Robert Hettinga writes:
All they have to do is auction the first copy off for a lot of money, cash, and let the market take care of the rest. That, by the way, is what people do now, of course, with advances, record contracts, and so on.
Brilliant. Let the market solve the problem. Why bother with the auction part, then? If the market's going to solve the problem for the 2nd guy to hold the copy, why not let it solve the problem for the 1st? The fact is, quoting this mantra is simply a way of avoiding the hard issues. You've got to show *how* the market is going to solve the problem. Why would content creators get "a lot of money, cash"? Obviously, only if your #2 guy knows that he is also going to get a lot of money for it. So you haven't taken a step towards solving the problem; you have simply handed the problem off from #1 to #2. The fact is that the market can't solve this kind of problem. That's right, markets are not perfect. They do fine for ordinary, private goods. But information objects, absent successful DRM restrictions, are effectively public goods. That is, you can't restrict their dissemination. If you try to provide such goods only to a small group of people, you've effectively given them to everyone. This idea of digital content as a public good is developed in detail at http://www.tidbits.com/tb-issues/TidBITS-602.html#lnk5. Markets do not handle public goods well. It is a standard theorem of economics that they underprovide public goods. There is no way to charge for goods that everyone can get for free, and ideas like Kelsey and Schneier's Street Performer protocol don't work because of free riders. The traditional way to provide for public goods is by government. If we don't get DRM, that's probably what we will end up with: government subsidies of the arts. Most musicians and other artists won't be able to make enough money to live on even if their works are relatively popular. The government will have to tax consumers and distribute the proceeds to artists (and the RIAA, etc) in order to protect the content industry. This is the true alternative to DRM. Anyone who respects the power of markets should understand that DRM is the key to allowing markets to function with information goods. If you oppose DRM, you are working to insure that creative content will become a public good. And if you understand econmics, you will see that this is an outcome to be avoided if at all possible.