Last of the "big four" labels to offer DRM-free music tracks

[AppleInsider]

Record labels are remaining on the offensive when it comes to battling iPod maker Apple Inc. for revenue share in the digital music business, with word spreading that Sony BMG will soon join the ranks of other major labels in offering its catalog through some online retailers stripped of copy protection measures.

Citing people familiar with the matter, BusinessWeek clams Sony BMG Music Entertainment is finalizing plans to make at least part of its collection available without so-called digital rights management (DRM) software some time in the first quarter of this year.

The move would see Sony BMG become the last of the top four music labels to drop DRM, following word from Warner Music Group in late December that it also plans loosen its grip and sell DRM-free songs through Amazon.com's digital music store. EMI and Vivendi's Universal Music Group both announced their plans for DRM-free downloads last year.

The concessions also represent an about-face for the recording industry, which for the better part of the digital age has resorted to DRM to protect its catalogs from widespread piracy over peer-to-peer and other Internet file sharing networks.

"In abandoning DRM on à la carte song purchases, the labels could create a raft of new, less restrictive ways of selling music over the Internet, such as through social networks like Facebook and News Corp.'s MySpace," BW went on to speculate in its report. "Partnerships with retailers such as Amazon could also help the music industry take a swipe at Apple, which has come to dominate the legal download market through a one-size-fits-all pricing scheme record labels find restrictive."

The business mag said further details of Sony BMG's plans are expected to emerge in the coming weeks, adding that Justin Timberlake, the popular recording artist signed to the Sony-owned Jive label, is participating in a Super Bowl promotion with Pepsi that will kick off Feb. 3 and offer free distribution of 1 billion songs from major labels, including Sony BMG, through Amazon's DRM-free download service.

[ View this article at AppleInsider.com ]

[nmcphers]

They will likely follow suit and do Amazon only. Then Apple will fight back with forming their own record label with Jay-Z.

[edunaway]

Originally Posted by nmcphers

They will likely follow suit and do Amazon only. Then Apple will fight back with forming their own record label with Jay-Z.

The record labels are terminally ill. Artists will sell their music direct to the public via iTunes, Myspace and other websites.

[mrjoec123]

Originally Posted by nmcphers

They will likely follow suit and do Amazon only. Then Apple will fight back with forming their own record label with Jay-Z.

What does it say about the labels that they are willing to sell non-DRM to everyone BUT Apple? What message does that send to the customers? You can have music the way you want it, but you can't get it where you want to get it.

What would people think if Coke and Pepsi suddenly stopped selling their products in only one chain of supermarkets?

So instead of working to improve the customer experience and finally catch on to the music revolution, the Big labels just set their sights on a new enemy (Apple) and continue their old tricks, to the detriment, once again, of the paying customer.

The people have spoken. They want to use iPods, and they want to buy songs from iTunes, because it's the most convenient way to go about buying music for an iPod. Despite having several other options for years. They also want to pay a set rate for songs and albums, not the "variable" pricing schemes that promise cheap music but open the gate for higher and higher prices instead.

I'm all for Amazon succeeding, but I want that to happen on an equal playing field. Keep both Apple and Amazon honest.

It's clear that the end game for the labels is "crush Apple at all costs so we can get control over prices again and then start gouging like we always have." Whether or not they succeed depends on the gullibility of the average music purchaser.

I hope Apple does start its own label. And I hope independent labels start growing in number and popularity. The Big Four need to die as soon as possible.

[echosonic]

Originally Posted by edunaway

The record labels are terminally ill. Artists will sell their music direct to the public via iTunes, Myspace and other websites.

I don't think most of the artists are that smart.

I think the big winner will be the firms that stand between Apple and the artists and do the actual work of promoting, touring and logistics.

Its too much for any single artist and their personal team to handle worldwide sales, promotions, etc...they have no skill in this realm, and it is highly likely they have no interest in developing these skills either. For a small piece of per unit sales, a digital label could middleman the labor side and make a decent penny...

[gigi]

Let's boycott EMI label. No more song purchase from EMI. They start this nut strategy. And they will loose

[Booga]

Originally Posted by gigi

Let's boycott EMI label. No more song purchase from EMI. They start this nut strategy. And they will loose

Huh? EMI are selling through the iTMS. Let's boycott everyone *BUT* EMI.

I foresee Apple doing 2 things:
1. Laughing their way to the bank as people buy more iPods and fill them with songs from Amazon.com,
2. Create a portal/front-end for Amazon.com accessed from inside iTunes. Why not? It's just a web site.

