Ailing music biz set to relax digital restrictions
Tue Jan 2, 2007 4:53 AM ET

By Antony Bruno

LOS ANGELES (Billboard) - The anti-digital rights management (DRM) bandwagon is getting more crowded by the day. Even some major-label executives are pushing for the right to sell digital downloads as unprotected MP3s.

In 2007, the majors will get the message, and the DRM wall will begin to crumble. Why? Because they'll no longer be able to point to a growing digital marketplace as justification that DRM works. Revenue from digital downloads and mobile content is expected to be flat or, in some cases, decline next year. If the digital market does in fact stall, alternatives to DRM will look much more attractive.

Revenue from digital music has yet to offset losses from still-declining CD sales, and digital track sales remain a cause for concern. Month-over-month download figures were largely flat through 2006, even in the face of year-over-year gains. If the expected post-holiday spike in download numbers that has occurred in the past two years is weak, look for the glass on the panic button to break.

"People in the industry will have a very different conversation in January when the dust clears and they realize just how bad this year really was," says Eric Garland, CEO of peer-to-peer (P2P) tracking firm BigChampagne.

Even more of a concern is mobile. According to Gartner G2 analyst Mike McGuire, the ringtone market -- currently contributing more than half of all digital revenue -- will soften during the next 12-18 months as it matures.

Meanwhile, the music industry wants a strong competitor to the monster it created called iTunes. Forcing would-be competitors to sell music incompatible with the popular iPod is not showing any signs of working. Removing DRM would attract powerful new players to the market, and that -- the theory goes -- will result in more buyers.

"The majors . . . have got to capitulate, or they will continue to have a fractured digital media market that will slow down and stagnate," says Terry McBride, president of Nettwerk Music Group, management home of such acts as Sarah McLachlan and Avril Lavigne.

Here are five places to watch this year's DRM developments:

AMAZON

The online retailer reportedly is itching to get into digital downloads but is holding out for a DRM-free service. It sells as many iPods as anybody and is a haven for music that is disappearing from physical retail shelves. "They already have a relationship with our consumer the way that a lot of others don't," Blue Note GM Zach Hochkeppel says. Viewed as the biggest threat to iTunes, Amazon has the power to force a DRM strategy shift.

LIMEWIRE

Still in the process of settling with the music industry, the P2P file-sharing service wants to start charging its 40 million users $1 per download and share the revenue and user-behavior information with the music industry. But it wants to stay DRM-free. The company hired TAG Strategic consultant Ted Cohen, a former EMI exec, to convince the majors to at least test the idea for six months.

MYSPACE

The most popular Internet destination in the world is working with SnoCap to launch a music download service that would let musicians sell music directly from their profiles and that of their fans. But it will only sell files as MP3s. It is moving ahead by focusing on independent and unsigned artists willing to release unprotected music, and a successful showing would make the majors take notice.

EMUSIC

The indie-only specialist just surpassed 100 million downloads; it's the second-largest digital music retailer after iTunes, all sans DRM. CEO David Packman says he is not interested in selling major-label fare, but he may have no choice if majors suddenly allow his competitors to sell in MP3 as well. But even if the majors did relent to MP3 sales on eMusic, the company's business model would have to change--no label will agree to 50 downloads for $15 per month.

YAHOO MUSIC

GM David Goldberg has convinced Sony BMG and EMI Music Group to test the DRM-free waters with limited, promotional "experiments" involving Jessica Simpson, Jesse McCartney, Relient K and Norah Jones. The lessons learned from these tests will either speed or slow their path to eliminating DRM.

Reuters/Billboard

http://www.zdnetindia.com/news/communication/stories/166548.html

(leflaw, please remember to provide the source's link)

then you would be looking for something to do!

I bust my ass 'round here. (and you should KNOW that by now!)

But hey, if you want me to use my "admin powers" and spend a huge portion of my time here doing spell-checking, grammar-checking, making sure the link got posted correctly, etc. at DMusic or Boycott-Riaa...

--THAT kinda job is called "technical editor" (or some-such by the newspapers and other media organizations.)

I'd be willing to again quit the "day-job" crap I have to do in order to pay the rent/bills.

But, I DOhave to pay the rent/bills first and foremost. (Do you grok what I am saying?)

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Aw crap, I know, I know. I shoulda sent you all that in a DNote or an e-mail.

OK stop fighting

Anyway I have an issue with the comment about Emusic
"But even if the majors did relent to MP3 sales on eMusic, the company's business model would have to change--no label will agree to 50 downloads for $15 per month"

Why the hell not? A buck a song is stupid. The only reason iTunes is number one is because they hit the market first. Once people realize that there is a better product (music) available for a fraction of the price that could all change.

Fighting?

(No, we are only discussing things PUBLICLY that we should probably be doing in private. MY FAULT for "being that way" about these things that might/should/probably be
"behind the scenes" topics...)

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brenthannah,

exactly AS YOU SAY,

let's allow the artist/muscian/songwriter to "set the price" on their own music.

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But, once it is "released"

Does there not need to be a way for the performer/author to be recognized/renumerated for the art they gave the world?

As it stands now, ONLY the "Brittney Spears" and "Christina Agullera's" of the world have a chance to be KNOWN to the rest of us.

I believe that you may want to investigate this new office phenomenon called 'MEMOS'

A buck a song is stoopid (unless it's one of mine--then a buck a song is ay-oh-k'eh!).

"A buck a song is stupid."

Sure is. Hmmmmmm, what should I pay, a buck a song, or nothing a song??

Besides, since MP3 files are INFERIOR copies of the actual music file on a CD, why shouldn't they be priced accordingly? If a CD with 10-12 songs costs 10-12 bucks, then charging far less than a buck per song for an inferior digital copy would only make sense.

No one bothered to use the internet extensively until the morons at AOL figured out that, hey, if we stop charging for every friggin' minute and charge a flat fee per month, people will use it! Until a flat fee program that is REASONABLE is available in the downloading area of music, you can bet your life I'm not wasting my time or money. I like eMusics plan. At least they are headed in the right direction.

"Besides, since MP3 files are INFERIOR copies of the actual music file on a CD, why shouldn't they be priced accordingly?"

Because the labels still think mp3s are perfect digital copies.

Id like to vulenteer to be a spel cheker here fer all th postings

CDs for @$8 in the Indie market... maybe 15 songs?
a site should just have a standard mark-up on top of whatever price the artist/band sets for their recordings, weather CDs or mp3s (or mpegs or avis)...

"Because the labels still think mp3s are perfect digital copies."

Anyway, regardless of whether they really believe that themselves, it's what they usually want John Q. Public to think (that MP3s are practically perfect digital copies; i.e., CD quality).

There was an occasion in the past, however, when the RIAA had temporarily reversed their position to momentarily suit their purposes at the time. If I recall, it had to do with making a better argument in litigation.