Wednesday, May 2, 2007

Those who do not remember the past are doomed to repeat it

Today we have another post by Roy Smith - co-founder of Turtle Beach Systems. Thanks Roy!

The battle of record industry versus their customers is eerily similar to a battle that was fought and lost before many of today’s music lovers were born. The issues were quite similar and the results of that battle shed light on the likely outcome of this one.

Back in the early days of the PC in the early 1980’s, software was a very new concept. There had never been a product that could be replicated at will by the customer. And replicate they did: “Oh, you want a copy of WordStar? Here you go.”

Like RIAA in the '90’s, the software developers got legislation passed to identify and protect their intellectual property rights, but in practice these new laws were almost unenforceable. Most developers of high dollar value applications then moved to an early form of DRM called “copy protection”.

Just like DRM for music today, copy protection used a variety of crafty methods to prevent users from making multiple copies of programs. Some systems required a hardware key that had to be installed in the computer, others used specially prepared diskettes with known errors that disk copy programs could not duplicate.

The hacker community responded rather quickly. (Sound familiar?) Patches soon appeared online to unlock all popular copy protected applications.

Unfortunately, copy protection had two unintended effects on the legal purchasers of software. The first was that many legal users encountered problems with their legal copies because of the copy protection and publishers were forced to spend great amounts of effort to make their product work through the DRM issues.

The second unintended effect was that legal customers developed an adversarial attitude because they were indirectly being accused of being thieves. Even when it worked, the DRM was still an annoyance that didn’t provide value.

In the end, the honest people who were not likely to copy and distribute the software were inconvenienced and angry about it, and the dishonest people who were inclined to copy the software were still able to do so. (Again, sound familiar?)

Eventually the software industry abandoned copy protection in favor of installation keys and online registration ala Microsoft's genuine Windows testing and those 30 digit install codes.

The PC Software industry didn't fall apart when it dropped copy protection. As we all know, it has flourished.

Yes, there is piracy. Every business has theft, fraud, shrinkage, and bad debts. The point is that DRM is one solution of many for these problems. Will the music industry learn anything from the battles lost by the software industry of the '80’s? Time will tell.

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