EMI Is Right, But For The Wrong Reasons
The impending death of DRM was delayed slightly yesterday when it was revealed that EMI has broken off negotiations that could have enabled online music services to sell unprotected mp3 files. The talks apparently hit a snag when EMI demanded a large advance payment (presumably in unmarked bills) in exchange for allowing retailers like iTunes the right to eliminate DRM from downloadable songs.
An arrangement of this sort would undoubtedly lead to a price increase for downloadable music - although it’s difficult to assess how much of an increase without knowing how much EMI was asking for.
EMI’s thinking seems to be that the payment would be necessary to guarantee revenue that might be lost as a result of selling unprotected music. However, if iTunes, or any other digital music store, were to take EMI up on this offer the unintended consequence would be that the corresponding price increase would validate the widely held belief that unprotected music is intrinsically more valuable than DRM restricted music.
I realize this sort of observation should go without saying, but this is the music industry we’re talking about. And let’s not forget that at least one DRM vendor has implied that DRM actually adds value.
I’ve been saying for a while now that most digital media products are a bad deal for consumers. DRM restrictions are only part of the problem. Quality is another major issue. While I think that 99 cents is still too much to pay for downloadable song, I might be willing to pay slightly more per track if the songs were DRM-free AND they were encoded at a higher bit rate than that currently offered by iTunes and other services.
EMI is worried they’ll lose sales by selling unprotected mp3 files, but strangely the sale of unprotected compact discs doesn’t seem to concern them. The difference, of course, is that compact discs can be ripped to a lossless format to produce an exact replica of the original. The same is not true for songs sold in an mp3 format. Consumers are limited to the quality that the mp3 files were originally encoded at.
If anything, the continued sale of CDs is a threat to music industry sales.
From a consumer perspective, eliminating DRM is only the first step in a larger battle. Once DRM is gone we’ll need to fight for higher quality media files and reasonable prices. Or better yet, flexible pricing that allows consumers to choose the format and quality, and pay accordingly. Unfortunately, the RIAA is actively trying to shut down the only online music store that offers consumers this sort of pricing and flexibility.
For the time being, it looks like consumers who buy music downloads are stuck paying for an inferior product. Meanwhile EMI and other labels will continue to manufacture and distribute high quality DRM-free CDs, and sell them at a substantially lower profit margin. That’s not what I would call good business, but it’s certainly what I expect from the music business.
Technorati Tags: DRM, EMI, iTunes, mp3
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4 Comment(s) so far
1. Rick Curran wrote on February 27th, 2007 at 12:18 pm
I can’t say I have any sympathies to All of MP3, the idea is an interesting one but I realy don’t think there’s much benefit feeding back to the artists whose music is being sold through them!
Interesting to see the next step from EMI though.
2. Kirk wrote on February 27th, 2007 at 12:26 pm
Rick, try to separate AllOfMP3’s licensing issues from the manner in which they’ve setup their store. In many respects it’s the model of what a modern digital music service should be like.
It’s fine that the music industry wants to shut AllOfMP3 down. It would be even better if they worked with them to deliver a consumer oriented service that properly compensated the artists.
3. Could Microsoft or Apple Be the Future of EMI? | Medialoper wrote on March 5th, 2007 at 5:25 am
[...] Like all good media dinosaurs EMI Records is in no hurry to meet the future. The status quo is just too familiar and comfortable; better hang onto it as long as you can. Last week EMI postponed the future just a little bit longer by refusing a $4.1 billion takeover bid by WMG and breaking off discussions with online music services over the possibility of selling DRM-free downloads. [...]
4. EMI Is Right, But For The Wrong Reasons « Kristen’s Weblog wrote on November 19th, 2007 at 2:32 am
[...] read more | digg story [...]