Monday, July 02, 2007

The Cat is out of the Bag

The cat is out of the music bag and it will be hard to put it back in.
First there was Steve Jobs who announced DRM-free downloads, then Amazon followed suite and now the retailer, HMV has just announced that it is to provide a DRM-free download service from September. HMV’s offer will include, at launch, a 1 million track DRM-free catalogue from EMI, along with other DRM-free tracks from independent record labels.

So the first question we must ask is, why would anyone want to buy DRM restricted tracks? The second is, if DRM-free takes over, who will win, the pirates, or the legal downloads?

The HMV news comes hot on the back of the news that HMV’s full-year pre-tax profits have just dropped form £98.2m to £48.1m. Changing times sometimes call for bold moves, but its rather ironic that HMV is the same company who derided Prince’s free ‘Mail on Sunday’ promotion as ‘devaluing’.

So the movement to DRM free is gaining ground. This may have wider impact on other IP entertainment and information sectors.

The second news is of the pricing spat between Universal, the world’s largest music corporation and Apple, the world’s largest download service. Last week Universal notified Apple that it will not renew its annual contract to sell music through iTunes. Some music executives consider iTunes has a near-monopoly position in the digital sector and wish to wrestle back pricing from the 99 cent track price point which Steve Jobs created. They don’t believe that low pricing fights piracy and want to go back to charge more for popular tracks and wrestle back control of pricing.

If Universal were to remove their business they would be potentially removing one out of three new releases sold in the United States. Conversely, if Apple were walk away from Universal’s recordings, the music company and mainly leading artists could sustain a digital blow.

It is interesting to observe an industry where the giants still haven’t learnt to co-operate and work together and where the artists and the consumers appear to be forgotten voices.