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Music Execs Think DRM Slows the Marketplace
MacGod writes "From BBC News comes a story about a Jupiter Research survey conducted before Steve Jobs's anti-DRM essay, indicating that most music industry execs see DRM-free music as a way to expand sales on digital tracks. The survey covered large and small record labels, rights bodies, digital stores, and technology providers. To summarize: 54% of music execs think that current DRM is too restrictive and 62% think selling unencumbered music would be a way to boost sales. Even limiting the survey to the record labels themselves, 48% believe this. Yet, many also believe it's not going to happen without significant governmental intervention — even though most insiders think DRM is harmful, the labels are keen to stick with it. Is this yet another sign of the typical media industry 'head in the sand, refuse to change' approach, or might we be seeing the early stages or some actual change?"
Other than 'its chilly down here' comments, I have to say I think this is record companies trying to pose like they actually care about the consumer, while still loving the RIAA henchmen they employ. I don't buy it for a second.
If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.-TJ
http://slashdot.org/comments.pl?sid=222358&cid=180 11682
"I know many media execs, both music and film/video, here in Los Angeles and have had many discussions with them about DRM.
Every single one of them hates DRM, thinks it is a pain in the ass to deal with, would love to sell all of their content without DRM.
But they all live in the real world."
Why did the music industry think consumers would accept DRM?
The obvious and total failure of DRM'ed e-books should have warned them: Take a medium that consumers view as a tangible product, that they can buy and sell in an aftermarket, and try to turn it into a limited, licensed, revocable, non-transferable right-to-use at a not particularly attractive price - and it should succeed?
What are they snorting? Oh. Right. Never mind.
I wrote parts of this stuff
So record company execs are saying:
1) DRM is bad
2) It hurts the market
3) Doggone it, let's get rid of it!
But then they say....
4) But we're not going to get rid of it
5) We're hoping the government will force us to get rid of it?
I may not be as bright as some of you guys around here, but this doesn't make any sense.
They really seem to be saying:
1) DRM *THE WAY WE'VE DONE IT* is bad.
2) No way will we get rid of it, we'd rather have bad DRM than none. We need to be able to resell Elvis tracks every 5 years to the same consumer.
3) What we're hoping for is the government mandates a technical solution, since Apple has really screwed us up, and we don't seem to be able to work together to come up with a viable solution on our own.
Seriously, if you're the government, isn't it reasonable to say "Gee, selling music to consumers is not a core function of government. You guys figure it out. We've already given you eternal copyrights and the FBI to enforce it, what else do you need?". But I guess that won't happen.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
Personally, I'm all for DRM. If we have a effective and uncrackable DRM system, more people wouldn't bother listening to the garbage hollywood and the music industry force on us (Brittany Spears, etc.) because they have to pay for it. Smaller artists who give their music away and make money by dealing directly with local radio stations concert venus would thrive.
if DRM is removed and piracy jumps, the cause-effect logic will be very hard to refute. It probably CAN be refuted (all that has to happen is to have a file successfully ripped once and it's all over the internet) but an observed jump post-DRM removal would undoubtedly end some careers. Nobody wants to take that chance.
The music industry seems to be doing quite well (which is not to say the artists are getting all they really should, but that's another post) since they have money to spend playing around with copyright law. There is no "we need to try DRM-free music before our profits dry up!" imperative which might drive people to take risks and the company to accept risks, so DRM (which is easy to make sound good, whether it is or not) won't go anywhere until the case for it hurting sales AS A CONCEPT (not just a bad implementation) becomes obvious enough to convince anyone.
The only way I can see that happening is an "open source music" phenomena that replaces corporate music trends, star generators, and hits with something just as good (or "effective" if you don't think it's good) but community controlled. That's hard, because opinions are subjective and can apparently be influenced by ads. We need a central site, lots of sources of music people want to listen to (not what they SHOULD want to listen to, mind you, but what they DO want to listen to - no running people down for their (lack of) taste), and quality control that people can trust. When THAT emerges, DRM will become too much of a liability. I don't see anything else that can do it.
"I object to doing things that computers can do." -- Olin Shivers, lispers.org
They are 100% correct that it slows down the marketplace, actually it comes to a grinding halt since I'm not buying anything which is DRM'ed.
I'm not sure if they are mistaken or not.
A few people revel in ripping things off. The music industry (MI) will lose some money on them.
A lot of people have absolutely no morals and will do what costs them the least. MI will lose some money on them.
A lot of people are as moral as they can afford to be. MI will lose some money on them if people feel swapping non-drm'd titles is okay.
The folks folks who are very moral, it won't really matter unless the basic morality of the action is redefined by the culture (which I see a strong incentive to occur).
It might turn out to be the last big blast of sales income before music sales dry up.
