DRM and Individualized Pricing

Michael Lesk, from Rutgers University, attempted to answer why online music stores sell to each customer at the same price. Interestingly, every song is sold at the same price, regardless of its performer. The price of the corresponding CD varies depending on the artist’s fame. Online stores have good profiling of Alice. Thus, they could easily propose a personalized price slightly lower than the price she would be ready to pay. According to Lesk, it is not a privacy issue but a feeling of resentment that frightens the sellers.

One alternative that make price differentiation acceptable is versioning. People accept that a hard-bounded book is more expensive then a paper back. People may accept to pay more for a content they will be able to view several times, than for a content that they will view only once. This is the role of DRM. DRM may allow to decrease the average price by offering different versions. Unfortunately, today DRM is not used for that, probably because it is simpler and safer for merchants to offer one unique price.

Reference of the paper
LESK Michael, Digital Rights Management and Individualized Pricing, in IEEE Security & Privacy, May/June 2008

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