes of purchasing a video usually results in a "vastly superior" product for cheaper than the Internet download, there is no incentive for most people to switch.

The study includes both legal and illegal movies. Not surprisingly, many people are angered at what the survey reveals, not just because it kills some people's predictions that there is already a massive switch in how people are watching movies but rather how it undermines on of the strongest justifications for DRM--illegal pirating of films online. If the survey is correct and people aren't that interested in the product, why does the industry insist on DRM that severely restricts the ways in which films can be viewed by users?

For instance, John Campea on The Movie Blog writes in response, building to a crescendo of a call-for-action, "don't confuse the MPAA with those pesky little things called "facts". They just want to get more laws passed to force you to spend more money on movies and items you've already paid them for. It's a racket, and they need to be stopped."

And Garth Franklin at Dark Horizons writes, "Much like many other 'looming threats' to society over the decades, piracy seems to be over exaggerated by the media and more importantly the overbearing current security restrictions on end users rather than the real criminals (the suppliers of pirated material) are having little to no effect on solving any problems."

But will this report institute a change in practice, both in better pricing and product in legal offerings of digital downloads for movies and with changes in DRM practice, or will the MPAA instead opt to change its justifications for DRM?

Nevertheless, the data has certainly sparked some controversy online.