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Does DRM Enable Online Music Innovation?
chia_monkey writes "An article at the Tech Law Forum asks the question 'Does DRM Enable Online Music Innovation?'. The piece looks 'at the range of legitimate online music distributors to see just how much the presence or lack of DRM affected business models.' It's a rather interesting read as the author breaks down seven online music stores (iTunes, Napster, Yahoo! Music, Zune, eMusic, Amie Street, and Magnatune...four of which use DRM and three that don't). The article mainly focuses on the ownership and 'renting' of the music (which can be seen with the 'buy the condo downtown' and 'rent a mansion in the slums' analogies) and how it applies to innovation and perceived business models. The numbers don't lie ... price-per-download is the clean winner while DRM-based models also take the lead. Will the market shift toward subscription based models in the future? Or, will DRM go the way of the dodo bird (as Steve Jobs has already proclaimed his preference for)?"
I used to be dyed-in-the-wool against DRM, but since using Rhapsody with the Sansa player and with Squeezebox* I have to say it is pretty hard to defend the position that DRM is universally bad. It is hard to imagine how you could have a service like Rhapsody without DRM. Having "all the music" accessible whenever you want, for a flat monthly rate, really changes your listening habits and how you think about music "ownership".
* I work for Slim/Logitech
There is a huge difference between the various services that the article does not take into account: mass marketing of the underlying music.
The companies that want DRM on their music are the ones that they spend a lot of money making popular. Their business model is to get a lot of people aware of certain songs, and then sell the song to each of them individually. That's the RIAA's model.
The independent labels don't have a huge marketing budget, and so they care a lot less about whether they get paid for each individual download. For them, passing songs between people really is free advertising.
So the success of any individual music store has more to do with how effective they are at getting you to find the music you want than with the DRM. iTMS sells a lot of the RIAA's music, which the labels spend megabucks marketing (an investment they want to protect). eMusic sells songs that aren't heavily marketed.
There are a few performers who straddle the line, who got famous on the RIAA's dime and then managed to extricate themselves. They get the best of both worlds: a huge audience without the need to make each individual download pay. But these are the exceptions, not the rule; don't forget how they got famous in the first place.
That's the key here: promotion. It's way more important to most people's music choices than nearly anything else.
It needs to compare the artists marketed in each model and ask what it means.
I think that 10% for eMusic is remarkable, considering these are primarily either artists have not yet achieved major commercial success; or achieved it some time ago.
For my money and they get it. eMusic is doing a fine job of widening the range of available artists, and in the new business model, the costs of doing so are marginal and the potential profits high.
My only complaint and the reason I will one day move away from them is there continued overcharging of non-US based customers. Electrons and bits don't cost more on the other side of the pond!
if "Faith" could be proved with facts - would it still be faith? So why does "Faith" try to present beliefs as fact? -
Please stop repeating that canard that Steve Jobs has a "preference for getting rid of DRM." That is absolutely false. Almost all independent music labels (the labels not owned nor controlled by the four majors) have been licensing their content for resale in the mp3 format for several years. If Jobs wanted to sell such mp3s, he could do so today.
Apple has absolutely no reason to get of DRM -- the iTunes DRM locks consumers into iPods.
I am an IP lawyer working on music licensing. The industry consensus is that Steve Jobs is a publicity hog and pro-mp3 his editorial was an attempt to take credit for upcoming rumored announcement from the major labels regarding selling in non-DRM format. Rumor has it that such shift will occur within a few months.
The fact that they decided not to include allofmp3.com in the "study" should give you a hint regarding how objective this "study" is.
Personally, I think allofmp3.com is the best of them all.
DRM doesn't enable anything...All it does is restrict. So how can it possibly enable innovation? What would happen if there was no drm? Would music stagnate? Doesn't seem to have in the past.
I believe in limited copyrights to protect an artists ability to profit from his works. I don't believe those copyright should be transferable to corporations. I don't believe those copyrights should have anywhere near the duration that they currently enjoy, and I don't believe I'll pay a damn dime for drm encumbered crap that does nothing more than deprive me of rights that I should have by virtue of paying for the damn content...At least if I stole it, someone would have taken off the damn drm!
Innovate that.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
It helps build smarter code crackers, but thats probably not what TF meant by 'innovation'.
_Vishal www.squad9.com
I agree with you : I haven't problems with DRM being part of a "renting" or "access to a catalogue" business model, where you pay a monthly fee. Because in this case, if you are not happy with the DRM, you can stop paying and that's the end of the story. So the provider must do its best to keep you happy.
