DRM and iPod Success

I just read an interesting Reuter’s article suggesting that DRM is responsible for what is referred to as Apple’s stranglehold on the digital music industry. According to the author, some competing music services are blaming DRM and the labels for their inability to do as well as Apple.

eMusic is pointed to as an example to prove their point. The only digital music site with more downloads than eMusic is iTMS. eMusic offers completely unprotected MP3s, and digital music sources claim that this is the reason it is as successful as it is.

Of course, anybody who follows DRM issues knows that there is controversy having nothing to do with the success of the iPod. Many people feel that DRM doesn’t protect the artist at all. Some would suggest that DRM is just another way to protect the labels.

Record labels, of course, are for-profit organizations. I’m not a fan of DRM (who is?), but I’m not surprised that record companies want to protect their sales. Apple and other companies do the same.

Yet when it comes to DRM, the writer makes a good point about the lack of protection that DRM offers artists and labels. It isn’t all that difficult to work around for the average user. For those who enjoy the challenge, every DRM offered has been hacked.

David Goldberg of Yahoo! Music states that digital sales of legal downloads have remained flat all year. In fact, after an all-time high at Christmas, average sales have slightly dipped. Goldberg blames DRM for this. He claims that DRM is keeping people from buying music legally.

The Reuter’s quotes Goldberg as saying that there has been no growth at all this year in the digital download industry. Numbers from SoundScan contradict this. Though weekly average sales may have slumped recently, individual track downloading has increased 72% and album sales have increased 115% during the last year. The only drop is in physical sales, which have decreased by 8.3%.

I suspect the iPod phenomenon has more to do with the design and marketing of iPod/iTMS than with the industry’s DRM requirement. Goldberg suggests that DRM is preventing some who download illegally from moving into legal downloads. Maybe he’s right. Then again, maybe there will always be a large number of consumers who refuse to pay anybody for music they can get for free. Fortunately, companies like Apple proved that people are willing to pay if the price is right and the download is relatively painless.

No matter how good the product, and with or without DRM, download sales will eventually stall. They have to. Nothing continues to grow forever. Digital download sales are currently in the millions every week. That seems like a pretty good number of sales to me.

If the industry is looking for ways to promote growth, offering more variety could be helpful. Everything doesn’t have to be commercial, especially when offering digital downloads is so inexpensive. eMusic.com doesn’t offer the major artists, but it still manages to thrive. This is good for the entire industry.

As reported here and other places, Yahoo! Music is offering limited DRM-free music. If DRM is the only thing standing in the way of increased digital downloads, this will be the beginning of gathering the information that can prove it. If DRM is the only reason people use iPods and iTMS, people should be flocking to Yahoo! Music to download their DRM-free offerings.

Like others, I’d like to see DRM go away. In the meantime, if the industry wants to increase sales, they should try promoting a wider variety of music.