When Will The Other Major Labels Join EMI?
Now that one of the majors, EMI, has agreed to drop DRM from their music sold over the Internet, the question becomes if and when the rest of the major labels will follow suit.
I believe that it will be sooner rather than later, but others disagree.
Brian Garrity of Billboard writes,
“Sources at rival major labels are expressing annoyance that EMI is ‘recklessly’ jumping head first into a DRM-free environment without what they view as adequate research and testing about the impact on sales, piracy or consumer demand.The other major labels remain concerned that selling music sans DRM will cannibalize sales. And some label sources are also expressing dismay that EMI’s effort undercuts the industry’s ability to correct the security problems that have plagued the CD format by creating a completely secure commercial environment for digital music.”
I’m sure the other major labels are very disappointed in this move by EMI, the smallest of the major record labels. I think the labels were hoping that they could–with all the DRM restrictions–coax people into buying the same music they already owned on CD, tape, vinyl, yet another time.
But Apple has slowly been pulling them in the opposite direction. First, Apple allowed it’s iPod’s to play unprotected songs–ripped music from CD’s and illegally downloaded music–which is something that Sony didn’t do (and look at how well that worked out for them). And now, it will beginning selling unprotected songs.
The labels have already despaired over how digital downloads of single songs from iTunes have contributed to the slump in CD sales, but sooner or later, the music industry is going to have to find a way to make money selling digital downloads online.
As I have written previously (here and here), and as others have written–most recently, Mark Cuban–the CD as a viable music format is rapidly dying. I mean, really, when was the last time you got home from Best Buy, wrestled the plastic wrap off the plastic case and immediately put the CD in your Discman? Come on! Sure there will be audiophiles and people like my parents who will still buy CD’s, but for the most part the future is in digital downloads.
Brian Garrity from Billboard goes on to say that ‘retail sources’ think it could take a few months to up to 2 years for the other labels to switch to selling their music without DRM on iTunes.
It is pretty apparent that the other major labels are now just going to wait and see how well EMI does with this new deal. If EMI does well, they might drop their firm stand with DRM, but if not, they will try to paint it as evidence that not only does DRM-free not work, but that DRM needs to work.
Maybe more importantly though, is if independent labels make the jump. I know many fans of independent artists would love to buy their music on iTunes, but don’t because of the lower-than-CD quality and DRM. If the independents, who have double the market share of EMI in the U.S., start selling DRM-free high quality downloads and have success, the other majors may be forced into changing their stance or risk losing market share.
I tend to agree with Steve Jobs that by the end of the year around 50% of the music available on iTunes will be DRM-free. The other majors will budge, not necessarily because EMI has huge success, but because they risk losing market share to EMI and the independents.
Essentially, EMI has forced the other majors into a corner. EMI has given the consumers who do actually buy music more incentive to buy their music rather than the music on the other major labels.
So now, the other labels have to make a decision. Unfortunately for them, that decision has already been made.