... I prefer the classic "buy once for all" business model. And in this model, DRM are completly inacceptable.
But like the vast majority of people, I am not interested in these business models. I still like to buy things, build a collection,
There is not such thing as "BUYING" a DRMed media, those things are just too volatile : change your hard-drive/OS/players too much time and your file self-destroy ; providers can go bankrupt with their activation servers ; buy new hardware which happened to be incompatible with non-standard DRM techniques, have your player key revoked because some hackers found it, etc... And of course, if the DRM is efficient, you cannot make backup or "interoperable" copy. So sooner or later, your media is broken for no reason and you can't do anything about it...
You cannot buy a DRMed media, you are renting it ; the provider just forgot to tell you for how long... And if you are not happy with the DRM, too late, you have already paid. I suppose that's qualify as a business "innovation".
For some definitions of 'innovation' I would agree that DRM might be an enabler. I consider the the definition of 'innovation' as "1) something that allows you to do the same thing as before with less effort; 2) maintain what you were doing before with no increase in effort even though environmental conditions have changed; 3) do more than you're currently doing with no increase in effort."
Hrm, looking at that, DRM could be considered an innovation for the distribution industry because it enables them to keep some lock on their product/service in light of a changing market landscape.
So I guess I don't have a problem with the concept of DRM being innovation. I think the more important question is "innovation for the benefit of whom?"
"There are a dozen opinions on a matter until you know the truth. Then there is only one." - CS Lewis (paraprhase)
As far as I am concerned it is all about the difference between purchase and a service. If I buy something, then I should have every right to use it however I want, as long as I do not distribute or publically perform the work. In my opinion, not only is DRM unacceptable, but I think the law should be changed so that a purchace comes with an implied license to copy for any reason. That would cover almost all of the consumer rights issues that are currently up in the air with regard to fair use. (Producer rights, like parody, criticism, education would still have to be dealt with seperately.)
On the otherhand, broadcast and rental are very nice business models for some types of media. As far as music goes, I prefer buying, but I almost never buy movies or anime - the replay value just isn't high enough for me to justify paying 5x the rental price and have more junk cluttering up my apartment. Without some sort of DRM, rental is impossible in the digital relm, and I really don't care if my devices make it difficult to copy something that I rented because I never had the right to do so to begin with. As long as the implementation is convienient I don't have any fundamental problems with DRM on rentals, and other services.
DRM is a complete failure when it comes to preventing piracy, and always will be for basic fundamental reasons. However, when it comes to rental/broadcast the purpose of DRM isn't to prevent piracy but theft of service. For that purposes DRM actually works fairly well. Because you control the stream, it is easy to change keys whenever one is cracked, as opposed to static media and players which cannot be changed after they are sold. This is why AACS was effectively broken within weeks, while the DRM for digital satallite is still secure after years. This is a situation where "Open" DRM (licened under RAND terms) can be valid and useful, much along the lines of the CableCard standard.
That said I would hate to see the situation where media is locked up and only provided as a service, and never made available for purchase. But as long as we don't get to that extreme have think both non-DRM sales and DRM'd services can coexist peacefully.
The big point this report is totally missing is that the record companies whole cake is shrinking faster than the extra part of the slice they're gaining from DRM. More and more musicians are realising they can now idependently sell their own music directly over the internet instead of going to a record comapny.
Record companies contracts are so agressive that signed musicians earn very little from even millions of sales via the conventional channels. The record companies have traditionally been able to get away with this because of their monopoly on the marketplace, however the internet has thankfully broken their monpopoly in that a few sales on the internet now earn musicans more money than a million sales through a record contract. Furthermore musicians also get to keep their rights to their own music which are usually also demanded by the record company.
Ironically as a short-sighted response to this the record companies are making cotracts even more restrictive and making their products less desireable by adding DRM. For some reason they think us consumers are too stupid to spot or be concerned about the DRM. Just like every other accounting-driven business, record companies have a large blind-spot with respect to lost sales thorugh bad treatment of customers as there's no way to calculate the exact figure so they ignore it. This also explains why most companies feel its ok to keep you waiting in phone queues for 20 minutes over the cost of one more minumum wage phone clerk.
Ultimately record companies will just have to accept that they've lost their monopoly on the marketplace and will be obliged to either start making products that people actually want, and treat musicians like equal partners, or fade away into obscurity. However until then, they are kicking and screaming like the fat cat spoilt brats they are. But rest assured the change is being forced on them wheter they like it or not, so they can't keep it up forever.