[jbella]

It's totally nuts. All the musc labels have banded together to try and kill their most lucrative online retailer. I may not be a great business person, but that doesn't sound like a good move to me, especially with CD sales falling, and piracy increasing.
This does not even sound legal to me. Is it legal for the record companies to band together to offer a better product through one provider with the express purpose of destroying another? Isn't there some sort of anti-trust implications here?

[Chris Cuilla]

Originally Posted by Booga

I foresee Apple doing 2 things:
1. Laughing their way to the bank as people buy more iPods and fill them with songs from Amazon.com,
2. Create a portal/front-end for Amazon.com accessed from inside iTunes. Why not? It's just a web site.

I think you are 100% correct. It might not be in iTunes 8 (then again it might be).

Ultimately though, Apple could relieve itself from having to run the iTunes store if they wanted/needed to. This could provide an exit strategy if they need one (if they started to see the iTunes store as a "white elephant" in any way. Bottom line is that it gives them options.

I still think they want to try and make the store a success for video content and the AppleTV, but even there, they have demonstrated other ways (YouTube) of getting video content to the device.

[json]

The record companies want more control than Apple is giving them, over pricing etc. and I suppose Amazon is doing that.

What is a bit odd though is that Warner are selling DRM-free music only through Amazon, and still some Amazon boss was quoted saying that iTunes saved the music industry (or something to that effect, sorry for my bad memory).

[Bageljoey]

Originally Posted by json

The record companies want more control than Apple is giving them, over pricing etc. and I suppose Amazon is doing that.

Yeah, I wonder if Apple should cave on their control of pricing. You have to pick your battles. And to pick you battles you have to be in the fight! If Apple can't get the full catalogue of DRM free music, they won't be in the fight at all after a while.

I appreciate Apple trying to keep a reasonable and predictable price for music but I don't buy the argument that variable pricing will confuse the consumer. Certianly not as much as having to search out music from different sites because they are on different lables.

[mrjoec123]

Originally Posted by json

The record companies want more control than Apple is giving them, over pricing etc. and I suppose Amazon is doing that.

What is a bit odd though is that Warner are selling DRM-free music only through Amazon, and still some Amazon boss was quoted saying that iTunes saved the music industry (or something to that effect, sorry for my bad memory).

Well, iTunes did save the music industry, but that doesn't mean that the labels will hesitate to destroy Apple in order to regain control. And it doesn't mean that competitors like Amazon won't try their best to succeed in the marketplace. (The latter of which I think is a good thing, ultimately.) I just wish that the customers didn't have to suffer through all the inconsistencies.

I hope for all our sakes that the labels lose the next battle the way they did the first two. (One being the resistance against digital music in the first place, and two being the fight for DRM.)

[mrjoec123]

Originally Posted by Bageljoey

Yeah, I wonder if Apple should cave on their control of pricing. You have to pick your battles. And to pick you battles you have to be in the fight! If Apple can't get the full catalogue of DRM free music, they won't be in the fight at all after a while.

I appreciate Apple trying to keep a reasonable and predictable price for music but I don't buy the argument that variable pricing will confuse the consumer. Certianly not as much as having to search out music from different sites because they are on different lables.

It's not about confusing the consumer. It's about gouging the consumer. We already saw that NBC wanted to charge $4.99 an episode for popular TV shows. There's no doubt the labels will want to creep the individual song cost to at least $2.99. And Albums to $15 or even $20. Their past history with CDs practically guarantees that.

It's not that Apple is being the Good Samaritan here, looking out for the consumer above all. It's that Jobs knows that when that price increase happens, we end up in the same boat we were in the Napster days, when people would simply start stealing music en masse again. And then the industry loses its last hope of having a profitable (albeit less profitable) business model.

What the industry fails to see is the flip side of digital distribution. No warehouse, no physical medium. No shipping. No posters in retail outlets. No billion-dollar promotions needed, really. Just put the music out there and let the people decide what they want to listen to.

They don't want to see that, because in that scenario, they become superfluous. Record your song at home, post it on the web, and see what happens. With technology that makes searching for similar music and new music easier, people would simply discover and then spread the word on new music that inspired them.

[GQB]

Originally Posted by mrjoec123

What the industry fails to see is the flip side of digital distribution. No warehouse, no physical medium. No shipping. No posters in retail outlets. No billion-dollar promotions needed, really. Just put the music out there and let the people decide what they want to listen to.

Actually, they see it all too well. What they want is to directly pocket those savings rather than pass them on to their customers.
The myth of free-market capitalism is that reduced costs will be largely passed on to customers. But in anything close to monopoly conditions (as is the case with the recording industry) there is no incentive to do that, as we're seeing.

