Removing DRM increases sales

A study by the University of Toronto has found that removing digital rights management from album boosts revenue rather than losing it to pirates.

The study showed that music revenue increased 10 percent on general content and 30 percent on other content.

What this shows is that buyers do not like it when you place restrictions on content and will buy something else instead.

DRM has been a complete disaster. Pirates found it easy to circumvent, but it had a nasty habit of bricking machines that it could not cope with. People buying pirated versions were sometimes getting better quality because they lacked the DRM which made paying customers’ life a misery and actually discouraged them to buy it.

The working paper published by University of Toronto researcher Laurina Zhang was based on a survey of 5,864 albums from 634 artists and compared the sales figures before and after the labels decided to drop DRM.

The effect works if Big Content tries to bring in DRM-like controls using things like album release dates, music genre and regular sales variations over time.

Older albums selling less than 25,000 copies saw their sales increase by 41 percent and overall lower-selling albums got a 30 percent sales boost. DRM only seems to work for top selling work.

According to Zhang, the 30 percent sales increase for lower-selling albums can be explained by the fact that DRM-free music makes it easier for people to share files and discover new music. The finding that removing DRM from top-selling albums has no effect on sales makes sense, since the discovery element is less important for well-promoted musicians.