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.