ANALYSIS | Digital locks don't always work as intended

I don't want anyone to steal my bicycle. So I put a lock on it. I don't want anyone to break into my apartment. So I put a lock on that, too.

But does the same logic apply to digital music, books, and movies?

Digital locks have been with us for years, under many names -- sometimes called "copy protection" or "technological protection measures" or "Digital Rights Management." But whatever you call them, the goal is the same: to restrict access, often to combat piracy.

Under the federal government's proposed copyright reform bill, C-11, it will become illegal to break any digital lock, for any reason. And even though the bill includes many exciting new categories for fair dealing (education, parody, and satire), the digital lock provisions trump any of those new uses.

But why? Why make any lock-breaking illegal, even if it's for perfectly legitimate, non-infringing purposes? On a recent episode of TVO's Search Engine, Heritage Minister James Moore explained the rationale: "It's about people who invest into the creation of software and games and movies. It's about people who invest into their products to be able to protect themselves [from those] who would hack and steal from them. Why shouldn't we allow people to protect themselves?"

So then, if the role of digital locks in Canada is to protect the livelihoods of content creators, then it's worth considering some new research out of Rice and Duke universities. A new paper called, Music Downloads and the Flip Side of Digital Rights Management, suggests that when it comes to piracy, digital locks don't always work as intended: "Our analysis suggests that, counterintuitively, download piracy might decrease when the firm allows legal DRM-free downloads." The paper, which will appear in the November-December issue of Marketing Science, goes on to say, "Furthermore, we find that a decrease in piracy does not guarantee an increase in firm profits and that copyright owners do not always benefit from making it harder to copy music illegally."

That's right: according to a peer-reviewed academic paper, creators can reduce piracy by removing digital locks instead of adding them.

I spoke with two of the paper's co-authors, Dinah Vernik and Debu Purohit earlier this week. Purohit explained that music DRM is often seen as hassle, but that the only ones who have to deal with the hassle are paying customers.

"There will be some group of consumers out there who will just go out and steal, no matter what," he explained. "But then there's another group that falls in the middle. The argument is that if we get rid of the DRM, we'll end up lowering prices and this middle group of consumers will actually switch over to buy legal music."

So then, if the goal is to convert potential customers into paying customers, maybe the best strategy isn't to add a layer of hassle through DRM.

Vernik and Purohit arrived at their conclusions through a technique called analytical modeling,  a sort of simulation based on knowledge of how real-world markets operate. "We have data from the industry," Purohit explained, "And then we did an extensive consumer survey as well, in terms of what people were and weren't willing to accept in terms of DRM. And then we modeled this in a simulation, but it's all done mathematically through equations to try and see what would happen."

Though their research was focused specifically on digital music, I asked Vernik and Purohit if the same model could be applied to other mediums: books, movies, or video games. "Absolutely," Vernik replied. "It's pretty much any information good, so any product that's about information will work along these lines."

The Canadian government says its new copyright bill strikes a balance between the rights of consumers and creators. Still, this balance makes breaking any digital lock — even for non-infringing purposes — illegal. Before these digital lock provisions become part of Canadian copyright law, I think it's well worth asking if these locks actually produce their intended effect.