May 17, 2007 4:00 AM PDT

Apple, Amazon may hold future of DRM-free music

Critics of digital rights management have long insisted that record labels could boost sagging sales by offering music unencumbered by copy-protection schemes.

Apple's iTunes and e-tailer Amazon.com are in position to test this hypothesis in the coming months. On Wednesday, Amazon announced that it plans to sell digital songs from record label EMI Group that will be DRM-free. Amazon's unprotected music, which will be sold from the retailer's upcoming download store, can be played on a wide variety of portable music players, including Apple's iPod and Microsoft's Zune. Amazon's announcement follows one last month from Apple, which is also due to begin selling unprotected music from EMI.

The music industry-- struggling with one of its worst-ever sales slumps--will be closely watching how Amazon and Apple fare. If they are successful in moving a lot of songs, then that might convince the other three major record companies to strip DRM from their music. If sales are lackluster, then that might spur the labels to wrap songs in even tighter copy protection, say industry insiders.

"DRM is the only thing that has given the industry any kind of control," said one record executive, who requested anonymity.

David Card, an analyst with JupiterResearch, said it's going to be hard for Amazon and Apple to prove anything by selling music from only one of the four major labels.

"Amazon is a strong endorsement for this (unprotected music) strategy," Card said. "The question of whether it's enough to tilt the tables away from DRM remains to be seen. The sales would have to be huge to bring the others on board."

Representatives from Warner Music Group, Universal Music Group and Sony BMG declined to comment.

Sales of traditional CDs are in a free fall. The industry reported a 17 percent decline in album sales so far this year. Ipsos Insight, a Chicago-based market research firm, issued a report recently that showed a 15 percent drop from 2002 in the number of U.S. consumers who had bought a CD within the past six months. The music industry is waiting for music downloads to make up these losses, but that hasn't happened yet.

The question of whether DRM-free music will appeal enough to consumers to make them pay for it may be answered by music fans like Elise Malmberg and her husband, Joe Gore.

The San Francisco couple are musicians, music critics and owners of more than 500GB of music. The couple listens to songs on iPods and other devices.

"DRM is kind of a moot conversation," said Malmberg, who bought her last CD from Amazon in December. "The record labels are trying to control something that's totally out of their control. People can access songs now regardless of DRM. It doesn't help."

If the price is right ...
Gore and Malmberg rip most of the songs they listen from albums and load it on to their iPods. While the pair does buy some music from iTunes, they don't tolerate Apple's copy-protection software.

"We know a way to convert everything into regular MP3s," Malmberg said. "We can then move them around to any device we want. It's ridiculous for them to say I can listen to songs only on the players they say I can."

Amazon and Apple could end up frustrating consumers, many of whom have long resented having to figure out what music formats and DRM schemes are compatible with the many music players available, said Susan Kevorkian an analyst with IDC.

"By offering both DRM-protected music and songs without, these retailers are adding another level of complexity," Kevorkian said.

Nonetheless, Malmberg, 44, and Gore, 48, said they would absolutely buy unprotected music from Amazon as long as the retailer's new site is simple to use and sells songs at the right price.

Look for other retailers, including Wal-Mart, to offer DRM-free music, said music-industry sources. Amy Colella, a Walmart.com spokeswoman said the company has yet to decide its next move.

"We know digital music interoperability is important to our customers and continue to evaluate these types of opportunities," Colella said.

Jeanne Meyer, a spokeswoman for EMI, declined to identify which retailers would next begin offering unprotected music. "We're out talking to everyone," she said.

If EMI is able to stir up interest in DRM-free music among retailers (Apple is responsible for 80 percent of all music downloads), it may help push other labels to at least try it out, according to industry insiders.

One executive from one of EMI's rival labels said that the fear among DRM proponents within the record industry is that the labels could be "swept up" into copy-free music should it take off with retailers.

They may be right to tread lightly here. Not even Malmberg is convinced that offering consumers a way to listen to music on multiple devices is the way to cure what ails the record industry. She said that too many consumers have gotten use to paying little or nothing for songs.

"Ultimately I don't think digital music will be a primary product," Malmberg said. "I think it will be a value-added thing that's used to sell other products."

See more CNET content tagged:
Amazon.com Inc., digital-rights management, copy protection, EMI Group Plc., retailer

40 comments

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Could go either way
I think acceptance is going to depend on their metrics. Say I'm the only one in the world that likes Fiona Apple. Apple/Amazon starts selling DRM free Fiona Apple songs, I lap them up like a toddler in the M&M factory and because I'm the only one, they declare it a failure.

