Digital Rights Management: White Knight or Trojan Horse?

Due to its ability to solve all main problems associated with digital goods, Digital Right Management is the favourite option used by companies to tackle piracy. The aim of this article is to discuss the consequences of DRM for consumers, firms and society. The rationales of DRM are discussed and the expected benefits for firms are presented. It is shown that the advantages brought by DRM to firms go beyond what would be needed for an efficient provision of digital goods. In contrast, consumers are likely to see few benefits in DRM. This article demonstrates that even a standard DRM system is unlikely to improve social welfare. The article concludes with some public policy and corporate strategy recommendations.