Universal's DRM Drop: Just an Apple Negotiating Ploy

The Times reports that Universal Music will join EMI and drop DRM restrictions from its digital downloads -- sort of. Why sort of?  Because Universal won't be doing the deal with Apple's iTunes.

Since Apple controls 70% of the digital music marketplace, the real news here is that Universal chief Doug Morris is still trying to negotiate with a monopolist without actually walking away from the monopolist. Earlier this summer Universal announced they would not renew their long-term contract with iTunes - but they continue to sell music through iTunes on a month-to-month basis. Now they'll try to squeeze Steve Jobs by giving his competitors something Apple doesn't have.

Universal's move will make many people who follow the music business very happy, because they believe that DRM restrictions are a real problem for the industry. But I think they're wrong.

The industry is certainly better off without DRM than with it. The restrictions are a belated attempt to lock up a store that has already lost many of its customers, and dropping them will be a benefit for the remaining ones. But a limited benefit. Most consumers don't know what DRM is, and don't understand why it's a problem. Those who rip CDs or who acquire music via filesharing don't have DRM problems. And those who buy songs from iTunes don't have DRM problems, because they play them on iTunes players and iPods without a hitch.

The real problem for consumers is compatibility: Music you buy on Napster, Yahoo, Rhapsody, etc can't be played on iPods. But again, only a fraction of buyers shop anywhere else but iTunes. Making other retailers' music compatible with iTunes would be nice for them, but that's Apple's call, and Apple has little incentive to do it. Note that even the DRM-free tracks EMI sells don't work on most non-Apple players or software.  EMI said this month that sales of DRM-free tracks have been "encouraging". But the industry will need much more than that to pull itself out of its long decline.

For an alternate take of the same argument, see Bob Lefsetz: "The problem here is the price. Not raw availability."

Doug Morris: "Copy as much music as you'd like -- as long as you don't buy from iTunes."