The music industry complains that CD sales are in a free fall and I have to say, they have no one to blame but themselves. First off, and maybe I'm just hitting my "you kids get off my lawn" stage, but a lot of the music being released is terrible. Most of it is just rehashing (or 'sampling' as you kids call it) old music anyway. Many of the kids releasing music these days can't even sing during a performance because so much of it depends on them dancing instead of actually singing. Second, the prices are way out of whack. I've been eyeing the new Feist disc at Starbucks. They want 15.00 for it but I can get the same music from iTunes for 9.99 and I just burn it on my own disc. Granted I have slightly more portability and freedom with the disc, but is that worth an extra 5.00 when I'm near a digital player 85% of my day anyway? Finally, the music industry has sabotaged itself with their own paranoia. Take Sony's root kit fiasco and the latest incident with the Blue Ray discs where they've made their own product incompatible with their own players. They put so many wacky DRM schemes on the discs that I can't play the things in the one player I use most, my computer.

I hope it works, but who knows.
Posted by menty666 (53 comments )
Reply Link Flag
Get the facts straight!
"Amazon and Apple could end up frustrating consumers, many of whom have long resented having to figure out what music formats and DRM schemes are compatible with the many music players available, said Susan Kevorkian an analyst with IDC."
To even insinuate any blame on retailers for the DRM-restrictions that are imposed by record companies is foolishness, and coming from an "analyst" is a good display of lacking integrity. As for confusing the public, I don't think having a separate section of the site where "DRM-FREE Music" that would be open to any music players would be that hard for the public to understand.
Posted by skipperpma (30 comments )
Reply Link Flag
wahooo for the industry!!
finally we may have what we want! dont give in to big music monopolies!!!!!dont buy their music . give your money to the artists instead of the man..
Posted by cybnetic (2 comments )
Reply Link Flag
45
I haven't bought music since 45s were popular.. I record songs off
of FM.
Posted by paulsecic (298 comments )
Link Flag
Buy non-DRM music
Foes of DRM should put their money where their mouth is and
buy DRM-free music, and not from dubious sources like
allofmp3.com. Consumers should want all the labels to drop
DRM, and the other three major labels are going to need
convincing.

So stop buying music from three big ones that insist on DRM.
Buy only from EMI and indies that sell without DRM. If we vote
with dollars, the industry will have to respond.
Posted by Thrudheim (306 comments )
Reply Link Flag
Nothing will change
As much as I loath DRM schemes, the problem lies with the complete and utter garbage that is being produced these days. Record(and movie) companies have gone to a quantity over quality model of doing business and it's killing them.
Posted by GOVEmployee (7 comments )
Reply Link Flag
Renting your media is where the world is headed
Eventually, any sales strategy based on the notion of bit ownership will fade. Why do I want to re-accumulate my favorite 5,000 songs on my own home PC or media player? Why would I want to collect my favorite 500 movies?

Instead, charge me a reasonable fee on a monthly or annual basis, and let me access any piece of media from any computer anywhere at any time and play it on any device I choose. I already do that for music (Rhapsody.com) and I find the experience much more useful.

This 'pay by the download' approach hopefully is only a passing fad.

-jason
Posted by jbuberel (41 comments )
Reply Link Flag
If renting music is the answer
then why are all the subscription sites doing so poorly? Only those backed by companies with deep pockets are managing to hang on.

So far, the success of iTunes shows that most people want to own their music.

Tomorrow may be another story.
Posted by rcrusoe (1305 comments )
Link Flag
Could Not Disagree More
I think you are wrong on this one. Subscription Models are simply
too much work, too inconvenient and lock me into monthly pricing
that I don't want.
Posted by dansterpower (2511 comments )
Link Flag
I'd much rather own it, and collect it
Thanks.
Posted by technewsjunkie (1265 comments )
Link Flag
Meanwhile, back in reality
Napster posts its biggest quarterly loss yet, while Apple's "passing
fad" increases market share.
I'd say that, oh, 80% of consumers strongly disagree with you..
Posted by GGGlen (491 comments )
Link Flag
Except sales and statistics prove you are wrong
Who has a vast majority of the market.

Not Zune (huvering at 2.5%). Even the non-ipod players mostly
contain purchased music instead of rented.

Stats just don't bear this out.

Also, if this is so great, why hasn't this worked with renting
furniture and so on. Why aren't we all leasing cars? eh
Posted by weegg (849 comments )
Link Flag
What they really want...
What the music industry really wants is for people to rent their music. The same thing for the movie industry. They don't want you do own it cause according to their copyright, you don't own it now. You only own a license that lets you listen to music or watch a dvd using the provided medium (cd or dvd).
Posted by thedreaming (573 comments )
Reply Link Flag
Why aren't CD prices down like they were supposed to drop already?
Due to an article I read awhile ago here....CD prices were supposed to drop by $2-3. there is absolutely NO reason other than greed that they haven't drop the prices due to media costs. And the prices being charged at places like Sam Goodies and others is ridiculous. $16-18+ for a disc? Gimme a break. I do a lot of purchasing online at underground stores because I absolutely HATE the crap that is called "today's music". I am into the underground metal scene and have been for a long time. New music sucks, rehashed crap from 10 yrs ago half the time. But that's a different rant altogether. At least the underground scene is still going strong. New music + prices being charged = garbage and greed.
Posted by doctorsoos (9 comments )
Reply Link Flag
The music industry might as well ditch DRM
because they can't catch enough people to make their antiquated business plan work.

