Strategies for a discontinuous future.

Wednesday, June 22, 2005

I'd Have to Disagree With Gartenberg Disagreeing With Cory's Position on DRM

All due respect, in this case Gartenberg's argument is (really) flawed. He says Sony's DRM was 'mainstream' and points to iTunes sales as evidence that consumers 'will accept DRM'.

The flaw in this argument is straightforward: if we're thinking strategically, we have to consider the opportunity costs of our various strategies. It's not that Sony went bankrupt because of DRM (clearly, it didn't), it's that Sony missed the opportunity to, well, build the iPod - the Walkman of the 21st century - because it's content acqs forced it to incorporate silly DRM. Does this sound familiar? It should because...

It's not that iTunes is getting killed because of DRM - it's that Apple is foregoing huge opportunities in reshaping the digital media value chain because of it. To give you just one simple example, DRM restricts Apple from ever turning iTunes into what I've called a reconstructor - a tech that remixes snippets of micromedia based on your preferences. Folks like last.fm are going to dominate this space. Alternatively, you can value the opportunity cost by thinking about about the counterfactual: how successful an iPod that only played AAC tracks would be (hint: not very).

In fact, I think if you really wanna to analyze DRM in an Apple context, he'd look at the number of AAC tracks vs the number of MP3 tracks per iPod. My bet is that the ratio's (way) below one.

But all this is kind of besides the real point. The open vs closed debate is, I think, about the media industry shifting from goods to services. So simply concluding that 'consumers will accept DRM' kind of misses this fundamental point, which should probably be at the heart of any digital media analysis going on these days - because it suggests how much to open your goods.

And it also implies the big-picture fundamental tension in Media 2.0 strategy: that if you can't transition to services, you have to protect your goods with DRM. But if you have to do that, then you're in a competence trap.

That's because protecting your goods builds competences that are going to be totally irrelevant in a liquid Media 2.0 world, where there's an exploding supply of reconstructors, smart aggregators, and tweaked, remixed, split, cut micromedia and personal media accessible almost anywhere/anytime.

In such a world, plasticity - being able to do lots of cool things with media goods - drives value (and protection kills it).

Now, I'm not arguing this because I'm a rabid Doctorow fanboy. In fact, I wanted to post this morning about how I find Free Culture increasingly irrelevant, because it should be about finding ways around, for example, the UAE's block on Flickr - it shouldn't just be about people lucky enough to live in the developed world being able to freely remix Britney Spears.

But then my net connection went down like all day... :)

-- umair // 11:55 PM //


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// Anonymous // 7:35 PM
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