Last week the music industry was awash with the news of the music label EMI deciding to strike a deal with iTunes to release music without DRM (Digital Rights Management). Apple has been required to use DRM for all songs on iTunes since inception to make the labels happy. The problem with DRM files is that you can only use them on the iPod. DRM files are not like mp3's..they are very restrictive. The other major labels have been slow and quiet in response to the idea of moving their files to a non-DRM format (Apple is planning to use the AAC format for the EMI music files-Apple claims the AAC files will be much higher quality sound than typical mp3 files). I regularly visit an informative site each day called Digital Music News and came across the following article. It definitely makes you think..enjoy:
Resnikoff's Parting Shot: Will Other Majors Follow?
Paul Resnikoff, Editor
If kids robbed your candy store everyday, would you simply throw away the padlock out front? Of course not! You'd get a better security system, you'd outfox the thieves and get your business back! After all, the chocolate store next door only has a small problem with theft, and the ice cream store next to that is raking in millions. Why should your business be any different?
In this case, the candy store is recorded music, the chocolatier is the movie business, and the ice cream store represents the gaming industry. Sound familiar? Of course, the analogy is limited, and the current scenario facing the recording industry is far more complicated. But not to a number of major label executives, and that makes a move away from content protection by Universal, Warner, and Sony BMG anything but guaranteed.
Sure, movies may be next, especially as broadband pipes fatten, file-transfer technologies grow more sophisticated, and storage limitations become negligent. But that cloud is still hovering in the distance, and the gaming industry is drowning in billions! Both have protected architectures and controlled viewing environments, so why should music chart a different course? "The notion that music does not deserve the same protections as software, television, film, video games or other intellectual property simply because there is an unprotected legacy product available in the physical world is completely without logic or merit," said Warner Music chairman Edgar Bronfman, Jr., during an earnings call in early February. "We will not abandon DRM, nor will we disadvantage services that are successfully implementing DRM for both content and consumers."
The current recording industry malaise is largely the result of a technological perfect storm. The CD boom in the 90s generated unheard-of revenue totals, but the seeds of an uncontrollable digital distribution nightmare were being sown. Critics question why labels would knowingly distribute perfect and unprotected digital copies of their product, though most executive boardrooms lacked a digital soothsayer in that era. Jump back to 1995, and few could outline a future so severe. But the combination of the pristine and unprotected disc, coupled with manageable song file sizes, allowed music fans to revolt against heavily-packaged and overpriced CDs with a terror.
Music fans were feeling pain for decades, and applications like Napster and iTunes unleashed a bull charge of cherry-picking and stealing. But almost every other industry has its unique portfolio of pain, though locked-in customers are willing to endure it for a variety of reasons. When is the last time you cursed your mobile phone? Or laughed at how high gas prices were? Or willingly allowed a movie theater to gouge your wallet on tickets, parking, popcorn and an ice-filled soda? In any of these arenas, disruptive changes and new entrants have the power to ease those pain points, but until then, you'll put up with it! But in the case of music, consumers are no longer forced to bear the packaged pain of an overpriced CD.
Steve Jobs has been pushing labels to ditch DRM, but he almost rubbed it in their face during a joint announcement with EMI on Monday. When asked why the iTunes Store would not be shedding DRM on video, Jobs replied that the movie and television industry isn't already distributing a totally unprotected product, and that makes the decision matrix different. "Video is pretty different than music right now, because the video industry does not distribute 90 percent of their content DRM-free, never has," Jobs said, referring to the unprotected CD. "So I think they're in a pretty different situation, and I wouldn't hold the two in parallel at all."
But the recording industry wants to protect their CDs, they just can't figure out how! The wreckage of the Sony BMG rootkit fiasco looms large, and few are willing to roll the dice in such a delicate consumer environment.
Cynics note that Jobs is the single largest Disney shareholder, while others point to a shrewd move by the Apple chief to escape a deepening European regulatory glare. European consumer protection groups are wondering if the Apple FairPlay protection system needs to be licensed, but Jobs wants to take that option off of the table entirely. What better way to accomplish this than by brokering a collection of DRM-free, interoperable tracks?
Viewed that way, are label executives ready to get played once again? Labels often fall like dominoes when it comes to decisions like this, but does EMI have any sway this time around? After all, the label is in a desperate situation, and battling a downward profit spiral. Is that how the other executives want to play, from a desperate corner?
They may have to in order to survive, though maybe it makes more sense to simply watch the EMI DRM-free sales story emerge. After all, what harm is created by waiting and positioning EMI as a guinea pig? If sales balloon, then the decision is easy, and if not, it's back to the drawing board.
The only problem is that the definition of "DRM-free" for EMI involves a higher-priced track, and one that still has lingering compatibility issues. And that makes this guinea pig a bit deformed. Sure, the locks and keys have been thrown away, but iTunes will be selling the "premium" tracks in AAC, an internationally-recognized standard but not a format as universally accepted as the MP3. Other stores will be able to position the tracks in whatever unprotected form they want, including WMA and MP3, but isn't Apple really calling the shots in this game?
And that's what this is, a game. And for the majors, the score is getting hopeless, and the clock is ticking fast. In fact, the fans - music consumers - are quickly leaving the stadium! But despite the grim situation, major executives may take their time before throwing a Hail Mary, DRM-free bomb. Let EMI play that card, especially with the stakes as high as they are.
Let's see how things unfold...
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Released on: 3-26-07