All they have accomplished so far is to push their customers to innovate new methods of getting DRM free music (and dust off some old methods).

Years ago it was common for people to copy their albums and tapes and share with their friends. Napster made it more convenient to use the net rather than cassette tapes.

But now, once again, it's quite common these days for groups of people with common musical tastes to buy a single CD, rip it, and distribute the music to everyone who chipped in for the disk. I've even heard of music buying "co-ops" among groups of people.

Does the RIAA plan to start patting down everyone on the planet and searching their USB drives?

Perhaps providing the product your customers want at a reasonable price might be the basis for a successful business.
Posted by rcrusoe (1305 comments )
Reply Link Flag
Blackmail?
"If sales are lackluster, then that might spur the labels to wrap songs in even tighter copy protection, say industry insiders."

In other words, if we don't chip in and bail them out, they'll punish us by making DRM even worse?


Where is the evidence that file swapping is the reason for slow sales? DRM solves little, even if you believe it works. This isn't the Napster/Kaaza heyday... I don't even know anybody downloading illegal files anymore.

Maybe they should look in the mirror and search for reasons there. Overpriced product? Crappy music? Lack of interest in the latest "dancing girl" musician? Competition for entertainment dollars based on expanded options? Dollars going to new hardware (iPods aren't cheap like CD walkmans were!)? The list goes on.
Posted by skeptik (590 comments )
Reply Link Flag
The root of why CD sales are down!
The recording industry seems to be following the old paradigm of targeting youth for sales. Fact is, the largest segment of the population is still the baby-boomers.

With very few exceptions, the industry is not releasing product that appeal to this demographic.

For example, everyone I know age 45+ listens to talk radio now. We are sick of Oldie and Classic Rock stations... For me, there are only a handfull of new songs a year that I really like.

Find some fresh and creative artists, and get cloned radio stations to play there stuff. Then, MAYBE the largest segment of our population will start buying CD's again.
Posted by shrynk (2 comments )
Reply Link Flag
Too much crap being put out
I'm in the 45 and older range and I listen to METAL (underground, doom/death/black) and I also play in a doom/death metal band. I also love old rock/metal (HUGE old Rush Fan, Robin Trower, Zeppelin, Sabbath, etc..). Was never into the *hair band* crap. I also like blues, dark ambient, martial, etc...but do we hear a portion of this on other than classic rock stations or the net? NO! Commercial CRAP force fed over the airwaves. But the answer to that is a) don't listen to radio or at least most mainstream stations, b) listen to music in car/work/mp3 players.
Posted by doctorsoos (9 comments )
Link Flag
Music has lost it's glamour, it's now a commodity
I have a feeling that DRM-less music is not take off as as some expect. I base this on my own reaction when I read some music will be sold without Digital Restrictions Management. I was like, "oh, okay, big deal". I haven't bought music in years. Part of the reason I think is because I would rather spend my entertainment money elsewhere such as video games and XM radio which suits me just fine.

I think music has lost a lot of it's glamour. It's now a commodity. Add to it the fact that most of the large music retailers have gone either belly-up or closed shop. Big box stores sell most of the music and are dedicating even less space for music sales, so it will be even harder to find a wide variety of music off line. In addition, the music industry has managed to pis5 off most of their customers.
Posted by bobby_brady (765 comments )
Reply Link Flag
Did anyone noticed how Metallica got crappier since the napster thing?
Instead of focusing on how to protect their crappy music, they should invest that money in hiring better songwriters for all the little "plastic" artist they shove down our ears thru top 40 radio. Seriously; my tween nephew bought avril lavigne´s new CD. Only 1 song out of the bunch was good enough to load on both mine, and his iPods. that´s two iPods carrying one lousy track well forget in a matter of months, ripped an over-priced CD.

I don´t mean to say that yesterdays music was better... Hell, there´s a lot of crap form the ´70s and ´80s i´d like to forget about. But it´s like, nowadays, they´re going way out line with it. And DRM is not helping eiher.

