Internet/Telecom/Social Media

The death of DRM is the rebirth of the music industry

By Martin Bosworth

I just wanted to follow up on Brian’s awesome post detailing Sony BMG’s plans to sell DRM-free music through Amazon as part of a Super Bowl promotion by making a few additional points:

  • Digital music sales are quite literally the only bright spot in an ailing business–whereas digital downloads rose by 50 percent in 2007, sales of physical CDs, particularly full albums, continue to tank. This is a logical progression of the business as it moves towards a singles-driven model. Unless you have the clout of Jay-Z and can force digital retailers to sell your album only as a single piece and not individual tracks, the era of the album (or “CD”) may be coming to a close, at least in terms of vendor sales. CDs will probably continue to sell like hotcakes on tour, particularly promotional CDs.
  • Artists who have experimented with bypassing the major labels and selling tracks directly to fans have met with mixed results. Nine Inch Nails’ Trent Reznor offered fans the chance to download tracks from fellow artist Saul Williams for free, or to buy higher-quality versions for $5. The majority went for the free version, once again proving Mike Masnick’s theory that you can compete with “free” only if you add value enough to the product to make it worth the cost. As Masnick points out, Saul Williams probably has a lot more publicity now from this experiment, so when the album comes out, he may get a lot more in the way of listeners.
  • Speaking of artists who have tried to bypass typical channels to sell their music directly, Radiohead’s Thom Yorke makes the very valid point that artists often see next to nothing in terms of real profit from their via-download sales, because their contracts were negotiated to nickel-and-dime every last bit of money away from them, or simply don’t address e-music sales at all. Much like the writers in Hollywood striking to win rights for profit from content on the Internet, downloadable music means the artists should be able and willing to renegotiate contracts that cut out the middleman and get the profits where they belong.
  • Sony BMG is the lone holdout record company that has not committed to sales of DRM-free music. For the company to ignore a revenue goldmine that could come from competing with Apple’s notorious “walled garden” of iTunes and undercutting their price model is, simply put, bad business. Sony already has a tarnished reputation thanks to the CD rootkit scandal, and even its preeminence in the DVD format wars and sales of the PS3 haven’t completely erased that issue from the public’s mind. To cheat itself out of profit through legal music sales just to prove a point is financially unwise at best, but this is the music industry we’re talking about.

This is an exciting and fascinating time to be a music lover, though I’m sure it’s an intensely aggravating and disheartening time to be in the music business. And in order to remain a business–one that’s viable and competitive–the industry is going to have to dramatically readjust its models of success, from committing fully to selling MP3s without any copy protection, to giving artists more profit and control off e-music sales on the back end, to ending the practice of drumming up new revenue streams by suing people into oblivion.

You can’t fight the future, as I often say. 8-tracks, albums, VHS tapes, and many brick-and-mortar chains have passed or are passing into history, but music itself endures and thrives. The medium and the format may change, but the art lives forever. In order for the business to endure and thrive along with the art, the industry needs to stop treating customers like criminals and give them what they want.

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