With CD sales falling and high levels of pirated music so readily available, it is hardly surprising that the recording industry has pushed for controls to limit the use of digital music available online for download. But it seems that the technology is universally disliked, from the industry that created it, all the way through the value chain to the end consumer. So why have we got it, what exactly is it, and where is it all going?
Why DRM?
Although DRM (Digital Rights Management) as a concept has been around for many years protecting video and some CDs, it has only really surfaced as a major issue recently as the portable MP3 player has emerged.
At the height of the powers of infringing P2P (peer-to-peer) sites, of which an estimated 3.6 billion songs were being downloaded per month by US consumers alone, and 1.2 billion pirated CDs being sold (constituting 34% of all CDs sold worldwide), it was clear that something needed to be done. Then there is the rather embarrassing situation that the all-conquering iPod, certainly in its early pre-iTunes Store days, could only be filled with content from file-sharing P2P sites or ripped CDs.
Hence when the iTunes Store launched, it had its proprietary DRM software deeply embedded into the complete system. The fear was that with digital music easily available online and legitimate, without protection, these songs would start to appear everywhere. So the iTunes store emerged with the Fairplay DRM system that limits the use of purchased songs to the computer registered to it and the iPod registered to that. The other systems do pretty much the same thing with a significant difference, which we'll touch on later.
What exactly is DRM
DRM is there to restrict the use of digital files to protect the interests of the copyright holders, in this case, the record companies and the artists they have to pay royalties to. And it works like this; essentially there is either a wrapper in which the content is encrypted so that only those with the authority to do so can access it; or it is tagged as a signal to a device that the media is copy protected.
These systems can be either closed or open. Fairplay, the Apple system, is closed in that it operates only within the Apple environment and it is not available for license by third parties. Thus once you are committed to iPod/iTunes, you cannot transfer that content between devices as a consumer, or access it digitally as a developer.
On the other hand, Microsoft, while launching the Zune player with a seemingly similar closed system, has always made it clear that the Windows DRM system will be made available to developers, and it does have a good track history of doing exactly this. Indeed, the existing (non-Zune) WMA DRM 9 has been available for developers to use for a long time - it is what people like Napster currently use.
How does it affect the custom install industry?
As with any dominant industry player like Apple, there are profound impacts in related sectors. With the massive penetration of iPod and iTunes, there has been a corresponding interest in integrating this content into the home environment. The frustration is that, while non-DRM content from the iPod and iTunes is accessible for digital integration - and there are a number of elegant solutions currently available to do this, DRM content is only available through the iPod serial interface, licensed and controlled by Apple. This means that developers are completely hamstrung and largely can only replicate the interface and data sets that Apple dictates. That interface is great for the iPod as a personal device, but our customers need more; in the CI world they seek greater richness of information and interfaces that suit the chosen control surface.
The good news however, is that despite Apples claims for the success of the iTunes Store, research indicates that on average only 3% of tracks resident on iPods are purchased from the store as downloads - the rest are ripped legitimately from CDs or acquired by other means. On average, those people purchasing downloaded music from stores purchased three tracks per year as opposed to around seven CDs purchased online during the same period.
Indeed this picture of poor download sales is likely to get worse. Recent research indicates that sales from iTunes are collapsing; an effect felt by all the pay-download services. Yet, with an estimated 65% drop in iTunes revenues over the last year, device sales have quadrupled!
Clearly there is something interesting going on here. Perhaps the consumer is becoming rather unhappy with expensive, poor-quality audio tracks with restricted use, against owning outright a cheaper physical product that they can keep and do what they like with - the CD. Around $14 buys you 19 great Robbie Williams tracks in pure 16-bit 44.1kHz uncompressed music on his Greatest Hits CD. The same tracklist costs $18.81 downloaded in a codec where most of the musical information has been thrown away in the name of compression. As they say, it ain't rocket-science.
Paradoxically, the cost of buying a track on iTunes is too low and simultaneously too high. It is too high to be of practical use in filling up an MP3 player, and it is too low to make anyone any money in the music industry - artists or company.
The future for DRM
Many industry insiders are predicting the demise of DRM within a year, indeed Columbia UK boss Mike Smith predicted this at the recent In The City convention in Manchester. Both Bill Gates and Steve Jobs have come out in public and declared that DRM is not serving the industry or consumer well. They are right, but then they would say that as they want to sell products and have no core interest in being content distributors - they want the lowest hurdles for the consumer to jump over. And actually, this matter might be out of the industry's hands as EU countries such as Norway, France and Germany line up to break the Apple monopoly and force them to offer Fairplay to other manufacturers. But what is there to replace it?
Both Bill Gates and Steve Jobs have come out in public and declared that DRM is not serving the industry or consumer well
We could easily see a situation where a blanket license replaces DRM in the same way that public performance of copyright material on the radio for example, is received with the license/royalty already paid for by the broadcaster. This pot is apportioned to the publisher and the artist by collecting agencies/societies.
A way this might work is a close link between copyright-owners, ISPs and retailers (online and physical) to pass on a flat rate fee for all of those downloading music. Applied across the field, this would be a very small charge and passed on by the infrastructure for delivering digital content - the broadband ISP.
Conclusion
À al carte selection may be great in theory, but consumers invariably won't pay a premium for choice - as graphically emphasised by the research into download sales. This plays into our strengths as an industry as we want minimal barriers to entry for the consumer, so that we can find more intuitive and elegant ways of enhancing their enjoyment of the content they own.
Matthew Simmons is Commercial Director of Digital Fidelity, a manufacturing and software consultancy that supplies flexible, content server platform solutions to audio-visual manufacturers.
www.digitalfidelity.com
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