Digital Piracy Management

A new approach to preventing digital piracy of music and video content that sidesteps the need for the privacy compromise associated with DRM (digital rights management) is reported in the International Journal of Intellectual Property Management.

Thierry Rayna of the Internet Centre at Imperial College London and Ludmila Striukova Department of Management Science and Innovation, University College London, point out that privacy issues have come to the fore as e-commerce has matured. One area of particular concern to those involved in civil rights and data protection is the use of so-called Digital Rights Management (DRM). DRM provides a way of protecting the copyright holders’ intellectual property in music files and video but is a serious issue for the music and movie industries as unless a widespread adoption is achieved, a significant proportion of illegal file sharing of digital media is still likely to occur.

In order to fight piracy, some form of DRM technology is needed, but consumers are not as willing to adopt the current DRM systems because of privacy concerns and a lack of flexibility when sharing of files among their personal media players and computers.

The main advantage of DRM, they explain, is to prevent piracy, thereby maintaining a high demand for legitimate products and enabling firms to recover initial sunk costs. DRM also has crucial additional benefits in that it allows the copyright holder to retrieve information about the individual using the file as part of the activation of the music or video file they wish to use. “This revealed information can indeed be very valuable for firms, since it enables them to use price discrimination and increase their profits,” the researchers explain, “This is precisely this collection of information that is criticized by the proponents of piracy.”

The researchers have now outlined two approaches to solving the dilemma of how to fight piracy and yet not compromise consumer privacy. Their first solution consists of offering the consumer a reward in exchange for personal information. “Such information enables firms to discover the true value of a product for a consumer and to charge more for what is really liked,” Rayna told me. The solution proposed by the researchers is such that consumers never pay more than the regular price of a song, movie, program, so they are protected from the negative effects of price discrimination. In addition, consumers are charged for each product at a price that corresponds to its value. They are, thus, given access to a large quantity of products they would not otherwise purchase (since their value is lower than the regular market price), but most likely pirate.

Rewarding consumers for disclosing personal information has proven effective on the internet, for instance the “free” storage space amounting to several gigabytes that are made available to users of the Google Web Mail system in exchange for permission for Google to index their emails. Millions of users worldwide are quite happy to forfeit some degree of privacy in return for this “free” email facility and large amount of storage space, as well as the being able to search their email archives quickly. However, until now, this model relied solely on advertising, which is often considered obnoxious.

This rewarded price discrimination will work best with digital products that are consumed repeatedly, such as music, software, games, and video, but will not work so effectively for movies or books. The team has thus devised a second solution that introduces a different type of DRM system that aims to make digital goods rival, thereby leading to anonymous DRM.

This second approach would involve simply tagging the digital product with a unique code that would retrieve no personal data, but would prevent the same download from being played on more than one device at a time. This would preclude piracy without compromising privacy and would allow consumers to regain rights they used to have, such as using media content they purchased as they like or lending albums and movies to friends.

The researchers suggest that whatever solution is used to address the privacy concerns of consumers and to attack the piracy concerns of producers, a serious change of strategies is needed if DRM is to be used to its full potential.

Thierry Rayna, Ludmila Striukova (2008). Privacy or piracy, why choose? Two solutions to the issues of digital rights management and the protection of personal information Int. J. Intellectual Property Management, 2 (3), 240-252