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The Herd of Elephants in the Room: Why We are Not Going to See the End of DRM Anytime Soon

by John Davidson
20 February 2007

So, everyone’s buzzing about STEVE JOBS’ comments on his blog. In short, he hinted that a way for the music business to right itself would be to purge itself of copyright control mechanisms (digital rights management, or DRM as we know it.) His point (that way more than 90% of songs are sold without DRM) is salient, but if it were that easy to just ditch anti-copying schemes maybe it would be a realistic option.

Of course, eMusic sells MP3s that have no limits on use. They have a pretty great catalog, it’s a pretty good deal, and they have been semi-successful with it. So we should be able to adapt that concept to all music then, right? Not so fast. There are a lot of limits over at eMusic: many titles are only partial in their content, many artists are only vaguely represented, and the vast majority of popular music isn’t available at all.

The criticism directed at Jobs is that his comments don’t reflect the dog he has in the fight. The iTunes Music Store was designed to support the iPod, and while the iTMS adds almost no direct profit to Apple, it provided impetus and an element of technological/cultural transformation to the device. But since we know that only about 2% of the average iPod contains music purchased at the iTMS, it would seem that iPods would still be big sellers without an Apple-branded store.

No, the real problem with stripping DRM from music is much more complicated than that. First, copyright issues are dealt with individually, which means that even the major labels need legal approval to distribute nearly all of their work in digital form. Getting catalog released is often a huge legal headache for record labels, as anyone who’s worked on legacy recordings knows, because there are so many hoops of approval to jump through. Copyright law was developed through hundreds of cases based on old-school technology, and even with the latest version of the Digital Millennium Copyright Act, conflicts can and do arise. It also stands to reason that labels probably face lawsuits from the music publishing companies if they don’t make an effort to enforce copyright.

The biggest problem, however, probably isn’t even related to the music business specifically. Even if the major labels got together and wanted to sell unrestricted digital files, there would be complications and pressure by other industries in their way. JEFF ZUCKER
, who was recently named CEO of NBC Universal, has thrown down the gauntlet at YouTube, essentially telling the much-ballyhooed website that he is going to vigorously defend copyright laws. If you think that Zucker is going to roll over while music executives—the ones who lucratively authorize copyright use to television shows, film, etc. to the rest of the entertainment business—decide to give up on copyright, you’ve got another thing coming.

Yes, it’s the rest of the industries who rely on the strength of copyright laws who are going to make it hard for the music industry to give up. Software companies, who likely lose billions a year on piracy issues, are a very effective lobby and could be asked to join with entertainment companies and go after Congress to demand stiffer enforcement. Industrial copyright, engineering copyright, chemical copyright—in general, most of the economy—relies on intellectual property law. At some point, those other sleeping giants are going to be awakened by the clamor in the music industry and start to rattle the cages of our imperial federal government. They will demand action and they will get it.

If Jobs’ prediction comes to fruition, it’s possible that the music industry will decide to play stupid and release as much as they legally can via unrestricted MP3s, but there will likely be an enormous amount of significant releases whose approval simply will be too expensive to garner. Those recordings will continue to be a part of the digital underground and spur legal action, with a likely result that the industry will view the experiment as a failure.

Filed under music industry music technology

Comments

This is an interesting column, as usual, but I think the most important line is what you wrote here:

“But since we know that only about 2% of the average iPod contains music purchased at the iTMS, it would seem that iPods would still be big sellers without an Apple-branded store.”

This is the real elephant in the room. Specifically, I’m talking about how those iPods get filled. You and I both know that it’s a combination of already purchased discs and unregulated downloading. The ITMS is for suckers willing to pay 99 cents a song or $9.99 per album when a higher bitrate (in many cases lossless), unprotected (w/out DRM) file is available for free if you know where to look. If the majors could figure out a way to make downloadable music legally available in a system much like calling plans or internet service (a set price for limitless or virtually limitless service), they’d be rolling in the dough. Of course the problem, as you noted above, is all the copyright hurdles they’d have to jump through to do this. To me, though, this is the obvious solution to the problem.

Then again, if they’re not willing to adapt to how more and more people are getting their music (i.e. so-called “illegal” downloading), I won’t be sad as they continue to lose their stranglehold on the marketplace.


