Will Abandoning DRM have a Boomerang Effect on Apple? - An Empirical Analysis of Lock-In and Network Effects

Is Digital Rights Management in online music platforms already doomed to die out? Having decided to gradually abandon the copy protection of online music sold on iTunes, Apple strives to return more degrees of freedom to customers. But what seems to be promising at first sight, may entail major drawbacks for Apple´s predominant tandem between iTunes and iPod. What will be the response of existing and potentially new customers, once the DRM link between these two Components will be abolished? Drawing on lock-in and network effect theory, the paper at hand analyzes the implications of removing DRM on customer adoption behavior. Based on an empirical survey of 432 iTunes users and non-users, several hypotheses on potential response behaviors were tested. One crucial finding of this study is that Apple may have to make up for a potential negative boomerang effect when existing clients migrate to alternative sources and providers of online music.