According to researcher Laurina Zhang from the University of Toronto, it is more profitable to sell music online without digital rights management protection. Higher revenue would benefit both the record labels and artists in addition to making it more convenient for legitimate music buyers to manage and consume their digital purchases. Now there is a matter of putting theory into practice, which does not always go as planned.
The researcher used 5,864 albums from 643 artists in her study, comparing sales before and after each of the four major record labels, the EMI, Sony, Universal and Warner decided to remove their DRM. She found a 10% increase in revenue after the protections had been removed which also accounts for other factors like release date, music genre and typical sales variations.
Looking deeper into the study, not all albums were affected the same. Zhang found that older releases selling less than 25,000 copies saw their sales increase by 41% while overall lower-selling music saw an increase of 30%. When we get to top-selling albums however, Removing DRM appears to not have any effect on revenue whatsoever.
When it comes to DRM and its function, it appears that it did exactly the opposite, meaning it did not stop people from illegally acquiring music through piracy and instead lowered legitimate music purchase due to its restriction. Fortunately a lot of labels are now realizing this mistake and are dropping traditional DRM.