DRM Destroys Value: Why Years Old, But DRM Free, Devices Sell For Twice The Price Of New Devices

from the DRM-protects-who,-exactly? dept

Nothing takes value out of a product faster than DRM. Digital rights management has expanded into places where no "digital rights" should exist. What once was something clumsily inserted to "protect content creators" has now become a catch-all term for anything a manufacturer does to ensure that the end user never truly owns the product they purchased.

A small scanner in a coffee maker ensures you'll never use a competitor's coffee, even though purchasers thought they were purchasing a device rather than being sucked into the undercurrent of a revenue stream. The application of inkjet-esque DRM to a souped-up cat litter box means a $200 purchase will be outperformed by its $5 equivalent should you happen to run out of proprietary cleaning solution.

DRM takes purchases out of purchasers' hands. It nullifies the right of first sale by allowing the company -- not the end user -- to determine how the product will be used.

Public Knowledge's John Bergmayer points out that not only does this screw the customer, but it devalues the product itself.

Back in 2010, I paid $99 for an Apple TV--technically, the Apple TV (2nd generation). Recently, it stopped receiving software updates, so I decided to put it on eBay. I was surprised that I was able to sell a piece of four-year old electronics for $161--it's not often you make a profit on old devices.

A 2nd-gen Apple TV isn't a collectors item. It's just worth more to people who want something more from their Apple TV than Apple is willing to give them.

The reason for this is simple--tinkerers have figured out how to jailbreak the 2nd generation Apple TV, but not the 3rd gen one, which is the one Apple currently sells (also for $99).

Despite its name, there's nothing criminal about jailbreaking a device, although plenty of device manufacturers would argue otherwise. Jailbreaking returns control of the purchased device to the purchaser, and certain companies expend far too much capital and effort ensuring they can regain control with the next iteration. These same companies are either unable or unwilling to understand that products a purchaser can control are worth more than those boxed in by DRM.

A device that a user can modify, add capabilities to, and freely install software on is more valuable than one where she can't. And people are willing to pay for that capability. Pre-jailbroken Apple TVs are selling for around $230 on eBay right now.

Brand new: $99. Last generation -- jail broken and untethered: more than twice that.

Certainly, most of the buying public is happy with dumbed-down devices forever enslaved to their makers. Diehard hobbyists, hackers and fans are a market to be courted, but very few companies do so, no matter how "forward-looking" they claim to be when touting their latest products.

Amazon's Fire TV, a direct competitor to Apple's offering, suffers from the same problem, but the company is even more aggressive in its thwarting of jailbreaking. Not only did a firmware update brick rooted devices, it also prevented rollback to earlier firmware versions. What value does that add to the product? What benefit does a purchaser derive from a move clearly meant to lock them into Amazon's ecosystem -- one in which the "purchased" product makes every effort it can to sell them even more stuff?

The market is there for goods you can actually OWN. Products are meant to be controlled by the people who purchased them. The insertion of DRM reverses this long-standing relationship, allowing companies to control purchasers -- and expecting them to pay (sometimes repeatedly) for the "privilege.".

Filed Under: apple tv, drm, jailbreaking, resale value, secondary market, value
Companies: apple