Its said that Apple (being a profit driven corporation) is no white knight. But what they are is the closest thing to an ally that consumers have since our interests are fairly aligned. Ours for fair prices, and theirs to break up the strangle hold that the labels have on the market.

The enemy of my enemy, and all that.

[GQB]

Originally Posted by mrjoec123

Just put the music out there and let the people decide what they want to listen to.

Oh, and in addition that is also not what benefits the recording industry. If we get to choose based on our own criteria, they lose control. What benefits them is to have a vertically integrated distribution system that allows them to 'create demand' (which is much less expensive than 'following demand'.
As media consolidates, they control production through advertising for distribution and touring, and get to determine what consumers 'want', and maximize their production line accordingly.

Finally, I have to laugh when people claim that the main victims digital distribution (and even piracy) are the artists. That's a ruse.
The vast majority of musicians make their living through performance, not recording. The recording industry is somewhat akin to our larger economy where the lions share of the wealth goes to the top 1%.

I frankly couldn't care less if the top grossing recording stars went absolutely belly-up financially, and musicians who think they're going to make even a living off of recordings are as delusional as inner city kids who think they're going to make their fortune in the NBA.

The faster the current recording industry totally collapses, the better, and we can start over with a performance based, recording as promotion, music business.

[ifiredmyboss.com]

Excellent article by David Byrne on the music biz

http://www.wired.com/entertainment/m...16-01/ff_byrne

Personally I think all music should be available everywhere.
The Eagles and Garth Brooks only selling at Walmart is not the way to
go for fans. I don't shop there so I won't be buying their music. Maybe I'll get used off
of Amazon or Ebay and they still won't get paid for it.

[JeffDM]

Originally Posted by mrjoec123

It's not about confusing the consumer. It's about gouging the consumer. We already saw that NBC wanted to charge $4.99 an episode for popular TV shows.

Only if you take the word of Apple PR at face value, but they too are prone to lying or stretching the truth to get Apple's "message" out. I don't believe that they are telling the whole story.

[GQB]

Originally Posted by ifiredmyboss.com

Excellent article by David Byrne on the music biz

http://www.wired.com/entertainment/m...16-01/ff_byrne

Great article!

This is similarly instructive...
http://www.jericsmith.com/contract.htm

Money quote:
"There's a perception that a lot of bands have about how they're gonna make money selling lots of records once they sign a contract, but that's really a myth," explains Clay People drummer Dan Dinsmore. "Most bands are gonna make their money on advances, on touring, on merchandise and on their publishing rights..."

[GQB]

Here's the article I was thinking of...

http://dir.salon.com/story/tech/feat...00/06/14/love/

[GQB]

Originally Posted by JeffDM

Only if you take the word of Apple PR at face value, but they too are prone to lying or stretching the truth to get Apple's "message" out. I don't believe that they are telling the whole story.

Let's see...
Side with a company that has produced (IMO) quality, innovative, and user-responsive products consistently, or a pack of thieving pirates who have consistently (for my entire life) done their best to produce crap product while raping their customers.

hmmm... quality... pirates... innovators... theives...
Tough one... what do you think?

[initiator]

Originally Posted by mrjoec123

What does it say about the labels that they are willing to sell non-DRM to everyone BUT Apple? What message does that send to the customers? You can have music the way you want it, but you can't get it where you want to get it.

What would people think if Coke and Pepsi suddenly stopped selling their products in only one chain of supermarkets?

So instead of working to improve the customer experience and finally catch on to the music revolution, the Big labels just set their sights on a new enemy (Apple) and continue their old tricks, to the detriment, once again, of the paying customer.

The people have spoken. They want to use iPods, and they want to buy songs from iTunes, because it's the most convenient way to go about buying music for an iPod. Despite having several other options for years. They also want to pay a set rate for songs and albums, not the "variable" pricing schemes that promise cheap music but open the gate for higher and higher prices instead.

I'm all for Amazon succeeding, but I want that to happen on an equal playing field. Keep both Apple and Amazon honest.

It's clear that the end game for the labels is "crush Apple at all costs so we can get control over prices again and then start gouging like we always have." Whether or not they succeed depends on the gullibility of the average music purchaser.

I hope Apple does start its own label. And I hope independent labels start growing in number and popularity. The Big Four need to die as soon as possible.

Well said!

