Confirmed: DRM-Free Tracks Aren't Helping The Music Business (AAPL)
- Beyond a handful of vocal Web users, digital music consumers don't care know or care about DRM, and don't have any problem with it. That's because almost all digital music consumers use the iTunes/iPod/iPhone system, so any music they buy, share or steal works just fine for them, DRM or not.
- If the music labels were seeing significant uptake in DRM-free sales, they'd be boasting about it, because they need to boast about any good news they can get. And it would also give them that much more leverage with Apple, since 3 of the 4 big guys aren't selling their DRM-free tracks at iTunes.
But finally, we have an admission from one of the labels: Dropping DRM hasn't made a difference. Via Digital Music News, here's Warner Music's Edgar Bronfman Jr. at the Goldman conference yesterday: "DRM on the download business hasn't really moved the needle frankly, growth trends haven't changed DRM or DRM-free."
Now, as we've said before, going DRM-free isn't a bad idea for the labels. There are some tangible benefits -- chiefly that it allows music stores not run by Steve Jobs to sell music that people can play on their iPods and iPhones. Amazon's MP3 store now has something like a 5% to 8% share of the digital music market, we're told, and supposedly that's been accomplished without eating into Apple's sales.
So that's nice. But we think that we can finally put to rest one of the digerati's favorite myths: That people would love to pay for digital content -- but only if the big bad media companies stop trying to lock it up.
UPDATE: BizWeek's Peter Burrows says he's heard from a major label that's reached the same conclusion. Could be Warner Music again, though we're pretty sure he's talking about Universal Music Group:
In fact, one major label has been running a test in recent months with around a dozen big music retailers and online music services to gauge the importance of DRM on purchase decisions.
I’m told these include Amazon, Wal-Mart, BestBuy and Napster (before it was purchased by BestBuy); Amazon denies knowledge of any such test, while the others didn't respond to my inquiries to confirm their participation. What matters is that so far, the results suggest that DRM isn't high on consumers' list of concerns. "DRM-free sales are very good at Amazon and Walmart,” says one source familiar with the test. “But DRM-enabled products are doing just about as well. It could be that we’re just in transition. But there doesn’t seem to be this overwhelming consumer demand for everything MP3.”
See Also: Are DRM-Free Tracks Taking Off? Who Knows?
How Are Those DRM-Free Tracks Selling?
DRM-Free Music: Too Little, Too Late
Why Dropping DRM Won't Save The Music Business
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I think the major labels should get back into the business of discovering and promoting original and exciting music than to constantly stumble over each other trying to come up with the next "big thing" or at the very least copy for themselves another label's "Big thing." People are tired of buying crap....
I know people who have stopped buying from iTunes because they couldn't share the songs they bought with another logged in user on the same computer.
It is technically possible to do this but it takes more effort than people are willing to put it. People want their music to just work and DRM free music is more likely to just work.
Nick
I have replaced my PCs and upgraded my portbable music devices a number of times.
A little story, one of my PCs has crashed a number of times, and I tried a few times to repair/reinstall windows and my software including Adobe PS CS3, only to have it crash again. Well now that I have fixed the issue and the platform is stable, I have to call Adobe to beg them to let me install my legitimate copy of CS3 because I could not deactivate it from its former installs.
This makes me very wary of DRM or other copy protection schemes.
So unless the other online music stores have similar end to end solutions I'm not surprised that they are finding it very hard to compete against the itunes/ipod/appletv combo even with or without drm.
Certainly the inclusion of DRM adds cost and frustrations to those who patronize the products, so even DRM free versions are no more popular the industry will benefit from dropping the DRM.
I have no problem with an IP producers obligation to protect their markets and investments, but they have done a poor job in finding the common ground between their needs and consumers needs in the digital age.
Privacy concerns aside, I'd be fine with a DRM scheme that is tied to me as an individual so I'm not limited in the long term usage of my software or data.
Further, I love iTunes software and use it to manage my catalogue of music, I just dont shop at their store. I've heard about people burning DVDs full of freshly downloaded M4Ps to preserve the most uses of the file possible, but I have no desire to stoop to this as it will eventually catch up to me.
This gives the record labels leverage over steve jobs from dictatibg terms. certainly Apple can continue sell drm tracks though.
I personally would've liked the labels to insist on DRM, apple would then have the monopoly & get sued for ant-trust, then Apple would have to open their ipod fairplay to others. i'll keep on dreaming.
I still believe that people prefer DRM-free music, and that this will become more pronounced as people have more media players in their lives. For someone with say 2 desktops, a laptop, and two iPods in their household, the limits imposed by most DRM systems will be fine, but as more people play music in their cars, on their phones, and on their stereos via streaming devices, I can see this becoming a major issue.
Personally, DRM plays a major factor in my purchases. If it's not available as an iTunes Plus track, I go to amazon and see if I can find it DRM-free there. If it's not available there, I pirate it and try to find a good used price on the CD.
This even applies to my non-music purchases. There have been a number of games I've chosen not to purchase due to draconian DRM. I'll either wait until they show up in a
Maybe Darkside of the Moon, but there's a Dane Cook album in there in the Top Albums along with Dr. Horrible's Sing along Songs at #10.
