Op-Ed: Death of Digital Rights Management, goodbye and good riddance

Apple was the one who started the fall of DRM. Originally, the music companies were very wary of downloads, and wanted protection from copying. Steve Jobs Thoughts on Music article Feb 6, 2007:

To begin, it is useful to remember that all iPods play music that is free of any DRM and encoded in “open” licensable formats such as MP3 and AAC. iPod users can and do acquire their music from many sources, including CDs they own. Music on CDs can be easily imported into the freely-downloadable iTunes jukebox software which runs on both Macs and Windows PCs, and is automatically encoded into the open AAC or MP3 formats without any DRM. This music can be played on iPods or any other music players that play these open formats.

The rub comes from the music Apple sells on its online iTunes Store. Since Apple does not own or control any music itself, it must license the rights to distribute music from others, primarily the “big four” music companies: Universal, Sony BMG, Warner and EMI. These four companies control the distribution of over 70% of the world’s music. When Apple approached these companies to license their music to distribute legally over the Internet, they were extremely cautious and required Apple to protect their music from being illegally copied. The solution was to create a DRM system, which envelopes each song purchased from the iTunes store in special and secret software so that it cannot be played on unauthorized devices.

That was the setup for DRM’s demise. As Jobs points out in the piece, the internet is a big place, there are plenty of people with the technical knowledge to circumvent it, and DRM wasn’t going to cut it. Proprietary software was another big problem, with a truly ridiculous situation arising where downloads required special players to be considered “authorized” use. Jobs suggests alternatives to DRM, one of which is abolishing it entirely, which is what the recording industry is now doing. The ultimate commercial killer came with Amazon/Apple’s MP3 setups. These are the biggest distribution networks on Earth, and there's the market's smoking gun for DRM. The other fatal wound came from the fact that DRM has no effect on piracy. The Guardian (article and links courtesy Chris Hogg)

But what's the real effect of DRM? Last year, EMI began offering songs without it on iTunes. "The industry has finally been able to get some hard data about how removing DRM restrictions from legitimately purchased tracks affects piracy," says Bill Rosenplatt, DRM specialist and president of GiantSteps Media Technology Strategies. "The statistics show that there's no effect on piracy."

No effect. The assertion is remarkable. If DRM does not in fact discourage piracy, then it is merely a nuisance for the user. Now the Guardian understands that most download stores will remove DRM on permanent music downloads. "We are going to be selling non-DRM music from the summer", says Dave Elston, HMV's digital content manager, adding that it would solve "obvious interoperability issues" - primarily compatibility with Apple's iPod. Amazon has announced that its DRM-free MP3 download store, already online in the US, will be rolled out internationally later this year. Napster in the US is moving to MP3 for non-subscription downloads, and sources close to the company implied that the UK service will follow suit. And Apple offers DRM-free downloads for an increasing number of tracks.

Ironically, the music companies are now abandoning DRM because it worked too well. Apple wouldn't license its version to rivals - so the best-selling iPod drove the iTunes store to its present position, where it is the third-largest music retailer in any form in the US. Rosenblatt says that record labels "have been desperate to find a viable competitor to Apple and iTunes". Industry sources suggest that Apple's iTunes store has more than 70% of the UK download market, and growing. "The record companies don't like dealing with Apple, because Apple is in a position where it can dictate the economic terms and dictate the business models," says Rosenblatt. "What's going to draw people away from iTunes? One answer is to get rid of DRM."

I don’t buy the piracy bit. The whole concept of DRM was legally ridiculous and unenforceable, like the “illegal sharing” idea, which is still stinking in various courts around the world to this day. That’s caught nobody but innocent end users, not pirates, and has done absolutely nothing for anyone but lawyers. If DRM “worked too well”, what’s the problem? Either there’s massive download piracy, or there isn’t. Why so much emphasis on DRM and “saving” musicians from piracy? Why have we been hearing about nothing but piracy, for years? In any case, DRM is dead. It was one of the industry’s dumber ideas, using an entirely unrealistic commercial premise. It must have hurt sales severely in its heyday, and it would have cost a fortune in legal fees just to draw up contracts and terms of use. My bet would be the cost got too much in a seriously castrated revenue scenario. The industry has been losing enormous amounts of money in the post iPod era, which, coincidentally, was also the era of massive bleating about piracy. Commercially, this software-enhanced state of denial has been extremely costly, too, adding to unit costs. They’re not going to beat iTunes on the basis of a belated admission of failure. You either penetrate a market or you don’t. Having abandoned DRM, the next problem is commercial viability against a major league service provider. They’re nearly a decade behind iTunes in terms of reach, market depth and ability to deliver. They’re about a century behind in terms of marketing. DRM was a reflection of a mentality in the music industry which really needs to be put out to pasture. The music industry, like so many others, has let the lawyers and accountants run things, and costs have escalated according to the number of cooks. There’s a difference between accountancy, legal positions, and sales. Sales rule. No sales, and you don’t need accountants or lawyers, just a good mortician. In terms of PR, the industry now has a market image on a par with pedophilia with musicians and fans alike, thanks to the Nutcase’s Legal Guide To Psychotic Music Sales approach. The sooner the music industry wakes up to the fact that it’s consumer-driven, not lawyer-driven, the better for everyone. The Guardian article also provides some useful tips and comments on the current state of licenses, and handling your DRM-afflicted downloads. One suggestion to all concerned: Just sell the bloody music. Nobody gives a damn about anything else.