The DRM Debate
Add to this a move by a number of European countries either investigating DRM policies or scrapping them altogether, and demanding interoperability between devices. Taken as a whole, there appears to be a paradigm shift underway. How are we to interpret this and what will the effects be on the consumer electronics industry if such a shift were to occur?
At first glance it would seem that not much would change. Although DRM-restricted content is sold online by the majors, a majority of those companies already sell the same content in a non-restricted form on CDs. Some music companies, such as EMI, are beginning to experiment with free online streaming of content. Independent labels who do not restrict their sold content are also pushing for those restriction-free requirements on downloadable services. The only group that seems opposed to any reinterpretation of DRM licensing is the RIAA, which is neither a producer nor distributor of content.
Given the market segmentation of CE hardware and, with the exception of Apple, no one dominant piece of hardware, would the easing of DRM restrictions contribute to growth in this segment? The answer seems to be yes, but not in areas that are immediately obvious. Products such as flash memory, hard disk drives and optical media storage could be immediate winners, while portable devices, such as players and next generation mobile phones, can expect longer-term growth patterns. Ironically, while users might seem to be “incentivized” to save their collection of movies and music under current DRM schemes, it remains unclear and unlikely that those collections significantly contributed to the growth of the storage market. It can be argued that the growth in user-generated content really drove the mobile player and hard disk storage growth.