[JeffDM]

Originally Posted by GQB

Let's see...
Side with a company that has produced (IMO) quality, innovative, and user-responsive products consistently, or a pack of thieving pirates who have consistently (for my entire life) done their best to produce crap product while raping their customers.

hmmm... quality... pirates... innovators... theives...
Tough one... what do you think?

That assumes I have to pick a side. In this case, I think both sides are lying, at the very least, it looks like they are both leaving very important information, taking information out of context and letting people fill in the blanks based on biased assumptions and leading statements. If neither side is going to put all the cards on the table, facing up, then there's not much to go on. Puting out good products doesn't mean the company is good, it only means the product is good.

I just don't see the point here in griping about NBCU. If you hate NBCU, then is it really a problem that NBCU isn't in iTunes store? Why aren't you seeing that as at least a partially good thing? They've basically shot themselves in the foot and you're complaining about it? I think that's quite a puzzling reaction. If you think it's crap at too high if a price, then you shouldn't be buying it.

[mark2005]

Originally Posted by JeffDM

That assumes I have to pick a side. In this case, I think both sides are lying, at the very least, it looks like they are both leaving very important information, taking information out of context and letting people fill in the blanks based on biased assumptions and leading statements. If neither side is going to put all the cards on the table, facing up, then there's not much to go on.

Actually, neither side is lying since if you've carefully read the words (i.e. from a legal perspective), they have not directly contradicted the other.

The issues are clear: NBCU wants bundling (hits with non-hits), and more DRM protection (on the content and/or on the playing device). Apple wants each show episode sold on its own for $1.99, and not as much protection as NBCU is asking for. NBCU believes its goals will lead to successful digital distribution for the content owners as well as consumers (for if the content owners can no longer create content, then the consumers lose too). Apple believes its goals will lead to successful digital distribution in its Store, since there is enough profit for all involved at a price the consumer is willing to pay. No need to make either a villain; they both are pursuing the same ends but wanting to use different means.

[JeffDM]

Originally Posted by mark2005

Actually, neither side is lying since if you've carefully read the words (i.e. from a legal perspective), they have not directly contradicted the other.

Or maybe heavly laden with weasel words, and still, IMO, leaving out information that would put the information in context. The $4.99 price Apple gave might be for HD, but they don't say that, we don't know. For me, that's just as good as lying, even more insidious than lying because they both want to leave an impression without actually being culpable for saying anything directly. So saying they aren't lying doesn't really tell me anything. You could say that politicians don't lie, but for the same reason, a lot of people don't trust them at their word, they'll find a weasely way to say what they want, or a weasely way to explain what they meant when the complaints start rolling in.

The issues are clear: NBCU wants bundling (hits with non-hits),

This is assumed, not confirmed. Apple said bundling, but last I read the PR announcement, they didn't give any specifics on how it would be done.

There's just too little information to go on.

I think the DRM issue was just a rumor. It's not in Apple's PR bit:

http://www.apple.com/pr/library/2007/08/31itunes.html

Reading the soundbites by NBC, it looked like maybe they wanted some royalties for the hardware:

http://www.paidcontent.org/entry/419...n-itunes-thro/

NBC was complaining about piracy, but I doubt people are pirating videos that came from Apple's store, but rather, trading videos recorded from cable, over the air or DVD-sourced rips.

[tmedia1]

I stopped buying DRM protected songs a year ago. If I can't get it DRM free, I won't buy it. In some cases, I've actually gone back to buying CD's from Ebay or Amazon and ripping the CD to 320 kb AAC files. I can usually find any cd for 10 bucks or less and they sound better than what you get from downloads!

[caliminius]

Originally Posted by mrjoec123

Well, iTunes did save the music industry, but that doesn't mean that the labels will hesitate to destroy Apple in order to regain control.

How did iTunes save the music industry?

I've heard this repeated way too many times and I can't understand what people must be smoking or shooting into their veins to believe that nonsense. Only 10% of music is purchased as digital downloads. iTunes accounts for only 8% of all music sales.

How does less than 10% of total music sales somehow equate to iTunes "saving" the music industry. Utter nonsense!!!

[Walter Slocombe]

Originally Posted by mark2005

Actually, neither side is lying since if you've carefully read the words (i.e. from a legal perspective), they have not directly contradicted the other.

The issues are clear: NBCU wants bundling (hits with non-hits), and more DRM protection (on the content and/or on the playing device). Apple wants each show episode sold on its own for $1.99, and not as much protection as NBCU is asking for. NBCU believes its goals will lead to successful digital distribution for the content owners as well as consumers (for if the content owners can no longer create content, then the consumers lose too). Apple believes its goals will lead to successful digital distribution in its Store, since there is enough profit for all involved at a price the consumer is willing to pay. No need to make either a villain; they both are pursuing the same ends but wanting to use different means.