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
Surveys are one of the least reliable ways to get statistics. Why? Even with anonymity, people try to cast themselves in a good light on surveys. If music executives don't like DRM, then where is DRM coming from?
Always someone has power over you. The thing to consider is this: Is the power good, or bad?
I think it would be benificial for the government to prevent DRM. They wouldn't waste all that FBI money on enforcing it, they would waste all that money in the legal system fighting over it's infringement, and consumers get a product that isn't artificially limited in it's use. And depending on who you believe record sales will actually increase as consumers get a product they're more happy with/are able to let more people experience more music causing them to buy more music.
It's win-win-win... except for the companies that exist only to develop ridiculous DRM schemes... but they were already losers anyway.
Collector's Edition
This just occurred to me (call me slow), who came up with the abbreviation DRM? Somehow I doubt it was some random blogger. To state the obvious: the goal of the whole bloody concept has become to blur it. Read the words spelled out "Digital Rights Management". Whose rights? Who is managing? The only thing that is clear about it is the word "digital" but I count on the creativity of /.:ers to blur that part as well. As far as the regular Joe is concerned this could be something positive for him -- before doing any research, but why would he think he should?
Point is, in the case of the regular Joe half the battle is already lost, they have no bloody clue what DRM is, it's just another abbreviation along with DVD, HDDVD or whatever else that is `in' right now. For some twenty years DRM was referred to as "Copy Protection" because that is exactly what it is, by renaming it to some nonsensical abbreviation they have created a highway for easier acceptance.
But ah, it's not like it's the first time some industry does something like this...
And now we get to the point where I am considered troll: I do believe there are places where "DRM" is called for, anyone who posts it is all-through evil gets a page-down tap from me (it's usually long rants). Lately it has however been going out of line. Repeatedly.
On an ending note, all according to Google: 46,200,000 hits for DRM. 2,900,000 hits for "copy protection" (quotes included). God, I feel old.
You're right.
Actually, removing DRM is against what I believe are Apple future plans. Yesterday, in the Yahoo hates DRM thread it mentioned how microsoft's DRM only works 50% of the time. Makes sense when you realize they don't make the hardware, therefore, they are only 50% of the equation.
Apple, on the other hand, makes both hardware and software. My own belief is that the iPod, and soon the iPhone will be joined by among other things.. iTV or some such thing. Apple brought back Jobs to create, sell and make them money. He did it by advancing them as a multimedia delivery company and selling consumers devices that make it easier to buy content from them. I do believe that those nice Apple displays will become nice Apple HDTV's with firmware that enforces DRM and gets you to choose Apple as your content provider through their user friendly software et al. I actually expect more stringent hardware based DRM to come, not less, and I see Apple at the forefront.
I can't blame Jobs, it will make money and that is what he was hired to do. Now, OSX and it's incarnation can be 100% better than Vista, but all the comparisons smack to me of the old Windows 95 = Apple 88 stuff. And we know how that turned out.
Interesting that despite all the hype about OSX, it's the iPod and iTunes (banned in Norway!) that arguably turned Apple around. Iview will carry them forward when it comes.
Which would be fine, but thanks to napster, and all the p2p that has come since, they've already been forcibly thrown from the cliff. They better start flapping, or things could get ugly.
Just as some slaveholders were beginning to come out against slavery before the (U.S.) Civil War, mainly on economic grounds. There were not enough of them, however, and they were not in sufficient numbers to prevent said war.
Dog is my co-pilot.
Actually, while this may be unpopular on ./, it's indicative of value pricing of the digital product. You may not feel that is 'fair', but pricing isn't about fairness. It's about extracting the maximum amount of value from the consumer of the product while leaving the consumer with enough value that they return as a customer. In this case, the fact that the content is copyrighted generally trumps pricing fairness under anti-trust law (because the effect of copyright is to grant a temporary monopoly).
Digital downloads and CDs are well differentiated products, and they both have an effective place in the market. I suspect the value for the digital content is appropriate. Marketing = Product, Promotion, Price, and Position (or some other form of 4 Ps equating to the same message), so if you are purchasing a season-at-a-time and are price sensitive, you are not their target market. That doesn't mean the market does not exist (e.g. I think ringtones are the biggest rip-off known to man-kind, but I can't ignore that it's a billion dollar market).
Digital distribution is targeted at those who are either cherry-picking or are time sensitive. Conversion from a CD to digital form takes time and effort (worse for DVDs). To some people, this time is worth more than the price difference between the products (and to others, they are so price-insensitive, that they will probably buy the digital version to watch the show during their commute and then purchase the season DVDs once they are available). One could also digital distribution is carrying a premium price at the moment, because it's 'hip'.