— Matt Berlyant    2007-02-21 14:57    #

what I didn’t make very clear was that the majors could do their best to open the floodgates but probably or possibly bands like Radiohead and AC/DC would still hold out. I’m pretty concerned that because of legalities, a fairly large black market would exist for all the catalog stuff out there that can’t be legalized. For example, consider records like Paul’s Boutique or any of the other heavily sampled hip hop records that ran into major problems in that department. Eventually, one would think that everyone would toe the line.

The other more complicated but essential aspect is cultural: we are fostering an entire generation of P2P people who are going to have to be untrained on their habits. I think it’s still early enough to change minds but action is needed sooner rather than later.

And this goes beyond the fact that the labels gave up the copyright control fight over selling used CDs a long time ago. But that’s the subject for another time.


— john Davidson    2007-02-23 00:24    #

I go back and forth on whether a plan of limitless downloads would actually work because why would one pay 10-20 dollars a month for something that they can get for free? I think the only way for it to happen would be for the service to carry everything you can think of from majors to indie labels, for that to happen according to Davidson would be hard. C’mon even iTunes can’t get everyone on their ship, I mean heck there is no Garth Brooks, very big mainstream country singer. So if you can’t get it all in one place people are still going to find other ways to get the music they want. It’s all or nothing.


— Nick Carlson    2007-02-23 21:19    #

“The other more complicated but essential aspect is cultural: we are fostering an entire generation of P2P people who are going to have to be untrained on their habits. I think it’s still early enough to change minds but action is needed sooner rather than later.”

I just don’t buy this at all. Why do people’s minds have to be changed? Besides, you’re just fighting an unwinnable fight there. I guess your belief in human nature is very different from mine, but I consider myself a realist. People who are used to getting things for free aren’t suddenly gonna jump at the chance to pay for the same services, right? And more and more people are aware that the artists don’t suffer anywhere near as much as the labels do and as you well know, there’s no love lost between the majors and much of the music-loving public.

I’ll say it again. Charge a flat fee for unlimited service and watch the cash roll in. It’s the only way.

“And this goes beyond the fact that the labels gave up the copyright control fight over selling used CDs a long time ago. But that’s the subject for another time.”

I can’t tell if you’re just playing devil’s advocate here or if you really believe that they SHOULD benefit from used CDs? Remember the uproar that Garth Brooks caused in the early ‘90s when he got upset that he didn’t get royalties from used CDs? Well it’s the same thing. The majors are a cabal who want to profit every way they can, whether it’s wanting people to buy the same album on multiple formats or this type of stunt.


— Matt Berlyant    2007-02-26 16:52    #

John – I may be jaded, but I can’t help but be a bit skeptical at the timing of his statements. Not that I don’t doubt that Apple could potentially benefit from the removal of the DRM requirements for iTMS, but I really saw the announcement as a way to maintain “indie cred” – I read it as a sort of “look, folks, I hate DRM as much as you, but it’s those stufffed shirts at the majors that make us do this.”

The bigger picture of removing copyright is a huge one – and like most, I don’t really have a good idea how to address it.

Matt – I’m late to the party, but couldn’t pass up this chance to butt heads with you on this topic :) My bigggest issue with the argument remains “everyone’s doing it, so it must be ok.” And I don’t doubt that the artists are less damaged by file sharing than the labels are, but one could also ague that labels still provide value to artists (why would Death Cab and the Decemberists opt to sign with majors otherwise?). So damaging the labels DOES potentially damage the artist, albeit indirectly.

As far as the as comparing digital downloads to calling plans or internet service, the catch is that for both of those latter services, the pricing is based on an average cost. And in the case of internet service heavy users get throttled to cap their maximum consumption. Unlimited is never really “unlimited”. Going to music, I’d bet that the consumption rate would be HUGE for a handful of users, and given the questionable ethics of some, there’s little to prevent someone with a fat internet pipe to get an unlimited account, then turn around and quietly redistribute those files. If memory serves, eMusic used to offer an unlimited download plan, but the fact of the matter is that idea’s a hard sell when redistribution is so easy.


— Jeremy    2007-03-09 14:31    #