How the digital music market is changing
It all began with EMI. Well, not really, there were quite a number of Indie labels that tried it successfully before them, but they were the first major label to allow DRM-free downloadable music. Of course they first did it with iTunes, which is a bit like opening a vault within another vault that remains locked, but in the last couple of months, things have really started moving.
At the time EMI started experimenting with DRM-free downloads, many music industry executives were still thinking of such a move as suicidal. It seems they have pretty much all come around by now. Amazon now has (at least in the U.S.) a huge selection of music in MP3 format and they are planning on expanding that to other countries later this year, which means I will finally get to download all that music that so far I had to buy on CDs and rip.
So what happened? Did the music industry cave in to consumer pressure? Did they finally realize that DRM isn’t going to help them in the long run? One might be tempted to think so, but I think the truth is that they have started to see DRM-free music as a business opportunity. iTunes Music Store was in a position to pretty much dictate how much the music industry could charge for a download and they “stubbornly” refused to sell music for more than 99 Cents. But the industry wanted tiered pricing. The only way to make that possible was to provide an alternative that would still play on the majority of devices – and Apple’s iPod is the market’s leading portable music player, but it only supports Apple’s DRM, which they won’t license to third party music stores. But of course it plays DRM-free MP3 files. So in order to enable other downloadable music stores and break Apple’s quasi-monopoly in the downloadable-music market, the music industry had to bite the bullet and do away with DRM. They didn’t like it (although they may start to notice that it’s not hurting them the way they feared it would), but once the first two major labels had started, there really was no turning back. And you can see that it’s working the way the music industry wants by looking at the pricing at Amazon – there it is, the tiered pricing model the music industry wanted, where they can charge more for their “top tracks” and less for old archive material. It’s not a generous move by the music industry and they were thinking more of themselves than of the consumers – but still we benefit from it and have no reason to complain.
In the long run, the price for downloadable music may go down towards zero – advertising based business models are starting to emerge already. The music industry certainly can’t sit back and relax just yet – actually, their time may be over pretty soon, as the internet enables artists to take distribution into their own hands and already even some major artists have opted for non-traditional ways of distribution. If they go out of business, they will have to blame themselves – for too long they tried to keep up a way of doing business that was contrary to what customers were expecting. You can’t treat your customers that way for very long or they will find the solutions they were looking for from somebody else. If the music industry hadn’t focused on “going to war” with their customers instead of producing the solutions they were looking for, the situation would look very differently today.
Add comment February 8th, 2008
. Now there are no major trips planned for the next few months, which of course can change rather quickly, so I’m not counting on it. I’m looking forward to my holiday in March, though – a friend and I are going to London for the