A new working paper published by the University of Toronto shows that removing music DRM led to a 10% increase in music sales.
The study, published by researcher Laurina Zhang, utilized a "natural experiment", by looking at pre and post DRM sales data for the Big Four record labels, as they removed DRM from the catalogs at different times.
A sample of 5,864 albums from 634 artists was looked at, taking into account other factors such as genre, normal variation sales and release dates, and the conclusion was clear.
As Zhang notes in her report, "I find that the removal of DRM increases digital sales by 10%."
Most tellingly, while results for top sellers did not change drastically before and after DRM, it was older and more obscure albums that benefited most from the dropping of DRM.
"Relaxing sharing restrictions does not impact all albums equally; it increases the sales of lower-selling albums (the "long tail") significantly by 30% but does not benefit top-selling albums," Zhang notes.
The explanation for this phenomenon is actually quite simple according to the paper. Less well known works are more reliant on discovery, and that is facilitated by (possibly unauthorized) sharing, made much easier when the file isn't DRM protected. Well known works are already well publicized, and hence benefit less from sharing based discovery, Zhang theorizes.
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