Major labels to abandon DRM

IFPI logoYesterday’s post about Digital Rights Management prompted an email conversation with Paul Birch, who is a member of the exec committee and main board of the International Federation of Phonographic Institutes (IFPI) as well as the BPI Council and Chairs International.

According to Birch, the major labels have decided to abandon Digital Rights Management. They haven’t announced it yet — but it’s coming soon. In the wake of the Sony BMG Rootkit debacle, and in the light of the competitive advantage logic, it makes perfect sense.

Birch writes:

DRM as we know it is over. There may be Son of DRM but that’s another matter. Right now its dead, the majors are moving towards the new model. The one thing you can be sure of is they will still be at the centre of the world music industry whatever happens. The independents are another matter. As our sector’s share has fallen by almost half in just over twelve months, the new model for us is partnership. It always was, I’m just not sure we got it.

While Birch himself runs an independent record label (Revolver Records) and I have no cause to doubt the sincerity of his pledge of allegiance to the majors, I’m not sure all independent labels would jump on board the partnership model ‘major labels are our future’ sentiment, and nor am I as optimistic as Birch about their continued centrality.

In fact, while the majors may well declare a moratorium on DRM any day now, it seems unlikely that the people who get the real advantage from it will walk away. Apple’s FairPlay DRM and Microsoft’s PlaysForSure DRM are likely to be with us for a while, because they protect against disruptive technological innovation. This was never about piracy.

The major labels are, predominantly, (1) financiers, (2) filters and (3) marketeers for music.

Recently, (1) other similarly large (and traditionally non-music) corporations are spending significant sums on music; (2) increasingly sophisticated filtering systems are emerging that give exposure and choice to a much wider range of artists and consumers; and (3) the marketing track record for the majors has been patchy of late — particularly from a PR perspective.

While it’s good news that the majors have abandoned DRM as a bad job, it’s too soon to say that they’ve attained digital enlightenment. They are still under serious threat because they have not been quick to evaluate and accommodate new practices.

More importantly, I’m concerned that giving up the ‘protection’ of DRM will lead to other, even less acceptable tradeoffs. Increased surveillance on the online activities of their customers, more hostile lawsuits, increasingly draconian End User Licensing Agreements, and additional recoupable costs passed onto artists to pay for it all (with a nice, healthy margin to boot) are all potential ‘Sons of DRM’ we may need to keep an eye out for in future.

20 thoughts on “Major labels to abandon DRM

  1. Matt_ says:

    DRM does not work but Digital Watermarking does and then if the record industry finds a file that has your ID emebeded in the Watermark on a file sharing network then they will possibly take legal action agaist you .

    They will also use Digital Fingerprinting to help fiter copyrighted works off the ISPs pipes and they will ask all filesharinging companies to possibly join in a collective licening model like radio stations already do .

  2. Vay says:

    Maybe I’m in for a music free future, but I will not buy another song until a ‘you buy it you own it’ policy. I’d rather listen to a dripping faucet than deal with these greedy bastards. I have well over 300 Cd’s but my collecting days are over. They better grow up and relax if they want more of my money.

  3. Paul Birch says:

    It’s accurate that I said this, if it will come to pass is another matter. It’s purely a prediction and not something I have overheard said at a board table.

    I am neither advocating DRM’s demise or its continuance by the way. Just reporting on where I see things heading.

    The reference to “partnership is the future by the way”; what I was discussing there was partnership with each other. I don’t rule out a kind of partnership with the majors but that would depend upon the two sectors re-establishing trust. The real challenge for Independents is abandoning the “don’t crush us we are small and we hurt” sentiment, and picking up real differentiation strategies established through mechanisms such as corporate social responsibility.

    Independents have difficulty in working together in real strategic partnerships. Corporations have practiced these type of realtionships since the days of the East India Trading Company.

    It would be naive to think that 1/. The majors wont be at the centre of the new model what ever that might be or 2/. Rights will in some way go unprotected.

    I would expect to see some augmentation of existing structures but not the abandonment of the core values that binds the industry together.

    By the way if we look at the history of the Music Industry, there was corporate shuffling in the 80′s and 90′s when BMG took over RCA, when Warner merged with Time and then acquired AOL, when Sony took over CBS, when EMI de-merged from Thorn and when MCA was taken over by Matsusitu only then to be merged into PolyGram to form the new Universal company. Why should we be surprised then that these companies should now consolidate?

    Corporations do it all the time. If HP and Compaq can do it why not Universal and BMG music publishing?

    In fact if they didn’t consolidate the transition to the new model would fail. That would leave the Record Industry ripe to take-over by World sized corporation that dwarf the major labels.

    Does the Industry seriously think that Apple, Microsoft or any Telco you care to mention would be better guardians of our fragile rights?

    My money is on the majors acquisition of new media companies, placing them at the centre of a new world music entertainment industry. They should neither be the way us Indie labels define ourselves nor should they be our model for aspiration. They are what they are. The big question is what are we? What’s our strategy? How will we move to the new model?

  4. Mariomax says:

    Don’t count DRM out yet. There’s an exciting new version coming out very soon.

    STAY TUNED.

  5. Mario Welch says:

    This one makes sence “One’s first step in wisdom is to kuesstion everything – and one’s last is to come to terms with everything.”

  6. Heh, to TS- you is right!3

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    Yeah, it’s true!

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    Nikki Beach Music is giving the chance to their online members to free download music CD on 22nd March.
    They also organised a big music conference on 25th March with no of stars arround the world.
    Nikki Beach Music

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