DRM: the End is Near Thanks to Greed and iPods

I predict that thanks to Apple, DRM on music, and eventually movies, will become far less restricted, possibly even eliminated.

Brief History of Why a Collapse was not Possible Before

People got sued, negative publicity flew around every week, and there were even reports of DRM root kits! Many people loathed DRM, and yet it persisted. Some would argue it is because “average Joe/Jane” doesn’t care enough to make a scene. This is true to an extent, but the real reason DRM has not let up is because the content owners would rather die first. In short, the reasons against DRM were all from the consumer’s view point, not the sellers.

Idealists tend to forget that the RIAA and friends hold all of the cards. All of them.

In Came Apple

So after the rabid freebie era of Napster, Apple signed up to distribute music with DRM. Studios were “happy” that they would finally make money with digital music (no additional production costs!), and Apple got to push iTunes as the first and only.

Years later, Apple pulled a switch-a-roo and somehow, without the content owners realizing, Apple held virtually all of the cards.

DRM Prevents Competition

DRM is one of those technologies that doesn’t bother you until you have to switch products. That means nothing to consumers who love the iPod (pretty much everybody), but is extremely bad news for competitors.

The average consumer doesn’t understand the ramifications of DRM. All they understand is that digital music means iPod. But it’s actually worse than that. Even if I want to buy music from, say, Microsoft, it turns out I can’t play it on my precious iPod! You can see why Apple continues to dominate digital music sales.

This means competitors have a huge uphill battle to fight. They have to make consumers abandon their old legal library each time they want to switch brands. Good luck.

Labels Shoot their Feet

The labels accidentally created a monopoly on digital music, and they aren’t it!

To be specific, the problem is that the monopoly isn’t on the music itself; it’s the music players. This concerns the labels because so long as Apple has a dominant market share, they are stuck dealing with iTunes. They can’t pull support for iTunes because if nobody can sell iPod compatible music, everybody would just revert to piracy.

It doesn’t matter how much greater the iPod’s competitors are: if the consumer owns even one iTunes song, that becomes a huge mental barrier that the consumer must overcome. And competing stores are demanding better rates than iTunes in order to over come this.

DRM is not about Piracy, It is about Control

Have you ever thought about why labels are so adamant about DRM? Is it to fight piracy? No. It’s all about maintaining control.

DRM’s sole purpose is to maximize revenues by minimizing your rights so that they can sell them back to you.

But, in a funny and ironic twist, the labels lost control of digital music thanks to their self-imposed DRM. This is a lose-lose scenario for the labels. No matter what they do, so long as Apple dominates, they have no control. DRM isn’t helping them in any way.

What is Left But to Gut Yourself

The only option remaining is to force Apple to remove the DRM. If Apple refuses, simply offer competing stores a chance to sell without DRM: they will murder iTunes overnight. Proof? The second biggest music seller in the country is not MSN, Rhapsody, or even Real; it is eMusic.

Market share for online music retailers:

Apple iTunes: 67%
eMusic: 11%
Real Rhapsody: 4%
Napster: 4%
MSN Music: 3%

Why is this amazing? Because they sell only indie music! Their market share is the sum of the next three competitors combined, all three which have huge brand name recognition and sell mainstream music. How is this possible? They don’t use DRM. They are able to compete with iTunes because of this.

Removing the DRM guts Apple’s control of the market and once again gives the labels control over what to price their product. Until they do this, Apple remains the bench mark that every music store will need to beat to compete: $0.99 cents a song or less.

Ah, I love karma.

Note: I do not own an iPod. I prefer to “rent” (stream) and know I don’t own it, than “buy”, and not actually own it.