Tuesday, April 03, 2007

And The Wait for More Major Labels to do the Right Thing Begins... Drop DRM and Make Songs Available Even Cheaper Than They Are Today!

The much ballyhooed announcement of EMI ditching of DRM is great news. But record companies are stubborn so we should be prepared to wait a while, no matter how much Steve Jobs claims that it is the right thing to do
"The right thing for the customer going forward is to tear down the walls that preclude interoperability by going DRM-free," says Jobs.

EMI's move was met with a string of no comments from reps for the other major labels. But privately, sources at rival major labels are expressing annoyance that EMI is "recklessly" jumping head first into a DRM-free environment without what they view as adequate research and testing about the impact on sales, piracy or consumer demand.

The other major labels remain concerned that selling music sans DRM will cannibalize sales. And some label sources are also expressing dismay that EMI's effort undercuts the industry's ability to correct the security problems that have plagued the CD format by creating a completely secure commercial environment for digital music.

"They're completely wrong," says Barney Wragg, head of digital for EMI Music worldwide. "This is about creating more opportunity in commercialized music by providing the right product to people who are prepared to pay for it...We think it's going to significantly increase the size of the market."

EMI is adopting DRM-free formats after Norah Jones's "Thinking About You", Relient K's "Must've Done Something Right", and Lily Allen's "Littlest Things" were all made available for sale in the MP3 format in trials held at the end of last year.

The other three majors have tinkered with selling DRM-free music in limited tests. The results of those trials have been largely viewed to be inconclusive.

But market observers say that its only a matter of time before the other majors ditch DRM. "This breaks the logjam," says David Pakman, president/CEO of eMusic, one retailer lobbying the majors for DRM-free content. “This is the beginning of the end of DRM in music."
I agree, however how quickly this happens will be interesting. Interoperability has always been a key issue for all forms of popular music. In the 1940s and 50s the question was could you get a player that ran at 78, 33 1/3 and 45 rpms? In the 1970s did you go for 8-Track or Cassette? In the 1980s did you buy Beta or VHS (yes, I know, that was TV, but same thing... in a way).

Now, one thing that does burn me is the cost per song: 99 cents seems to be high, particularly for catalogue items. I always loved the fact that catalogue items have been, traditionally, around 30% to 40% cheaper than new. So, in the 1980s you may have bought a new record for $10 but an older record that had been around for five years or so would be $5.99. Heck, sometimes you could get them 3 for 12 bucks, if not cheaper. The whole point was to get more music in the hands of listeners after the initial demand for these items had waned and build loyal consumers who felt compelled to investigate catalogue. True, I may have made tapes and bought used records, but I also dropped lots of coin on new catalogue. Lots! So, why not sell these items at half the cost? You have already made your initial profits and you want to encourage people to buy your product and make them interested in legal downloads. right? Right?

Echoing my point with a megaphone and cuss words Bob Lefsetz simply goes off on this announcement that EMI's DRM free cuts will cost $1.29 per song:
Why the fuck should they cost more?

One small step for mankind, and one half-step back. It would be like Neil Armstrong getting to the moon and not getting out. I mean if you’re going to go all that way…

This is the kind of bullshit pussyfooting that got the labels into hot water to begin with. If anything, tracks should cost LESS!

Oh, if you buy the complete album, you get the old price. But who the fuck wants a complete album of dreck by lame acts like the Good, the Bad & the Ugly that played this press conference?

You want to sell more tracks at the iTunes Store? Make them a quarter. Or fifteen cents or a dime. Then watch sales go through the roof.

Do you see cell phone prices rising? Do you see T-Mobile canceling family plans or making you include every last living relative to get them?

You don’t make half steps. You go all the way, or not at all. If you’re not willing to bet the company, then you’re not willing to win.

Take the case of Compaq. State of the art computers, using the highest quality many times tested parts, for a high price. Good plan for a while. But then Dell sold hardly tested parts in machines at a low price. So did Compaq lower their prices A LITTLE? No, they changed their business plan, and sold what Dell did at similar prices. And the company ultimately merged with HP to survive. And HP was doing badly against Dell until computers became commodity items and people preferred to buy them at their local retailer rather than call Dell and wait for a shipment. In other words, business conditions change, and you have to adjust.

This is not a new movie. It started unspooling in 1999. People can download music from the Internet. And then they started owning hand-held players en masse. Where’s the mystery? CD sales have dropped since the turn of the decade. Now they’re in free-fall and you RAISE THE PRICE??? Shit, if you’re gonna buy the whole album you might as well purchase the CD, you can rip it at ANY BIT RATE YOU WANT, and there’s NO copy protection!

Unbelievable bullshit. EMI deserves to go out of business. As for its lame competitors, they’re so paralyzed that they won’t even make a move. Edgar Bronfman, Jr. wants higher prices WITH the DRM. And Sony BMG is just trying to stay afloat, with an internal war aflame, with the Sony half fighting for its life. And Universal is so arrogant, it somehow believes since it’s got the largest market share with the biggest selling acts, it’s somehow immune. RIDICULOUS!

Start with the publishers. They’ve got to go to a percentage rate.

Go to the deals. Give the artists a fair shake, or soon none except for the most vapid no-talents will sign with major labels.

Then rejigger the economics so you can sell tracks at a cheap price.

Or, wake up to the future and realize more people want more music at a cheaper price and sell it to them this way. In quantity. Probably as licensed P2P. But not track by track, even album by album, this is even LESS than the labels had before.

Record labels? Your business model has changed forever. Why don’t you wake up and acknowledge this. If you don’t give the people what they want at what THEY feel is a fair price, they’re just gonna continue to steal. And there’s nothing you can do about it.
Yeah, what he said without the swear words...

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