The (Inevitable?) Death of DRM
Michael Arrington on Techcrunch writes…
Notwithstanding Apple’s announcement today of the sale of 2 billion songs on iTunes (all with DRM), most of the recent market signs suggest that the eventual demise of DRM is inevitable. Consumers are more frustrated than ever that certain file types are playable only on certain devices. The only real questions are when, and will it be replaced with something far more sinister?
The signs:
A year ago, Yahoo Music GM David Goldberg urged labels to abandon DRM
CD sales continue to drop and are down at least 15% from 2000, and current digital sales are not offsetting that lost revenue
eMusic, which sells only MP3s, is the no. 2 digital music reseller behind iTunes
Amazon is rumored to be opening a MP3-only music store
Sony Exec says “DRMs are going to become less important” as time goes on
etc.
Then there’s the Apple factor. The digital music market is starting to look like a monopsony for the big labels, with Apple as the only real reseller (20x the sales of no. 2 eMusic). No one else can gain enough critical mass to get users to buy a player and the music, or otherwise make much of a dent in iTunes. The only way others can sell music playable on the iPod is if it’s DRM-free. The labels will see it as a poison pill, but Apple is on a roll and their lead is getting stronger over time.
I [Arrinton] spoke with Yahoo Music GM David Goldberg and VP Product Development Ian Rogers last week about their views on the future of DRM, given Goldberg’s comments about DRM a year ago (see above). The forty minute podcast is up at TalkCrunch. While they don’t quite agree that DRM’s demise is inevitable, they do have valuable insights as music insiders as to what may happen in the short term. One interesting prediction that Goldberg made is that we might see DRM and DRM-free tracks being sold side by side, with DRM music sold at a discount. I think that the general availability of illegal and quasi-legal alternatives may not allow that market to develop, but we’ll see. They also predict the rise of music subscription services.