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RE: [dvd-discuss] .002 Online again -- DRM Business Case for Si

Your "Prisoner's Dilemma" works both ways.

One way: if we don't come out w/ a DRM-enabled hardware,
someone else will and they will get all the goodies.

The other: if we only come out w/ DRM-enabled hardware,
someone else will come out w/ DRM-free hardware and they
will get all the customers who don't want to put up 
with that cr@p.

Truely the best case for businesses would be to come
out w/ both DRM-enabled _and_ DRM-free hardware.

-Richard M. Hartman

186,000 mi/sec: not just a good idea, it's the LAW!

> -----Original Message-----
> From: John Zulauf [mailto:johnzu@ia.nsc.com]
> Sent: Monday, September 30, 2002 8:34 AM
> To: dvd-discuss@eon.law.harvard.edu
> Subject: [dvd-discuss] .002 Online again -- DRM Business Case for Si
> Greetings all,
> I managed to get "copyright issues" on my annual goals list, 
> and thus am
> able spend work time on this list.
> I have a personal goal of exploring this question:
> "What is the business case for (or against) DRM collaboration?"
> Believe it or not most corporations have no great passion for the
> fair-use and free-speech issues.  Their POV (arguably 
> understandable) is
> the best return for the investors.  My goal is to show that 
> even if the
> short term tactics are those of collaboration (building products with
> DRM support or technologies) long term it is in the interest of the
> stockholder of technology companies to oppose the DMCA, CTEA, et. al.
> My initial case *against* DRM was the following (from the POV of a
> semiconductor company)
> A. DRM reduces functionality of a technology product (hereafter
> "Product")
> B. Reduced functionality reduces the value of "Product" to 
> the customer
> C. Reduced value reduces supply-demand curve intersection point (i.e.
> lowers the average selling price (ASP) of "Product"
> D. Reduced ASP of "Product" places pricing pressure on the components
> ("Si" -- i.e. silicon) -- reducing ASP of "Si"
> E. Reduced functionality of "Product" is artificial, thus "Si" is no
> less (and probably more) complex
> F. Lower "Si" ASP with equivalent complexity implies lower margins and
> ROI for "Si" QED.
> This argument has several clear weakness
> Attacking "B" -- if DRM entices media companies to release otherwise
> unreleased material (for example movies still in theater, or prior to
> DVD release) -- then the device acts as an access enabler, 
> with *added*
> value to the customer.  This is true whether the the product is funded
> by the end-customer (who sees value in enhancing their couch potato
> abilities) or by the service provider (who see value enhancing their
> average revenue per user (ARPU, or sometimes just RPU -- read "are
> pooh")
> Attacking "F" if the "B" attack is true then a DRM enabled "Si" device
> may in fact have higher margins and volumes than one without.
> Finally the "Si" vendors may be in a "prisoner's dilemma" -- "if we
> don't collaborate, someone else will".   Though this is typically
> couched in a more "customer focused" way.
> From my POV "Si" vendors are really in this position *because* of
> current laws and policy -- and focusing on the immediate 
> customer blinds
> one to the longer term threat of stagnation (technology progress gated
> by the most paranoid) and longer term opportunities (new 
> killer apps --
> e.g. video rip-mix-burn or ...)
> Anyway this is a first statement of the problem to this 
> forum.  Overtime
> I'll have other more target questions.