Recently EMI forged what might be touted as a groundbreaking deal with Apple’s iTunes Music Store to make available DRM –Free versions of portions of its catalogue to consumers.On face value this appears to be a positive shift in digital music retailing. However, upon closer inspection the execution may be flawed in a way that diminishes the overall impactfullness of the concept.
The digital rights management free tracks will be available in conjunction with their Apple DRM versions at a premium of $1.29 compared to the standard 99cent price point. The DRM-Free tracks will also provide a higher fidelity than the standard iTunes offering. The difficulty with this arrangement is three-fold.
First, the beauty of the iTunes Music Store as it exists is the seeming simplicity of the purchasing experience. As with most Apple products, it is streamlined to be intuitive. The double offering of releases with different price points undermines the simplicity of the store itself, adding potential confusion for casual users. If you do not know the difference between DRM and DRM-free or the difference in fidelity the increased price is a worthless premium and a cumbersome addition to the pricing scheme.
Most likely, the average consumer neither has concern about interoperability or interest in higher fidelity. Interoperability only affects, at present, those aprox. 20% of digital mobile players that are not iPods when considering the iTunes store purchases. The open format is not worth the premium to the majority of consumers because their only digital music experience is confined to the iTunes+iPod landscape. Additionally, the tracks will be non-protected AAC format, not the universally accepted mp3 format. Although AAC is open-format, it is not accepted by all media programs and players, thus diluting the actual effect of removing DRM by adding the extra step of mp3 conversion for non-ACC friendly devices.
Furthermore, fidelity is apparently not important to the average consumer. Most tracks offered online, both through paid sites and via file sharing, are at 128kbps, which is also the default for ripping music on the majority of programs for creating home digital use (and subsequent file sharing). These tracks are then typically consumed via lo-fi earbuds though a mobile devise, internal computer speakers not designed for broad spectrum music listening or a variation of the two connecting it remotely to either car speakers or a home unit (neither of which typically sport high end acoustics). The appeal of higher fidelity digital tracks really only impacts a small percentage of audiofiles who probably still listening to vinyl for its warmth or ripped their own CD catalogue at a higher bitrate already.
Secondly, for EMI the appeal of the venture is potentially increase sales in the digital forum, but what is the reality of this as the only label to attempt it right now? For starters, the DRM-free tracks are only available via iTunes, thus if there is any real sales impact from it, would seem to signal a further strengthen iTunes stranglehold over the paid digital download market in compared to other services not already touting DRM-Free material (such as eMusic). Secondly, it opens the door for these higher quality DRM-Free tracks to then be redistributed en masse at no profit to EMI via file-sharing sites once the early adopters make their initial purchases. Finally, EMI is going attempting this offering alone, without the support of the remaining three major labels or any of the prominent independent labels. This leaves them in a precarious predicament of educating the consumer of the benefits alone, sending mixed signals to an already confused consumer in the paid digital world.
Finally, if the average consumer views the nominal price of digital music on the internet as $0 (one need only look at Limewire’s activity to recognize this) and are marginally interested in paid downloads of 99cents to begin with (the averaged paid download per player is under 50 tracks according to published research), what is the reality that a premium of $1.29 is going to drive additional traffic to the paid download world? In theory, the increased price may deter whatever potential gain there could be from the advantages of the DRM-free, increased fidelity offering.
Other offerings in the digital music world also are becoming more prevalent as well. Consider the recent decrease in pricing for Verizon’s mobile music store (now at a competitive 99cents) and the new joint-venture between Cingular Wireless and Napster for its service. Similarly, other music listening options are beginning to provide greater sell-through options at competitive price points undercutting this tactic, such as MySpace’s deal with SnoCap and rumored satellite radio players with download to hard disk capability. As greater flexibility in obtaining legal digital music occurs, even with only nominal compatibly, it diminishes the requirement of paying a premium for EMI’s catalogue offering via iTunes.
One other note is most all other intellectual property outside of music, such as video and gaming, in the entertainment world continues to adhere to strict rights management schemes. Granted, unlike music that the consumer first was exposed to without digital rights management, video and gaming from the beginning contained protections either due to industry choice or a lack of free alternatives. This provides video and gaming with an unfair advantage in the digital rights management scheme and proves to further present a quandary in terms of the content protection versus consumer usage battle. EMI’s bold move sends mixed messages at best or at worst undermines some of the groundwork not only in the music industry in protecting copyright but extends the question of open sourcing to other areas of intellectual property management for those consumers in-the-know but not in the industries.
In the end, only time will determine the effectiveness of this ploy. If it is successful in driving paid downloads EMI will be hailed as visionary. If it fails, it may underpin the failure of the music industry to truly interpret consumer behavior and further devalue the already diminishing worth of paid music distribution, turning other would-be products aside for fear of further failure.