RSSMost European Music Execs Agree with Jobs on DRM
By Scott M. Fulton, III | Published February 15, 2007, 2:30 PM
A report issued last week by JupiterResearch lead analyst Mark Mulligan, just two days after Apple CEO Steve Jobs published an open letter advocating the end of digital rights management for downloadable music, revealed that in a continental survey of European music industry executives, more than half agree with the statement that DRM measures are "overly restrictive," and an astonishing 62% agree that dropping DRM measures altogether would drive consumer adoption of downloadable digital music.
Among the subset of those executives who produce records as well as downloadable music, that figure is 48%, though it rises to 58% when only counting executives of "major record labels." For the remainder, the figure is 73%.
However, other statements to which the same executives responded indicate they aren't exactly ready to drop DRM anytime soon - just that nothing better has come along so far to help guarantee them a revenue model. "For the majors, and most importantly their decision making elements, DRM is the essential means of generating due revenues against usage," Mulligan writes. "They are also concerned about high-quality DRM-free files finding their way onto file sharing networks, thus reducing the quality advantage of legitimate services (though CD ripping is a bigger threat)."
Indeed, 70% of all executives surveyed agreed with the statement that DRM interoperability is "key to growth." Evidently, what executives perceive as the fault of DRM as a concept is that it hinders the consumer's rights with regard to how to use it. That problem could be solved, many in the industry believe, through the adoption of a single, open standard for DRM.
From Jobs' point of view, even that single standard would be hampered by a critical flaw in the DRM scheme: its reliance upon secrets that "smart people" will eventually discover.
In his open letter last week, Jobs writes, "The problem, of course, is that there are many smart people in the world, some with a lot of time on their hands, who love to discover such secrets and publish a way for everyone to get free (and stolen) music. They are often successful in doing just that, so any company trying to protect content using a DRM must frequently update it with new and harder to discover secrets. It is a cat-and-mouse game."
One solution that music industry executives appear to be more willing than ever to consider is the interoperability approach, which might give consumers less incentive to try to crack a DRM scheme if files were more portable and flexible. But on this, Jobs cautions: "On the surface, this seems like a good idea since it might offer customers increased choice now and in the future. And Apple might benefit by charging a small licensing fee for its FairPlay DRM. However, when we look a bit deeper, problems begin to emerge. The most serious problem is that licensing a DRM involves disclosing some of its secrets to many people in many companies, and history tells us that inevitably these secrets will leak."
Jobs' comments prompted John Kennedy, the chairman and CEO of IFPI - the global representative of the recording industry - to respond: "After such a long period without interoperability, it seems to me that the right thing to do would be for Steve Jobs to sit down with the industry and say, 'I believe these are the consequences if I allow interoperability,' and for the industry to explain how we believe that some of the side effects that he believes are inevitable are not inevitable. There would be a sensible discussion of the pros and cons, a risk/reward assessment, and a discussion to make sure we are not throwing out the baby with the bathwater, and, most importantly, to preserve the right of all rights holders, big and small, to decide whether they want to implement DRM on their intellectual property."
It is by far the most open language we have heard on the subject in quite some time from the recording industry at large - perhaps an acknowledgment that its members are privately assessing the risks and rewards of withdrawing DRM if the unshackled content then attracts more paying customers, even though they may eventually, in his view, reawaken to reality. Kennedy adds that existing DRM makes feasible business models including subscription services, and the ability for rights holders to prescribe how their content is used, and for how long.
The IFPI and its members have been backing the efforts of the Coral Consortium, a group chartered to produce a single, interoperable DRM scheme that content producers may be willing to adopt, assuming they care to see their investment in time, effort, and resources pay off some day.
In Coral's own open letter last week addressed to Jobs, the president of its board of directors, Jack Lacy, wrote, "We have been wrestling with the issues around interoperability for some years and have concluded that it is not so much a technology problem as a business problem." Lacy then invited Jobs to download the Coral specifications for himself, and have his engineers address the problem of whether it could be made interoperable with iTunes.
But interoperability isn't exactly the solution Jobs had in mind. Perhaps with music written by another veteran of a company called Apple playing in the background, Jobs wrote, "Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat."
