It’s been a tough year to be in the music industry. Sales of the labels bread and butter products – CDs, cassettes LPs etc. – have fallen 15% in the U.S in 2007. Consumers are spending more on other forms of entertainment such as DVDs and video games. Even artists are shunning the major labels. Madonna signed a huge deal with a concert promoter, Prince gave out copies of his CD with a newspaper, Paul McCartney decided to work with Starbucks and Radiohead released “In Rainbows” for free on the internet. Other obvious pressures include file-sharing, the rise of Apple as a giant in one of the only growth segments of the industry and emerging online competitors such as Sellaband and thesixtyone.
It’s no surprise that the industry is slowly changing. One of the most promising developments is the move towards selling DRM-free music. The last major label, Sony BMG, made the announcement today. Although Sony’s motives are far from enlightened, mostly fear of Apple and the need to match the other three major labels, this means good news for JT fans who will be able to get his songs on Amazon. This more open approach is definitely not the cure for all the industry’s woes, however, it’s a first step in admitting that the customer is and should be in control.
The music labels have a chance to turn things around in a positive way as Apple continues to control the vital iTunes – iPod link. It is conceivable that some company, say Microsoft, comes out with a cooler player than the iPod, and consumers will demand an alternative to iTunes. Assuming that Apple holds on to its DRM (there were hints that it may not) an alternative will have to emerge. Many labels, with the notable exception of EMI, have thrown their weight behind Amazon. With online sales expected to continue growing - they increased by 45% in 2007 - it will be interesting to see if the music industry is able to create a truly open distribution model for digital music in 2008. As for CDs, it seems that their era is quickly drawing to a close.
Comments RSS
| TrackBack URI
Do you think DRM-free movie is possibility in new future? How it is different from DRM-free Music ? What are the industry dynamics in play for a DRM-free movie ?
thanks
Suvendu
Comment by Suvendu Sahoo - January 4, 2008 9:44 pm
Good question Suvendu. I would buy more DVDs if they were DRM-free I would buy even more DVDs if the movie studios include a Divx or Xvid version of the movie that I could copy to a compilation DVD and play in my kids portable DVD player.
Unfortunately, the movie studios think that DRM adds value to their products. It’s clear that we are all pirates when almost every DVD includes copyright and FBI anti-piracy warnings. Imagine walking into Wal-Mart and being required to read an anti-theft notice before shopping.
Comment by Vincent Clement - January 5, 2008 9:17 am
The dynamics around DVDs are slightly different. DVDs have not suffered as much online piracy as CDs because of bandwidth constraints. It takes a lot longer to transfer a full length DVD than a CD or just a song. The technology to rip and burn DVDs has also been around for a much shorter time. However, as bandwidth and storage space increase a lot more piracy can be expected. Also, as more devices are able to play movies – mobile phones for instance – consumers will start bumping up against the limits imposed by DRM. I expect that in a few years time the same issues facing music will dawn on movies.
Comment by Paul Artiuch - January 7, 2008 11:02 am
New compression techniques may also encourage DVD piracy - Divx and Xvid are doing to DVDs what mp3 technology did to music. Furthermore, hardware manufacturers are increasingly producing devices that can read a variety of media such as divx, xvid, CD-R etc.. with some DVD players even having a USB input to directly connect flash drives
Comment by Hagai Fleiman - January 8, 2008 9:59 pm
[...] never sponsored any of our research programs. Who knows why? Perhaps it’s posts like this, this, this, this, this, and this. Trust me; when we use terms like “house of cards”, we mean [...]
Pingback by Wikinomics » Blog Archive » When free isn’t cheap enough - January 30, 2008 10:30 am
[...] movies - is it a possibility ? Posted in Uncategorized by Suv on January 4th, 2008 Here is posting by Paul Artiuch in Wikinomics about DRM-free [...]
Pingback by DRM-free movies - is it a possibility ? « Infostrategy - September 1, 2008 11:22 am