The beginning of the end for DRM

By Stan Beer
Thursday, 07 December 2006 15:49

Opinion and Analysis

Recording companies, increasingly worried about the growing power of Apple in the legal online music space and the continued prolifigation of illegal file sharing are starting to toy with the idea of making MP3 downloads available for sale free of DRM restrictions.

The problem for record companies is that the dominance of the iPod in the portable music player market combined with Apple's strict digital rights management (DRM) system are combining to restrict legal digital music sales.

iPod, which has as much as 80% of the market won't play music downloaded from online stores other than iTunes. In addition, iTunes which dominates the legal digital downloads market, will not permit its downloads to play on portable music players other than iPods.

Thus, the only ways to get a music track onto an iPod are to buy it from iTunes, rip it from a CD or to download a DRM-free track from an illegal file sharing site. Simple arithmetic shows that the vast majority of music tracks sitting on iPods today have come from sources other than iTunes and much of it is pirated.

Despite the dominance of iTunes in the legal music downloads space, the amount of trade done through the online store is dwarfed by the amount of tracks downloaded from illegal file sharing sites.

Apple has no interest in opening up iTunes to music players other than iPod because it is really in the business of selling iPods not music. Likewise, Apple does not want people buying their music from other legal download sites because the music can be installed on players other than iPod. For Apple it's all about locking users into iPod through the music they have purchased from iTunes.

For record companies, which have experienced a downturn in CD sales because of online music, Apple has created a bottleneck in legal digital downloads. The amount of music being purchased through iTunes, the dominant online store, is not enough to make up for the decrease in CD sales. Meanwhile, music piracy through file-sharing sites, which DRM was meant to prevent, continues to proliferate.

The obvious solution for record copmpanies is to allow online stores, such as Yahoo Music, to sell digital MP3 downloads without any DRM restrictions, just as CDs are sold today without DRM restrictions. Those tracks could then be played on any MP3 compatible music player, including iPods.

The music industry has been worried that allowing legal downloads without DRM would make it easy to pirate music. However, it has become plain that imposing DRM restrictions on downloads has been a disaster for record companies in terms of lost sales, while piracy is more rampant than ever.

The message appears to be slowly getting through to the management at music companies. Major player EMI has started the ball rolling through its label Blue Note records, making the track "Thinking About You" from its artist Norah Jones available as an MP3 download on Yahoo Music. It is likely to be the first leak in the wall of a dam that threatens to burst and the response from Apple will be interesting to watch.