However, the route to such a utopia, in the minds of music executives polled by JupiterResearch last week, appears to involve marching to a tune whose lyrics include, "Imagine there's no Apple." While only 28% of executives polled agree with the statement that DRM is absolutely essential to digital music distribution, Mulligan writes that consumer demand for interoperability, from the executives' perspective, appears low. It might rise, however, if there were some kind of "iPod killer" or other alternative to the iPod/iTunes powerhouse. In short, they believe Apple itself remains the problem.
I am willing to donate to the END DRM fund.
Where are you ACLU? Did they fill your pockets with green stuff?
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What on earth does the ACLU have to do with DRM?
What Civil Liberties does DRM take away from you?
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The right to the theft of other people's work.
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LMAO!
I'll give my money to fight DRM, but I refuse to simply buy the %#$@ CD and rip it as many times as I want...
They obviously have ALLOT of free time, 'cause none of it is spent thinking!
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Dude, you're talking to yourself again.
This is not a good sign....
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DRM and anti consumer retaliation (like suing your fans) is not a step in the right direction for the labels. i really do believe that artists, fans, and distribution can live together without one of them shafting the other--a major reason why i started www.bmuze.com (free to upload and host original music, free to listen to it).
i predict in 20 years there will be a business/economics class on how the labels bungled their current pickle of a situation.
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The "moronic" thing is to carry on repeating vastly expensive defeat after vastly expensive defeat with DRM systems
(not one of which has ever survived cracking or avoidance anyways).
DRM is costing sales as consumers go out of their way to avoid it.
These are facts.
The only thing open to speculation is the alternative because 'they' are too terrified that going down the DRM-free path will finally rob them of the fig-leaf that it 'piracy' is costing them sales and not their unpopular rubbish new product(s) in a vastly changed marketplace.
The success of new label-free bands publishing over the net being a case in point.
(It's my own view that 'piracy' is overwhelmingly about people replacing one format of music which they have already paid for - possibly more than once already - with a more up to date format; this is a 'fair use' issue and not actually piracy at all......and boy do we need some sane thinking on the issue of 'fair use'.
Either that or the people continue to vote with their feet.....er, I mean fingers & keyboards)
Folks might like to consider this
(yet another study which calles the bluff about piracy) -
File sharing has no impact on CD sales - research 2:03PM, Thursday 15th February 2007
File sharing has had a negligible effect on the decline in CD sales over the past five years, according to a detailed study by two academics, Felix Oberholzer-Gee of Harvard University and Koleman Strumpf of the University of Kansas.
Their statistical analysis of file sharing activity in 2002 found that contrary to music industry claims, there is no evidence that sharers would have bought CDs containing the music that they had downloaded over p2p networks.
According to p2p research firm Big Champagne, there were an average of 10 million simultaneously active file sharers in 2006. By contrast, the researchers note that prior to 1999, when Napster, the first popular p2p network was established, file sharing activity was virtually non-existent. This huge increase corresponded to a 25 per cent fall in CD shipments in the US. The automatic conclusion is to blame the decline on sharing.
Not so, say Oberholzer-Gee and Strumpf.
'While concerns about P2P are widespread, the theoretical effect of file sharing on record sales and industry profits is ambiguous,' they found. 'Participants could substitute downloads for legal purchases, thus reducing sales. The inferior sound quality of downloads and the lack of features such as liner notes or cover art perhaps limit such substitution.'
Moreover, by exposing users to new music, sharing may actually have increased sales.
'File sharing allows users to learn about music they would not otherwise be exposed to,' they wrote. 'In the file-sharing community, it is common practice to browse the files of others and discuss music in file server chat rooms. This learning may promote new sales.'
The two researchers compared 1.75 million file transfers from the last third of 2002, a period of rapid growth in file sharing to a 'representative' set of albums for which they had concurrent weekly sales, matching the 260,889 songs that US file sharers successfully transferred during the period to the 10,271 songs on the 680 albums in their sample. They found no correlation between the particular songs that were downloaded and the sales of the albums that contained those songs.
continues here -
http://www.pcpro.co.uk/b...04713...s-research.html
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"In Coral's own open letter last week addressed to Jobs, the president of its board of directors, Jack Lacy, wrote, "We have been wrestling with the issues around interoperability for some years and have concluded that it is not so much a technology problem as a business problem." Lacy then invited Jobs to download the Coral specifications for himself, and have his engineers address the problem of whether it could be made interoperable with iTunes.'
