The Inevitable Death of DRM

Notwithstanding Apple’s announcement today of the sale of 2 billion songs on iTunes (all with DRM), most of the recent market signs suggest that the eventual demise of DRM is inevitable. Consumers are more frustrated than ever that certain file types are playable only on certain devices. The only real questions are when, and will it be replaced with something far more sinister?

The signs:

  • A year ago, Yahoo Music GM David Goldberg urged labels to abandon DRM
  • CD sales continue to drop and are down at least 15% from 2000, and current digital sales are not offsetting that lost revenue
  • eMusic, which sells only MP3s, is the no. 2 digital music reseller behind iTunes
  • Amazon is rumored to be opening a MP3-only music store
  • Sony Exec says “DRMs are going to become less important” as time goes on
  • etc.

Then there’s the Apple factor. The digital music market is starting to look like a monopsony for the big labels, with Apple as the only real reseller (20x the sales of no. 2 eMusic). No one else can gain enough critical mass to get users to buy a player and the music, or otherwise make much of a dent in iTunes. The only way others can sell music playable on the iPod is if it’s DRM-free. The labels will see it as a poison pill, but Apple is on a roll and their lead is getting stronger over time.

I spoke with Yahoo Music GM David Goldberg and VP Product Development Ian Rogers last week about their views on the future of DRM, given Goldberg’s comments about DRM a year ago (see above). The forty minute podcast is up at TalkCrunch. While they don’t quite agree that DRM’s demise is inevitable, they do have valuable insights as music insiders as to what may happen in the short term. One interesting prediction that Goldberg made is that we might see DRM and DRM-free tracks being sold side by side, with DRM music sold at a discount. I think that the general availability of illegal and quasi-legal alternatives may not allow that market to develop, but we’ll see. They also predict the rise of music subscription services.

Our advice remains the same. For legal reasons we do not condone the acquisition of music via BitTorrent or AllofMP3. We think Bill Gates’ advice is a pretty good way to go – buy the CD, rip and and do what you like with the music. You can listen to it on any device you own. But whatever you do, don’t buy DRM’d music. You’ll regret it down the road.

Photo by the amazing Scott Beale at Laughing Squid.