X
Business

The implosion of music DRM

I certainly wouldn't have expected that, within a year, most digital music would be legally available, DRM-free, from online download sites. That seems on track to happen, however, as Sony just announced it would be releasing its music in DRM-free MP3 format.
Written by John Carroll, Contributor

I certainly wouldn't have expected that, within a year, most digital music would be legally available, DRM-free, from online download sites. That seems on track to happen, however, as Sony just announced it would be releasing its music in DRM-free MP3 format. It helps, of course, that DRM-free music on iTunes has been so well-received. Sales of Pink Floyd's Dark Side of the Moon were up 350% after its iTunes re-release without DRM. Consumers seem to favor the DRM-free variety of digital music, and have proven willing to pay for it...just as they did with CDs (which are, by nature, DRM-free).

Other experiments in DRM-free digital music exist, such as those conducted by both Radiohead and Trent Reznor. Both recently released albums where consumers were given the option to download a free version. Radiohead's attempt was more free-form, with consumers being allowed to specify any price they wanted (an honor system, in other words), and though Radiohead hasn't released official results, other sources estimate them to be decidedly mixed.

Trent Reznor's experiment with the release of Saul William's The Inevitable Rise and LIberation of Niggy Tardust (produced by Reznor's production company) was a variation on that theme, with the free version being a lower-quality 192kbps, while the paid version being a higher-fidelity 320kbps. Further, the price for the paid version was fixed at $5.00.

Again, the results were mixed. 154,449 people downloaded the album, of which only 28,332 paid for the higher-fidelity copy. That means only 18.3% bothered to pay anything for Saul William's new album.

Trent Reznor wasn't negative in his blog post, but he wasn't exactly pleased, either.

I'm not sure what I was expecting but that percentage - primarily from fans - seems disheartening. Add to that: we spent too much (correction, I spent too much) making the record utilizing an A-list team and studio, Musicane fees, an old publishing deal, sample clearance fees, paying to give the record away (bandwidth costs), and nobody's getting rich off this project.

Then again, Reznor admits that they didn't do any marketing for the album. 18.3% would have been a lot better if downloads hit the 1-2 million mark (high by any standard, but not impossible for big-name music brands). Further, he notes that the total number of downloads exceeds the total number of CDs sold for William's 2004 release (33,897 in 2004, versus 154,449 in 2007, paid or not). That could translate into more popularity, leading to more attendees at future concerts, leading (perhaps) to 1-2 million downloads for future releases based purely on a Saul William's "brand" inflated by a larger fan base.

I also wonder whether offering entire albums for free is a good idea. I understand that Reznor is trying to short-circuit the "trade" in illegal free copies by offering legal free downloads from official web sites. That, however, might be impossible, at least from a "total success" standpoint.

It may be better to insist that ALL legal music will cost something, however nominal the fee might be. The lower-fidelity version could cost only $1-2, but insisting on some payment would create certain habits wherein people are accustomed to paying for online music...a habit that, sadly, seems in short supply with current digital music consumers.

Alternatively, they could offer only the higher-fidelity version, though at a somewhat lower price. That is how CDs work, which offer digital media encoded in "lossless" format at an admittedly extravagant price (there aren't low-fidelity CDs sold for $3.00). Sample music could still be offered for free, perhaps as incomplete songs.

The more I think about it, a "tiered" model would probably earn the most revenue, and operate in similar fashion to tiered pricing in other industries. Every tier would cost something, but lower-tiers (representing lower-fidelity music) would cost least, and the highest tier could offer a "lossless" digital encode (like CDs). Granted, music producers would have to be careful not to make things too expensive, as it could create incentives to turn (again) to music trading sites to get the higher tiers at zero cost.

Free music could still be offered, though perhaps as incomplete songs, or else radio-style complete songs with advertisements interwoven into the start and finish.  Such advertisements would have to be limited in length and subject matter.  Advertisements for other albums by the band, or even other albums from the same label, might be acceptable.  Advertisements for Charmin toilet paper probably would not be.

More experimentation, clearly, is necessary before a working model is devised. I think it will be impossible to make a complete end-run around illegal downloaders of free music. Those guys fill up hard drives with hundreds of gigabytes of bootleg music, and could care less whether the artist was compensated or not.

Most people aren't serial bootleggers, however. Most people would prefer not to run the virus, never mind the legal, risk of a pirate trading network. Most people would favor legal music at a nominal fee if the threshold of pain is made low enough. iTunes does a good job of lowering that pain threshold, acting as it does as a one-stop shop for millions of titles. Band oriented sites can also serve as useful storefronts on the Internet, with the added bonus that they offer extras not available through a standardized iTunes-style interface that serve to enthuse the fan base.

A tiered DRM-free model won't prevent illegal use completely, but then again, rope barriers used to manage crowds at public venues aren't the Great Wall of China, and white picket fences aren't 20-foot-high chain-link fences topped with razor wire. Most people obey such restrictions, irrespective of how easy it would be to get around them.

Anyway, I am thrilled that bands are experimenting with ways to make money from DRM-free music.

Editorial standards