"But interoperability isn't exactly the solution Jobs had in mind. Perhaps with music written by another veteran of a company called Apple playing in the background, Jobs wrote, "Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat."
Yup, ol' Steve and the others are such altruists!
Their concern is each a selfish concern centered around the difficulties of controlling a 'fractured' market!
They don't give a sh!t about the poor SOB content creators whose material will be effectively rendered in the public domain.
Yep, all they want is for us to 'all get along', as long as they are the one's to profit at other's expense and effort.
This entire ruse is as just as bad as the whine of all those other poor victims who object to DRM on the basis that they are entitled to the fruit of other's work!
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It would be an interesting test, though.
Get the labels to allow iTunes to sell and market without DRM restrictions, and allow Apple to control the price (though not the percentage given to the labels).
I would not be the least bit surprised if usage skyrocketed. The question then would be, if piracy also skyrocketed, would the increased sales through a non-DRM storefront still be justifiable?
In the end, the artists would be making more if they sold more through iTunes, even if piracy rose as well. Interesting trade-off.
Of course, if sales dropped and piracy rose, which would more likely be the case, we'd have the final word in the price/restriction vs. piracy argument. (And finally shut up all those morons who think that if they drop the price and remove DRM, piracy will effectively disappear)
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I tend to agree with your view. Although Im not sure sales would drop, i think they might increase. I feel however the piracy will rise as it becomes easier to obtain. I can see now the p2p networks having music on them that States 'ITUNES VERSION' so you know its a good quality track not some terribly disorganised version like you see all over the place now. Perhaps I am wrong, time will tell :|
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I agree that this is an interesting test.
It's so "naive" for EU to attack DRM without even thinking of the record companies. But, because open-minded societies in EU such as Holland, Norway, Sweden and France are tackling this issue, we'll see how Apple complies in exchange (hopefully) for customer loyalty.
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Yeah, Norway is *so* forward thinking...
Norway is thinking about putting in place an internet censorship plan that's similar to what's in China. ISPs would be responsible for blocking various sites that the government didn't like -- including foreign gambling sites (government monopoly on gambling would be protected), any sites that offer unauthorized downloads, sites that are seen as "desecrating the Flag or Coat of Arms of a foreign nation," sites "promoting hatred towards public authorities, racism and hate speech" and "Sites offering pornography that may cause offence."
link: http://techdirt.com/articles/20070214/170547.shtml
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Title is, yet again, not correct.
Jobs said: Interoperability is a problem.
IFPI says: No, it's not, let us tell you why.
I don't know about you, but I fail to see the "agreement" there.
Jobs told them to drop the DRM requirement, they told Jobs to go to Hell.
Did I miss something?
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Perhaps.
Jobs said: DRM is hindering both sales and user rights.
Execs said: DRM is hindering both sales and user rights.
You missed the lede of the article.
-SF3
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Depends on how far you take it. Jobs wants DRM gone, Execs want it interoperable.
Jobs said: DRM is hindering both sales and user rights.
Execs said: unlicensed (Non-interoperable) DRM is hindering both sales and user rights.
Fixed that for ya. The execs in no way think DRM itself is a Bad Thing™.
The way you put it, agreement could come in the fact that they both simply agree DRM stands for Digital Rights Management.
The agreement that you highlight is meaningless. The simple fact is that they do *not* agree on DRM in the lest, except for meaningless definitions and that the current status isn't ideal.
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What the survey explicitly says is that the EU execs would prefer a single, interoperable DRM scheme to the state of affairs today. (What their actions say with regard to their lack of active support for the Coral Consortium tends to say otherwise.) And indeed, Jobs has argued against that.
The disagreement is on the solution to this mess. But both sides are in agreement that the mess exists, and they agree on the same culprit. Yes, I'm saying the glass is half-full.
-SF3
(Didn't Jerry Pournelle have the trademark on "Bad Thing" first?)
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(Didn't Jerry Pournelle have the trademark on "Bad Thing" first?)
I never said it was *my* trademark. :p
Yes, I'm saying the glass is half-full.
That's the problem with you types. Always content with half the story. :p
Darn optimists. Need to shoot the lot of 'em.
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