One pays MORE on a relative basis for an individual ditigal product of lower quality than they can receive on a CD or DVD. It's 100% consistent with hundreds of thousands of physical products you can buy in a store. Effectively, CDs/DVDs are bundles, where you also receive the benefits of the doctrine of first sale (because you bought a product, not a license). Therefore, by buying the bundle, you get a discount (or you can view it as getting the higher quality for free). Buying the individual songs, you pay the market rate. In the case of TV shows, you may also get a time advantage (this is part of 'Position': it will be out in digital form before the season DVD is available).
Another useful analogy is to look at cost per bit of digital transmission. Try it someday on an SMS (cellular text) message (128 characters) vs. what the cable company pipes to you every month. The cost differential is something like 100,000X on a per-bit basis. That doesn't mean either cable or SMS is fundamentally flawed. SMS is certainly value-priced, but the number of users indicates it still possesses value even at that price.
Note that this judgement is on a relative basis to the cost of a CD, I am making NO judgement here about whether the CD costs are over-inflated due to industry behavior. That is an entirely different discussion which is not required to properly evaluate the relative value of individual digital tracks to a physical CD.
Given the current price of a CD, the prices are pretty close to what the market will bear (they are value priced). CDs can be effectively purchased for about $7-$8 at your favorite music club or other method of bulk purchases. So effectively, if you're buying more than 3 tracks on a CD, it's much more cost effective to buy the CD. For a one-hit wonder or a band where you appreciate a single song, but generally cringe at the music, use a $1/track digital source.
At least, it's what I think they would think.
Most "big hits" these days are CDs filled with garbage. If you look at the number one selling CDs, it's the "Wow! Now that's what I Call Music - Volume 845". Music executives know that people are only going to buy the CDs that are filled with stuff that audiences like, and enjoy.
That said, look at the music that's released on those 'compilation' CDs. The music is all old and past its 'hit single' prime. It's not terribly old, but it's not the stuff that plays commonly on the radio either.
Most artists have 'filler' CDs. That is to say, they have maybe two tracks that are any good, and the rest is total crap. But the music companies can charge you for the full price of the CD, filler and all. You pay for all 12 or 15 songs or whatever, when all you wanted was the two. And now with iTunes, you can pay $2 and get those two tracks alone. The odds of you buying entire albums now goes down significantly because you know that most artists pretty much suck donkey balls, and you just like that one "lalalala cookie monster" song. They are going to get smaller slices of the pie.
With DRM gone, there's no tie to iTunes and as well, people aren't as leery of buying music online because they know no matter what, their music will play in their car, on any mp3 player, and won't expire or screw up. It will spur rapid adoption of online music because it's easy to use, easy to share, easy to listen to, and gets you exactly what you want, without paying for filler.
And further, with rapid adoption of online music, the 'indie' bands now have a greater chance at making it big, because there is no reliance on music industry to play their music on the radio. Digital music will hit a critical mass quickly I think, and services like Pandora and Last.fm will become the standard for listening to music, instead of turning on your radio. You'll tell Last.fm that you like bands X, Y, and Z, all of which are mainstream bands. Then Last.fm will say "hey, you like them, you might like bands A, B and C" -- which are indie bands.
And in the end, the only people who are going to gain are the fans -- artists won't be able to produce filler CDs because they won't be able to make a living off of them (ala Britney Spears and the others), record companies won't control what we listen to because we have services like Last.fm, Pandora and the wonderful "word of mouth" (which is lightspeed on the internet). Music industry loses control, artists realize that if they are good, they can self-publish, and they all lose out.
As Cartman said to Token in South Park (playing the role of the Music Industry here) -- "From now on, we are an entertainment team, Token. You just do all the singing, all the performing, and all the entertaining... and leave the rest to us." That really won't work any more. And it's a good thing for us as fans, bad for the recording industry. And it's inevitable anyway.... just give it time.
The price is always right if someone else is paying.
We already know small labels are fine with selling their music without DRM. Merge Records and Sub Pop are now giving their customers DRM-free, digital copies of their music with vinyl copies of it. There are many independent labels on eMusic.com. And there are a number of small stores out there selling DRM-free mp3s.
The point is: these numbers tell us nothing. They are totally useless, because we have no context for the information. They do not suggest that the Big 4 labels dislike DRM at all.
Also, why exactly does a store about an opinion survey on DRM belong under Apple? If I remember correctly, Apple is not the only company that uses DRM, nor is Steve Jobs the only person to ever have an opinion on it. Did we used to put this under YRO?
They don't have a problem. They simply see that with DRM, they can get the honest people to pay several times for the same song. The pirates won't buy their music either way, so I guess they figured they are simply going to get as much as they can from the honest guys. It's stupid, of course, but it probably makes sense for them.
The competition is in herding artists, not in delivering content. There logically can be no compteition between selling CDs from Band A and someone else selling CDs from Band B - unless you believe that Band A and Band B are interchangable units each delivering the same unit.
