First, let us do a spot of linguistic cleansing. The acronym DRM has been mentioned a lot this week. It stands for digital rights management, which is a euphemism of Orwellian proportions. It is, in fact, a method by which record companies, movie studios and other publishers of electronic content impose restrictions on what consumers may do with the products they buy.
If I buy a paperback book in a bookstore, I can read it anywhere I like; when I've finished with it I can give it away to Oxfam, lend it to a friend or sell it on eBay. But if I buy the same book in electronic format, it will come with DRM or licensing restrictions which prohibit all of these things. So let us have no more cant about DRM being about rights. It is in fact about restrictions.
DRM was in the news because of EMI's unexpected announcement that, starting next month, it will sell its stuff on iTunes in two flavours: one is the standard, DRM-crippled variety; the other a premium version with higher audio quality and without DRM.
The announcement came as a bolt from the blue, though I suppose that if anyone had spotted Apple's CEO, Steve Jobs, going through Heathrow they might have suspected that something big was afoot. Mr Jobs does not normally descend to earth for anything as mundane as another company's press conferences. But there he was on the platform, alongside EMI's chief executive, Eric Nicoli. Selling digital music DRM-free is the right step forward for the music industry, intoned Steve. EMI has been a great partner for iTunes and is once again leading the industry as the first major music company to offer its entire digital catalogue DRM-free.
City reaction to the development was, on the whole, pretty cynical. EMI's move was seen as a desperate last gamble by a failing company. Why else would it give away its prime assets, allowing them to be ripped off by the digital pirates poised to board every ship in the content industries leaky armada?
Outside the Square Mile, however, shrewder assessments prevailed. To many, the EMI decision looks like a strategic coup. It's been obvious for a long time that the music industry's Custer-style stand against customer demand for unrestricted music was doomed. Sooner or later, the penny would have to drop that you can't maintain a viable industry by alienating all your best customers.
Recorded music is the product that most young people feel most passionately about. If you're a purveyor of this magical, valued product, it takes a perverse kind of genius to transform yourself into an object of universal loathing. Yet that is what the record companies have achieved over the last eight years ever since the original Napster blew a hole in their cosy, CD-based business model. By opting to abandon DRM, EMI stands a chance of being perceived as the one major record company that trusts rather than fears its customers.
That said, there are some puzzling things about the new dispensation. From May, iTunes customers will be able to buy EMI content in two versions. One is the old DRM-crippled stuff, recorded at 128 kilobits per second and priced at 79p per track. The premium version is free of DRM restrictions, recorded at 256kbps (giving higher audio quality) and costs 99p per track. Customers who bought the old, crippled, versions will apparently be able to upgrade for just the difference in price.
The weird thing about this is the way better quality and freedom from DRM are being combined. As Ed Felten, a Princeton expert on DRM, observed this week, if EMI and Apple wanted to find out how much customers valued DRM-free music, then the obvious step would be to give them just that option and see how it went. Ditto for higher audio quality. Under the new EMI scheme, the two are mixed and consumer reaction will be difficult to interpret.
There are two possible reasons for the decision. One is the straightforward marketing rationale the combo makes the proposition even more attractive to consumers: two improvements for the price of one! The other explanation is more, er, Machiavellian. As Felten puts it: Apple has taken heat from European authorities for using DRM to lock customers in to the iTunes/iPod product line; the Euro authorities would like Apple to open its system. If DRM-free tracks cost thirty cents extra [as they will in the US], Apple would in effect be selling freedom from lock-in for thirty cents a song not something Apple wants to do while trying to convince the authorities that lock-in isn't a real problem. By bundling the lock-in freedom with something else (higher fidelity) Apple might obscure the fact that it is charging a premium for lock-in-free music.
Sounds right to us. As my mother used to say, no smokescreens without fire.
http://observer.guardian.co.uk/business/story/0,,2052346,00.html
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