Nicholas Carr writes about EMI’s decision to release the new Norah Jones single as an mp3, as reported in the WSJ.
I see DRM as a futile attempt by a threatened industry to defend their existing business model, which for a hundred years has been predicated on manufacturing and selling some form of physical media (piano rolls, wax cylinders, LPs, or CDs) and earning a ‘breakage’ fee by selling people albums when most of the time they want singles.
What’s interesting about this story - in the light of my own posts about the wireless business - is the immediate cause of EMI’s move. It’s not that some Norwegian kid has cracked another DRM code, it’s that Apple’s DRM strategy - for now - has proved too successful!
Apple has a near-monopoly over sales of digital music. More importantly, they have a lock on the market for digital music players. Music sold through any other DRM channel won’t play on an iPod, so why bother? EMI’s best hope of selling digital music outside Apple is to sell mp3s, which will play anywhere, including iPods.
And mobile operators? Mobile phones will compete with iPods as portable music players, but most people will load up the songs that they already own from their PC, and the carrier will make no money apart from the initial handset sale. ("The iPod makes money. The iTunes Music Store doesn’t.") I can understand people downloading music over the air to their phone on impulse, and paying a premium to do so, but that will be a small business for the record labels and a negligible one for carriers. So why do they even bother? And why don’t all the carriers collaborate on a DRM strategy and build a single channel to compete with Apple? The answer to both questions is that content is the cupholder.
By the way, ‘Chris_B’ in a comment to Carr’s post says that unauthorized duplication of CDs is a much bigger problem than online file-trading. He is probably right for now, but I think that while the music business will survive the transition to digital content in some form, the CD duplicators will not. The only people who buy pirated CDs today are the ones who don’t have Internet access yet.
Traveling all over South-East Asia this year, I rarely saw anyone selling music - a few stalls in the Khao San Road in Bangkok, some sun-faded CDs in a store in Hoi An, Vietnam. Why? Because all the likely buyers were Western tourists and backpackers. And all of us had mp3 players.
On the other hand I saw two Internet Cafes - one in Cambodia and one in Laos - that were charging for the right to download music.
