DRM-Free iTunes – Did We Miss the Memo?


“Today, EMI is taking the next big step forward in the digital music revolution. This is something that will become very popular” said Apple’s CEO, Steve Jobs. He was referring, of course, to the fact that Apple and EMI are going to start selling DRM-free music (no copy protection) through the iTunes Music Store. The tracks are going to be higher quality and cost $1.29 (as opposed to $.99 for their lower-quality DRM-encumbered counterparts).

Wow! A recorded music company is going to start selling a digital music product that an average 11 year-old can create by herself and share with her friends. Is this news? Did EMI miss the part where 95+ percent of music found online is already free and already higher quality than you can buy from Apple? Is there any song you might want that you can’t find as a free download in under 15 seconds? Hey everybody! It’s April 2007 — this ship has sailed!

It’s hard to believe how much industry press coverage (and commentary) this topic is enjoying this week. Many writers and analysts were so focused on this singular issue that they had to add an unrelated story about anti-trust in the EU just to keep it alive. I’m wondering what all the fuss is about?

Depending on whom you ask, you will hear two sooths being said. 1) iPod sales will go up. 2) iPod sales will go down. Mr. Jobs must believe the former or you can be sure Apple would not be involved. Remember, even though they dropped the word “computer” from their name, they are in the hardware business.

You must also remember that iPods already play unprotected .mp3 files. It’s the other hardware in the world that can’t play Apple DRM-encoded files. This concept is called interoperability and it is always a favorite subject of armchair quarterbacks. Many tout it as the ultimate goal; others (like Mr. Jobs) are more interested in their own ecosystems than creating or working with industry standards. Both camps have excellent arguments; so far Apple is wining.

Will EMI’s DRM-free tracks impact iPod sales? Not unless every other major recorded music company follows suit. And then, only in so far as it will add a little competition to Apple’s stranglehold on the personal music player business. There will be some other players introduced and Apple will have to add features and benefits to their products to maintain their lead. I’m not worried. Steve Jobs is the world leader in making me personally buy stuff I don’t need with money I don’t want to spend. If you could look in the box in my closet marked “iPod graveyard,” you would understand.

Your next question has to be, “Will this help or hurt the recorded music sales?” The cheeky answer is the punch-line to the old chicken soup gag, “…it may not help, but it couldn’t hurt.” Can recorded music sales get much worse? The simple answer is, yes they can — and they will. Like I said, this is not news. If you want high quality .mp3 files of a song, search the title online or rip it from a friend’s CD. If you want a real doom and gloom scenario, take the number of households with broadband connections, the fact that computer and hard drive prices are in a freefall and the popularity of social networks and plot them against the highest quintile of music consumers. The resulting business forecast will make you very, very sad.

Is there any reason you should care about this announcement? I don’t think so. It’s going to be really hard to predict if someone has a choice between purchasing the same song with DRM and without DRM why they wouldn’t drop the additional 30 cents and have the convenience of moving it easily from device to device. Will consumers understand the value proposition of DRM-free? Bottom line — it’s nice to have, but I don’t see it impacting the idea that people with more time than money pirate songs and people with more money than time pay for convenience. The price points are just too close to each other. And, for album purchases there is no difference at all.

Kudos to EMI for trying something new. I would love to care about this issue and I would love for EMI’s sales data to prove that this mattered at all. Not for a short-term bump, but as an important change in the value chain of the music business. I don’t have high hopes.

What the industry really needs is legal ways for consumers to use (and pay for) music that is owned by others in their UGC and uploaded videos. We need a fully automated version of the Harry Fox Agency (for mechanical rights), check boxes on iTunes and other online music stores that let us pay for other rights (like sync rights, source licenses for public performance, parody and master rights) that most people don’t even know to ask about. We need education for music consumers about the value chain and we need it simplified. There are dozens of rights associated with each piece of music and there can be dozens of rights holders to negotiate with. Most people can’t articulate these rights, how can we blame them for not paying. There’s no easy way.

DRM free does not mean free to use. It means free of copy protection and usage tracking. The biggest result of this announcement may be that people believe that for another 30 cents they actually own the music. Talk about the law of unintended consequences! Shelly Palmer

About Shelly Palmer

Shelly Palmer is the Professor of Advanced Media in Residence at Syracuse University’s S.I. Newhouse School of Public Communications and CEO of The Palmer Group, a consulting practice that helps Fortune 500 companies with technology, media and marketing. Named LinkedIn’s “Top Voice in Technology,” he covers tech and business for Good Day New York, is a regular commentator on CNN and writes a popular daily business blog. He's a bestselling author, and the creator of the popular, free online course, Generative AI for Execs. Follow @shellypalmer or visit shellypalmer.com.



PreviousMediaBytes - 04/05/07 NextMediaBytes - 04/09/07

Get Briefed Every Day!

Subscribe to my daily newsletter featuring current events and the top stories in technology, media, and marketing.