There can't be the kind of competition you are talking about because to most people they are not buying per-unit-weight of commodity music. They are buying Band A's music or Band B's music. It wouldn't matter if this came from EMI, Warner or BMG.
This means the only competition is what kind of a deal Band A gets from EMI vs. the deal they get from BMG. Period. And that has been shaken out so completely that the deals are going to be very very standardized across the industry. They have had years to figure this out.
Your problem is that you're assuming that DRM has something to do with preventing piracy.
That is a fallacy. It is something the music companies would like you to think, but it is not really true. DRM is about "maximizing revenue," principally by allowing the record companies to sell the same piece of music over and over, in different formats. Basically, is purpose is to eliminate format-shifting altogether, because that way they can charge independently for a song on CD, as a digital file for an iPod, as a digital file for a cellphone, as a ringtone, etc. etc.
The music companies have realized that digitization basically means the end of formats that wear out over time, and it will also mean that it's pretty trivial to move your music from one type of playback device (e.g. iPod) to $NEXT_YEARS_DEVICE without them seeing a dime. Since their business model historically has derived a lot of revenue from the repurchasing of music in new formats (45s, 8-tracks, LPs, cassette tape, CD), they want to stop this, even though it's allowed by Fair Use as a simple format shift.
DRM is only nominally about piracy; in truth, it's about squeezing more money from honest consumers.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Completely agree. >90% of the music stored on my computer is ripped from my own CDs as Apple Lossless. I've DL'd quite a few MP3 illegaly, but I delete them if I don't like them and buy the CD if I do. The fundamental benefit of music file sharing is to try new things that you wouldn't if you had to pay up front - but there's no way I'm gonna PAY for a lossy compressed version of a track if the same thing can be had in proper PCM. If the Music labels cared, they'd offer official, DRM-free downloads from lavish band websites in much-better-than-CD quality. There's absolutely nothing to stop them giving us the opportunity to DL 24bit, 96Khz (or even better) AAC files. 5.1 mixes, even. EVERYTHING that DVD-Audio and SACD have failed to deliver could be done, BETTER, with downloads. They can even watermark the bastards if they want with some personal info about my sale.
God alone knows if they will, but they COULD.
PS I bought a DVD-Audio of REM's Automatic for the People because I wanted to hear the new mix and I'd lent that CD to someone years ago - can't play it, can't rip it. No fucking use to me at all.
We WANT TO BUY MUSIC, stop fucking stopping us listening to it you twats.
Cost to sign artist + Cost to press CDs + cost to ship CDs = total cost
Divide by the number of CDs pressed and you have your cost per CD. I'm guessing it's a lot less than the $15-20 we currently pay for a CD.
Replace "Cost to press CDs" and "Cost to ship CDs" with "Cost to pay high-school intern to rip CD" and "Cost to host private P2P tracker" and you've got the cost to release it on the Internet. Notice that "Cost to pay high-school intern" and "Cost to host private P2P tracker" are pretty much constant whether you sell 1 track or 1 billion tracks. That's the advantage of digital media.
Believe it or not, there is still value in something whose value can be apparently diluted to near-zero. It might only require a student to make a quality rip, but it still takes a little effort. Enough effort that it's worth avoiding if someone else can do it equally well. More importantly: The real reason that these files are so readily available on filesharing networks is that once people download the file, the file is left in the share folder and others are able to download it from there. If people can be convinced to use sanctioned download services it may actually serve to help reduce piracy by keeping these files out of individuals' share folders on the various networks. I absolutely agree. While many people have a firehose-style cable connection that offers near-unlimited bandwidth, I prefer high-end DSL service and don't have unlimited bandwidth. I actually convert bandwidth to cash before downloading something. I pay excess bandwidth charges at $1.99/Gb, so a 1.4Gb movie comes out to $3 if I've already used my quota for the month -- half of what it costs at Blockbuster, but I can walk to Blockbuster in 5 minutes while the movie takes an hour or 2 to download. Also I get guaranteed quality at Blockbuster.
Music Industry Execs: here's the information you need to build a viable business model. I will pay for the bandwidth/hosting and effort required for each MP3, plus contribute to the artist's royalties, and in a show of extreme generosity, even throw in a few pennies to keep the industry alive. That comes out to about $0.25/track by my estimate. Do it without DRM and you've got a winner. BTW: $0.25 * 10 billion tracks / year = 1 hell of a lot of cash.
"Please describe the scientific nature of the 'whammy'" - Agent Scully
They both piss off slashdot users. There's a start.
I'm in between insightful sigs right now...
I totally agree. They are trying to maximize short-term profits, thereby destroying their goodwill with the very people who give them money, thereby destroying their long-term profits. I see more and more people who simply don't care about copying stuff anymore. People post those insane ads from the recording companies ("isn't it funny that by pirating movies, you're bacrupting the very bands you love?") to their blogs and make fun of them. Less and less people think it's wrong to copy music.