The End of DRM (Digital Rights Management)?

According to a December 7, 2006 story published by Ecommercetimes.com, "A number of major music labels are releasing tracks that can be played on any digital music player capable of playing MP3s. The latest such offerings come from singer Norah Jones and rock band Relient K, both signed to labels operated by Britain's EMI Music. Jones' 'Thinking About You' and Relient K's 'Must Have Done Something Right' went on sale for 99 US cents each as MP3 downloads Tuesday."

Do you have a "non-iPod" digital music player? Ever been frustrated by the fact that the songs you buy and download from iTunes won't play on them? That's DRM at work. (Apple's proprietary brand of DRM software is called FairPlay.)

FairPlay software limits the use of a digital file in a number of important ways, including (but not limited to), what devices it will play on.

Song-files that are encrypted with DRM are not universally "playable" on the entire wide range of Mp3 players flooding the market.

DRM is a very controversial subject because at the core of the issue is "protecting the copyright owner(s)" -- the songwriters, the publishers and the mechanical (actual recording) rights holders, generally the music label that released the product -- from unauthorized distribution.

But now, apparently, even the major labels are at least beginning to take a look at the validity of NOT encrypting songs.

The Ecommerce.com story continues, "After years of selling online music digitally wrapped with copy and playback restrictions designed to hinder piracy, major music labels are beginning to make some songs available in the unrestricted MP3 file format.

"The releases are part of an experiment to gauge demand for tracks that can be played on any digital music player capable of playing MP3s, one of the oldest music compression formats..."

There is a terrific article on this subject by Nate Anderson at arstechnica.com, Making money selling music without DRM: the rise of eMusic. (eMusic is the leader in selling non-DRM encrypted music downloads.)

Says Anderson, "The Holy Grail of online music sales is the ability to offer iPod-compatible tracks. Like the quest for the mythical cup itself, the search for iPod compatibility has been largely fruitless for Apple's competitors, whose DRM schemes are incompatible with the iconic music player. For a music store that wants to succeed, reaching the iPod audience is all but a necessity in the the US market, where Apple products account for 78 percent of the total players sold. Perhaps that's why eMusic CEO David Pakman sounds downright gleeful when he points out that 'there's only two companies in the world that can sell to them—Apple and eMusic.'"

The formula seems to be working, for eMusic at least. eMusic is now the #2 retailer of downloadable music behind the iTunes Music Store.

eMusic admits that they still dominate only a niche market and that they likely will remain dwarfed by the "majors." However, their passion and place in the business seems to be in satisfying the tastes and demands of the "older" generation of music lovers.

"There's a customer in the music industry who has been ignored for the last seven or eight years, and that's the 25 and older crowd," says [CEO David] Pakman. "That customer is not targeted by the major labels at all, with very few exceptions, like the Norah Jones record, the Ray Charles record. Everything else is pop and rap for the 14 and 16 year old crowd. Our belief is that the 25 to 54-year-old market is severely underserved by the music industry. They have high amounts of disposable income, low amounts of time, and there's very little competition to reach them. As a result, they tend to be frustrated former music fans that are just dying to be talked to. That's our customer."

Are you that customer? Here at Events-in-Music.com, for better or worse, WE ARE THAT CUSTOMER.

From MusicRow.com February 9, 2007

Earlier this week, Apple CEO Steve Jobs posted an editorial on his company's Web Site advocating the demise of Digital Rights Management. Jobs points out that 90% of the world’s music is currently sold on CD which has no DRM and asks why make such a fuss about the remaining 10% in the digital domain? He also notes that DRM acts as a barrier to consumers, because songs with DRM are not platform independent, they do not play on all digital music players. Jobs said, "Abolishing DRM is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store."

Warner Music Group Chairman Edgar Bronfman Jr. responded, criticizing Job's argument during his recent conference call with financial analysts to discuss Warner's disappointing first quarter results [reported by the New York Post]. "We advocate the continued use of [digital rights management] in the protection of our artists' intellectual property," said Bronfman. "The notion that music does not deserve the same protections as software, television, films, video games, or other intellectual property, simply because there is an unprotected legacy product available in the physical world [i.e., the CD] is completely without logic or merit."

RIAA head Mitch Bainwol also responded, "One way to achieve it was outlined by Steve Jobs in his post—for Apple to license its DRM to other technology companies," he said. "We think that's a great solution." Jobs has refused to license Apple's Fairplay DRM technology to other companies because, "licensing a DRM involves disclosing some of its secrets to many people in many companies, and history tells us that inevitably these secrets will leak. The Internet has made such leaks far more damaging, since a single leak can be spread worldwide in less than a minute."

In news that may ultimately force Bronfman to consider a new strategy, EMI Group this week has asked the major digital online retailers (i.e. Apple, Microsoft, Yahoo, Real Networks) to submit proposals offering advance payments they might offer in exchange for the right to sell EMI music in an unprotected format (MP3).