Well put, and non paranoid. Thank you

[hillstones]

The record labels already sell non-DRM music. It is called a CD. The online alternative is not the only place to buy music. Just shows how stupid the RIAA really is.

[XanaduTheory]

Originally Posted by mrjoec123
What does it say about the labels that they are willing to sell non-DRM to everyone BUT Apple? What message does that send to the customers? You can have music the way you want it, but you can't get it where you want to get it.

What would people think if Coke and Pepsi suddenly stopped selling their products in only one chain of supermarkets?

So instead of working to improve the customer experience and finally catch on to the music revolution, the Big labels just set their sights on a new enemy (Apple) and continue their old tricks, to the detriment, once again, of the paying customer.

The people have spoken. They want to use iPods, and they want to buy songs from iTunes, because it's the most convenient way to go about buying music for an iPod. Despite having several other options for years. They also want to pay a set rate for songs and albums, not the "variable" pricing schemes that promise cheap music but open the gate for higher and higher prices instead.

I'm all for Amazon succeeding, but I want that to happen on an equal playing field. Keep both Apple and Amazon honest.

It's clear that the end game for the labels is "crush Apple at all costs so we can get control over prices again and then start gouging like we always have." Whether or not they succeed depends on the gullibility of the average music purchaser.

I hope Apple does start its own label. And I hope independent labels start growing in number and popularity. The Big Four need to die as soon as possible.

You can't have it both ways. First it was the big labels want to DRM us all to hell and back, now it's that they don't like Apple. Perhaps you're right in that the labels made an enemy out of Apple.

Good for them, in the short term, really.

Wasn't it Steve-o who said it was the labels that cause the Apple monopoly by not selling music sans DRM?

The labels are just trying to make Steve eat his words and, gasp gasp, maybe even keep things fair, however indirectly or without intent.

The labels will take the success of the iTunes store by essentially enabling Amazon to be a proper competitor... but like you said, everyone still wants an iPod.

It may be the spend a dollar to save a penny logic in the eyes of the labels, but would you expect less from them? At least we have DRM-free music available for purchase via a merchant that isn't either proprietary to one label or otherwise completely ridiculous.

[Swift]

For the labels to go DRM-free, and then refuse to do that with Apple, is not smart or, in the end, legal. If they stick to it beyond this negotiating stance, I'd say lawsuits will come. The labels complained about Apple wanting them to stop DRM -- remember the indignant statements from Bronfman and others? What idiots -- but really, they wanted complete control of the pricing. Well, they went to Amazon, and made their tracks available cheaper than to Apple. Variable, it's true, but nowhere do I see the $1.29 that Apple gave EMI. Most tracks in Amazon are .89. So, aren't they cutting off their noses to spite their faces? (Strange expression, that.)

The consumer has interests here. If all music is DRM-free, and reasonably-priced, I'd say that music piracy will not disappear, but they will reclaim a much higher percentage of the market. If it's legal, and affordable, I think most people will "go straight," if you can buy a track on Amazon or iTunes or the Zune marketplace that you can pay on any player.

The music labels are the equivalent of the Mob: they've controlled their market for so long, they thought it would go on forever. It didn't. All music should be available for sale in many places, and if one site can figure out how to sell it cheaper, that's up to them. They get 70¢ a track now, the credit card companies get 25¢. (That's who could lower prices, huh?), and then Apple has to pay for bandwidth for the download, the server farms, etc. If they get 2¢ a track, they're lucky. That's okay for Apple. They're a hardware company.

My prediction? Apple goes for downloads in CD-quality Apple Lossless. 300 MB for a CD for what? Five bucks?

[TX65]

the big music labels are watching their role in the music business fade from importance since internet distribution will allow small labels to form that do nothing but internet distribution and don't bother with physical media.

If you take a major known artist, what will be their motivation to resign with their record label when they can sign deals directly with internet distribution providers?

No different in the movie business as internet downloads will one day be the end of physical media.

2 years ago I met with a company in Houston that was beginning to offer fiber connections directly into homes in new developments and their entire methodology is that everything will be on-demand including broadcast shows. They likened it to as soon as a network broadcast a show, the show would be available on demand, just watch it as your schedule dictates. Beyond the internet connection, what they are really offering you is a DVR that records everything and catalogs it for you to watch when you like.

it wont be long that all you need is a stout internet connection and you can buy content from whatever source you want. In reality, there is very little broadcast on tv that needs to be real time.