[LINK] Music DRM dying?

[stephen at melbpc.org.au]

Amazon to Sell Music Without Copy Protection 
By BRAD STONE and JEFF LEEDS
May 17, 2007 www.nytimes.com

Amazon.com, the biggest online seller of CDs, is joining the movement 
against copy-protection software for digital music. It plans to sell 
songs that can be freely copied to any computer, cellphone or music 
player, including the iPod from Apple. 

The move could be another step toward the demise of the copy-protection 
systems that have frustrated some online music buyers and created 
confusion about compatibility between digital players and downloaded 
songs. Critics charge that the software has slowed the public embrace of 
legal digital downloads while failing to stop illicit copying, at a time 
when the music industry is desperate for ways to make up for declining CD 
sales.

Amazon announced plans yesterday to add a music download store to its Web 
site this year. It will sell songs and albums in the MP3 format without 
the layer of software for digital rights management, or D.R.M., that is 
used by most other online music retailers. 

Amazon said its service would include music from one major label, EMI, 
and from 12,000 independent music companies that have chosen not to use 
copy-restricting software. 

“We are offering a great selection of music that our customers love in a 
way they clearly desire, which is D.R.M.-free, so they can play it on any 
device they own today or in the future,” said Bill Carr, Amazon’s vice 
president for digital media.

Amazon’s announcement comes three months after Steven P. Jobs, Apple’s 
chief executive, wrote an open letter to the music industry arguing that 
it should stop using D.R.M. He noted that consumers get unprotected music 
anyway when they buy CDs and copy the songs to their computers.

Last month, Apple followed up on that letter, striking a similar deal 
with EMI to sell songs without copy protection through its iTunes store.

Apple, which controls more than 85 percent of the United States market 
for music downloads, will charge $1.29 for unprotected songs that will 
also have improved sound quality, versus 99 cents for a protected track. 
Apple plans to start selling those songs this month.

If the unprotected tracks from Apple and Amazon prove popular, other 
labels could feel pressure to follow EMI’s example.

“More than 50 percent of the entire music catalog is going be available 
without D.R.M. before Christmas,” said David Goldberg, the former general 
manager of Yahoo Music and now an entrepreneur in residence at the 
venture capital firm Benchmark Capital. “The music labels do not want 
Apple to have control of the download space, and although they won’t say 
it, they are very, very concerned about the lack of growth of digital 
music.”

Among the four major record companies, EMI has the smallest share of the 
United States market, and it has been struggling, posting two profit 
warnings this year and fielding takeover proposals from private equity 
investors. It potentially has the most to gain from experimenting with 
new digital music formats as a way to increase online sales. 

Other major music labels, like Sony BMG Music Entertainment and Warner 
Music Group, have appeared reluctant to join EMI in forgoing copy 
protection. But Universal Music Group, which is the world’s largest label 
with about one-third of the United States market, may be getting ready to 
make the leap. It has been dabbling with unprotected files in Europe, 
where it is selling new recordings from artists like the French singer 
Émilie Simon in the MP3 format.

According to music executives briefed on the company’s discussions, 
Universal has recently devised a broader set of offerings meant to test 
the market for unprotected songs through Amazon and other outlets.

In addition to the likely sale of classical music in MP3 form, these 
executives said the company was discussing selling unprotected recordings 
by stars like Gwen Stefani and Fergie, the lead singer from the Black 
Eyed Peas. 

Universal has also talked about possible MP3 sales through Google, which 
has been studying the music market, the executives said. A spokesman for 
Universal declined to comment.

Several analysts noted that the major labels could easily just stand back 
and watch EMI’s progress. “The other labels will all wait to see how the 
EMI experiment goes,” said James L. McQuivey, a vice president at 
Forrester Research. “They have the luxury of knowing good data is just 
around the corner.”

Amazon’s service could lead to a shift in the record labels’ relationship 
with Apple. Four years after the iTunes service established the market 
for paid downloads, the music corporations have become unsettled by the 
company’s clout in determining pricing and other terms. 

Many label executives say a successful entrance by Amazon could provide 
them with needed leverage in their current talks with Apple over renewing 
their contracts. Of course, even if the iTunes service faces new 
competition, Apple retains great power thanks to the popularity of the 
iPod, which has 70 percent of the music player market and works smoothly 
with the iTunes store.

Amazon did not announce many details of its new service, and it would not 
comment on its planned pricing for songs and albums. Executives who have 
talked with Amazon said they expected the service to sell D.R.M.-free 
songs for 99 cents — less than Apple’s $1.29 — though they noted the 
terms could still change.

Yesterday’s announcement puts to an end several years of industry 
speculation about Amazon’s plans for the digital music business. Last 
year, for example, there were reports that the company was on the verge 
of selling its own music players that would be linked to a subscription 
service. But the company later changed course, reportedly after Microsoft 
unveiled its own Zune player.

Despite the long wait, David Card, an analyst at JupiterResearch, said 
Amazon’s new store would immediately position the company as a credible 
rival to Apple and Microsoft. “We’ve been waiting for Amazon to be a 
serious player in digital music for some time,” Mr. Card said. “They know 
how to sell music, and this is a powerful endorsement of the MP3 
strategy.”

Not everyone thinks selling unprotected music can offset the decline in 
CD sales and save the music business. Many industry watchers are urging 
the industry to experiment with other approaches, including wholesale 
changes in its business model, like introducing music services that are 
free and supported by advertising.
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Cheers all ..
Stephen Loosley
Victoria, Australia