Get better artist, offer their music at a fair price; and i´ll buy they CDs for the music, the artwork, the line notes, bios, pictures... like the good old days of vinyl and pre-iPod digital music (CDs)
Posted by El_Mikee (41 comments )
Reply Link Flag
Record labels need to ditch DRM sooner rather than later.
Regardless of how well Apple and Amazon do with the new DRM free stores. People want to OWN what they pay for not the other way around. I will not buy an MP3 with DRM protection because I cannot burn it to CD or give a copy to a friend without jumping through hoops or willfully breaking laws. CD sales are low because music has hit a point where most people own the old stuff they want on CD already and new music is lame at best and garbage at worst. When was the last time you bought a CD of new music with more than 2 or 3 decent songs on it? I know I have not for a LONG time. MP3's and downloads will help record labels if they quit treating honest consumers like theives right from the get go.
Posted by BrodieB (20 comments )
Reply Link Flag
Agreed....and
Most of the music now days fits into 2 categories:

Rehash and Crap

Enough said.
Posted by weegg (849 comments )
Link Flag
What about the ipod causing a decline in cd sales...
Hear me out before you yell at me, it's just a thought. -
I've had an ipod sense they came out with the first generation,
and have 5th gen. now. Although I love my ipod just as much as
the next person, I have come to a rather disturbing realization.
The music selection on my ipod (although vast), has become
stagnant and stale. So, I started asking my friends and found
that we had all become accustom to hearing perfectly clear
music anytime we want, when and wherever we wanted. I also
found that we had all become completely intolerant of radio
commercials. Some even choosing to sit in silence in the car if
they forgot their ipods rather than listen to annoying radio
commercials trying to sell stuff.
I'd be one of the first people to slam good-old radio. However,
despite it's many downsides and annoyances, it did constantly
force new artists in-front of our faces. It kept our music libraries
alive and fresh. Although I don't have the numbers to prove it, I
would venture to guess that if we looked, we would undoubtedly
find a correlation between the ever decreasing radio audience
and the decrease in cd sales.
I don't really have an answer to this theorized problem yet, so I'll
leave that up to you to come up with. :)
Posted by skipperpma (30 comments )
Reply Link Flag
The genie is out and theres no way back
DRM or no DRM is non relevant now.
It's too late already and it wont make any difference which way they go
every drm scheme gets cracked and anyone who can use google can break it.
Give it up already
Posted by mssoot (169 comments )
Reply Link Flag
If you're not part of the solution, you're part of the problem
People have given all kinds of reasons to justify stealing from their favorite artists. They don't want to be forced to pay for an entire CD when they only want a song or two; the record companies are keeping most of the money from CD sales anyway; they want to own music, not rent; they don't want to be restricted in listening options with DRM'd music... and on and on...

Well, with DRM-free music, the labels are finally giving you what you want: the opportunity to buy only the songs you want at a fair price.

If you find yourself still resistant to paying for the music you enjoy and to support the artists who create it, perhaps you need to re-examine your morals and ethics. There is no more rationale for stealing.
Posted by iBuzz (330 comments )
Reply Link Flag
it's a personal choice
Depending on your music habits one may prefer to rent. If you're the kind of person who can easily blow $500 at the music store every month then you would probably like to just pay a monthly subscription. If you buy the equivalent of 6 cd's a year then you'll probably want to just buy yourt music. I think there is room for both services. It may even behoov some to have both services and give people their options.
Posted by chuchucuhi (233 comments )
Reply Link Flag
Customers and Sales Numbers it can't get any simpler
I think that Recorded Music Sales will continue a free fall and they derserve it. The RIAA and the Major Lables are the biggest rips.

Digital Music Sites = DRM, subscription fees, No CD, No Art, lower than CD quality and the online Music Sites charge 99¢ for each DRM Track! No thanks I will buy a discounted CD online. Deals like 23 songs at $7 with a physical CD copy and artwork. LOL! Things just gotta change.

What people want are tunes at 50¢ or lower and DRM FREE! It really can't get any simpler but I guess greed blinds.
Posted by onlyauser (220 comments )
Reply Link Flag
Indie Lables are Killing Big Corporate Lables
Indie Lables are Killing Big Corporate Lables.

Most of the NEW original music with any edge at all is from an independent lable anyway.

The corporations have killed radio and now they are killing the big lable recording industry in the name of greed. Be thankful for the awesome creativity and talent of the Independents.
Posted by onlyauser (220 comments )
Reply Link Flag
DRM-free music probably won't work
It took the record labels too long to offer music that can be played on any MP3 player. They for too long pushed customers to illegally download music for free so they wouldn't have to pay the music labels extorted prices and deal with the restrictions they placed on it.

Now you'll be able to download the music without the restrictions, but at a 30.3% markup. Tha'ts probably too high just to get the same thing with no improvements. It's only a matter of time before the go back to downloading the music illegally when they realize that they are spending $0.30 more for 1 song, $3.00 on 10, and $30.00 on a hundred.

This DRM-free is definately not free and it's probably the music industry that's going to lose when no one want to deal with them any more.
Posted by aka_tripleB (2211 comments )
Reply Link Flag
 

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