Trevor is on to something but doesn't spell it out enuf. You lose your music rights if you have to reinstall your computer system. Isn't that all too common, unless you're a teenager and relying on dad's computer. It's happened to me several times. I bought from Puretracks and itunes in Canada and now can't play most of it. It don't recognize the computer, can't find the licences etc. No more if I can help it, except that sometimes I simply need some songs.
Do you think there's "nothing to it" just burning everything to CD.
I'd like to see amazon selling in Canada next, and I do mean the whole damn catalog, not peanuts. Also interested in Real's Rhapsody.
Another suggestion is that the sellers could use some help in choosing their albums for old artists. For example they don't seem to know which CDs have Teresa Brewer's big hits, there are so many various CDs. It should cover ~1952-1961.
Obviously they are trying to marginalize iTunes (and build up competitors) by making iTunes tracks less desirable because of low bitrates and DRM. So clearly they are very aware that DRM matters to customers and they know that customer don't like it one bit. ahem
If they succeed in regaining the power to control retail pricing, we can all look forward to another era of ever-increasing prices despite ever-lowering cost of marketing and distribution — just like we had with CDs. And just like before, consumers will get disgusted and apathetic toward music. Blinkered put-the-screws-to-the-customer greed is the only thing the music industry is actually good at. It's called being a PIGOPOLY.
For myself, now that I can easily borrow friends music, now that I can easily carry my music around and listen to it in high fidelity almost anywhere, now that I can find what I like and now that I can buy it for reasonable prices, I buy loads of used CDs and a few select new ones from small companies like Six Degrees Records. When I want individual tracks AND it's an iTunes plus title, then I buy from iTunes.
Another thing that doesn't get discussed much is that the music business just isn't that big. Music is extremely important to us for all the obvious reasons. But there isn't that much money in it compared to other businesses. A quick search revealed that in 1999 the total world wide music sales were estimated at about $40B. It probably hasn't changed much since then. Apple alone is getting close to having that much yearly revenue and as all the PC people are quick to tell you Apple doesn't amount to much in the market.
What about DRM vs non-DRM at the iTunes Store? EMI once said early on that it did make a difference, altho we haven't heard much from them since, so possibly it didn't last. But then again, maybe going non-DRM at iTunes would boost sales.
And would the also-rans have been able to sell any music at all if they were not DRM-free?
I've learned it's always best to question the motives of any news coming from the labels.
A: they used to sell bundles (CDs, LPs) of product and single product (a Single). The bundles were the big revenue earners, and the ratio of single to bundle price was 1:5. Now the ration is 1:13. The bundles are less attractive.
B: the boomer generation bought a lot of product, mostly new, some back catalog. Now it buys little or no new music, mainly because the boomers exposure to new music is via their kids. If they like it, the kids supply it.
C: the kids buy little new music, they share, either through P2P or CD copies as MP3's from friends.
The solution is clear, and is confirmed by looking at Amazon's MP3 sales page. Sell MP3 albums for $5. This will increase the volume, by making the bundle more attractive. While $13-$19 was a reasonable price for a CD ten years ago when singles, if available, cost $4, with individual tracks at 99c it isn't.
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The DRM-free gates have only been opened partially ... mostly to US consumers ... there are many more people on the other side of the fence waiting to sip from the DRM-free stream.
I have stopped buying music from iTunes even though they offer DRM free music as it is a non portable format (unprotected AC3) ... I don't care that I can burn a CD and then rip back the music ... that is stupid why am I paying good money to then turn around and waste my time and blank CDs (yes I know there is some drive that allows me to do it without using a CD but that is besides the point) because of some industries insecurities. I do buy heavily DRM books from Audible ... but under protest ... I religiously write them every month to complain and ask when the DRM will be removed they always say “ … we are evaluating our options”.
I have always been skeptical about DRM and know very well its danger and used to feel since I live int eh iTunes and iPod world it wouldn’t matter to me much but it really hit home for me when I bought “DR Horrible's Sing Along Blog” from the iTunes store. After watching it in Itunes on my computer I was so happy with the production that I suggested it to my wife. She then said "ok lets watch it "... I said "ok lets go" and she sat in front of the TV ... I said "lets go watch it on my computer ... "she said "... get real, I want to watch it on the TV". I have my own PVR network setup at home but of course this wonderful show from iTunes would never work on it because of the DRM ... in order to save face with my wife I had to go to The Pirate Bay to get it so that I could convince my wife I wasn't a tool ... (yeah ... un believable). That was the 1st time I bought a video and it was the last time I bought anything on iTunes. That was 9 months ago. Every time I watch the show on my PVR I cringe as the video from Pirate bay was crappy for obvious reasons (bless the pirate bay). You better believe I am not going to run out to buy a $400 AppleTV just to watch content I buy from Apple with my money on my TV. I’ll just wait form it to show on the cable and record it and watch it when the heck I please.
I think it is bogus to claim that most people don't care about DRM ... they do care when they find that their stuff doesn't work. The writer should not fool himself in believing that crap. As more people start to try to do more with their media we will see the storm get stronger. Lets see how they are going to explain to people why it is that I can buy my digital movie on iTunes and why I can’t watch it in the car … I used to be able to go to the store and buy a DVD watch it at home, watch it at my friend’s home and still watch it in the car. It is this simple ... If DRM free is good for consumers then it must ultimately be good for those who want us to buy their content.