Is DRM a dead Technology?

The question I propose as the subject of this post is a very intriguing one. It seems as if everyday, when I read an article from a technology news section of an online news website, I see the following headline in this form - "Company X makes deal to sell DRM-free MP3 tracks on whichever device". For example, just today Real Network's Rhapsody announced a deal with Verizon Wireless to provide DRM-free songs on seven of its current handsets. Customers can now get unprotected MP3 tracks via a $15 monthly subscription, as well as individual downloads to their mobile devices or PC. The subscription buys unlimited access to 5 million songs from all four of the major labels--Sony BMG, Universal Music Group, Warner Music Group and The EMI Group. (Check the new feed section for the latest new stories on the subject of this blog).This is just one such example.

This surely was not the case 8 years ago when Sony BMG, Universal Music Group, Warner Music Group and The EMI Group all championed DRM as the only to way ensure profits and protect their investments via digital distribution of music. It appears that the entire music industry has recognized the DRM technology is no longer a viable business Model. Rhapsody follows Amazon and Napster in offering DRM-free MP3 music from the big four labels and also independents. Napster was the most recent entrant, having launched its MP3 service in May with more than 6 million songs. Even, Apple iTunes offers DRM-free songs via its iTunes Plus service. For a complete breakdown of the popular online music stores, see the previous post.

DRM is being dropped from the big four labels' catalogs and the industry has embraced DRM-free streaming services like iMeem, LostFM, etc. This is a different stance taken by the Music Industry. In 2001 sites such as MP3.org were being sued by the record labels and the RIAA to stop sharing music using their then current business model. Now many online websites allow users to purchase and share DRM-free music. Times have change and DRM is taking a back seat. See the video below for online websites where you can get DRM-free tracks.

I also found this interesting and funny. Brian Cooley, editor at CNET imagines a world without digital rights management.

For those of you, who may not know. What is DRM?

It is the control and protection of digital intellectual property and other copyright work that includes the description, identification, trading, protection, monitoring, and tracking of digital media to ensure no unauthorized access takes place. Encryption and other forms of security such as licencing are usually applied to digital media to limit or prevent unauthorized use.

DRM was not about piracy. Many argue that it was concerned with controlling competition and eliminating disruptive innovation of MP3 introduced digital distributing of music. You can almost hear music industry execs saying, "If you want to play my content, I get to tell you how to build your player."

Not to mention DRM protection is easy to crack. The many lawsuits brought against consumers by the records labels and the RIAA haven’t deter piracy. There videos online that instruct you how to remove DRM protection (see the video bar). There is a high quality of bandwidth available that is driving piracy. The Music industry failed to satisfied customers, so they still look to alternatives such as Bit Torrent and will continue to do so until there are free to manage their music in the manner they want.

The points stated here all indicate that DRM is a dead technology. So what now? Filtering bandwidth may be next alternative to protect Intellectual Property Rights. Recent reports over the last months indicate that service providers were limiting the bandwidth of users who used Bit Torrent Technology. However, there are many issues that come with this practice. There will be more on this in later posts.

The entertainment industry is now concerned with DRM for videos with the growth of popular video hosting websites such as You tube. DRM Video rights is much stronger issue to be debated greatly in months to come.



References:

Bruno, Anthony. Napster Goes DRM-Free. Billboardbiz.com. Retrieve June 30th from http://www.billboard.biz/bbbiz/content_display/industry/e3i9189f73c48e7dd51e9a8af5824382c0a
Cooley, Brian. What if DRM went away?. CNETTV.com. Retrieve June 30th from http://www.cnettv.com/9742-1_53-29372.html

Kahney, Leander. How Apple Got Everything Right By Doing Everything. WIRED MAGAZINE: 16.04. 03.18.08

Kravets, David. Death of DRM Could Weaken iTunes, Boost iPod. Wired Magazine. Retrieve June 30th from http://www.wired.com/entertainment/music/news/2008/01/rip_drm

Merrit, Tomn. CNET Top 5: DRM-free Music stores. CNETTV.com. Retrieve June 30th from http://www.cnettv.com/9742-1_53-32374.html

Sisario, Ben. Lee, Felicia. Rhapsody Ends Restrictions, Cornering iTunes. NYTimes. Retrieve June 30th from http://www.nytimes.com/2008/07/01/arts/01arts-RHAPSODYENDS_BRF.html?_r=1&ref=arts&oref=slogin

The Music Industry Today

Today, the music industry has embraced online music stores as a viable method of distributing music to consumers. Digital music sales have steadily increased over the years, as purchases of CDs and other physical formats of music have decreased. If you don't believe me or the recent new headlines just read these two articles from Wired Magazine where David Byrne interviews Thom Yorke about the Real Value of Music and Byrne offers advise on Survival Strategies for Emerging Artists — and Megastars. Music sales in general are decreasing due to widespread piracy over the Internet. However, digital music sales are increasing. See the chart below.

This posting offers some insight into the operations of the leading online music retailers. Most importantly highlighting and comparing their major features and whether or not they sell DRM and/or DRM-Free songs. Also, whether they have a subscription or non-subscription business model and if they have the support of the four major record labels. Below, some pertinent facts are listed:

• There are only Four Major Record Companies. EMI, Universal, Sony BMG (The latter a merger between Sony Music Entertainment and BMG)


• Napster was reconfigured by Roxio, Inc in 2003 as subscription and a fee-per-song business model, paying the record companies and the artists/composers the royalties. As of May 2008, Napters now has the largest DRM-free subscription service featuring 100 % content from the major labels content to in the MP3 format.


• Emusic is the largest subscription-based online music store


• Rhapsody was first online music store to offer streaming on demand access to entire library


• Amazon MP3 was first online music store to sell music without DRM


• Record Companies are easing demands for DRM and adopting unprotected MP3s shown by numerous such deals with music stores.

• Apple iTunes Music Store is now the number 1 US Music Retailer as of January 2008 surpassing Wal-Mart based on a NPD research.

The table blow gives you a picture of the online music stores today. Click on the image to enlarge

References:

Byrne, David. (2007). David Byrne and Thom Yorke on the Real Value of Music. Wired Magazine: Issue 16.01. 12.18.07

Byrne, David. (2007). David Byrne's Survival Strategies for Emerging Artists — and Megastars. Wired Magazine: Issue 16.01. 12.18.07

Sandoval, Greg. (2008). The geeks were right; music labels bow to technology. CNet New.Com. Retrieve April 5th 2008 from News.Com <http://www.news.com/8301-10784_3-9911721-7.html?tag=nefd.lede>

Wikipedia.Org. (2008). Amazon MP3. Retrieved April 5th, 2008 from http://en.wikipedia.org/wiki/Amazon_MP3

Wikipedia.Org. (2008). Zune Marketplace. Retrieved April 5th, 2008 from http://en.wikipedia.org/wiki/Zune_Marketplace#Zune_Marketplace

Wikipedia.Org. (2008). Rhapsody. Retrieved April 5th, 2008 from http://en.wikipedia.org/wiki/Rhapsody_%28online_music_service%29

Wikipedia.Org. (2008). Emusic. Retrieved April 5th, 2008 from http://en.wikipedia.org/wiki/Emusic

Wikipedia.Org. (2008). ITunes Store. Retrieved April 5th, 2008 from http://en.wikipedia.org/wiki/ITunes_Store

Wikipedia.Org. (2008). Napster pay service. Retrieved April 5th, 2008 from http://en.wikipedia.org/wiki/Napster_%28pay_service%29

Previous Work

Included is a link to a power point file that contains work by myself and others that have researched on the topic of this blog. (I am trying to figure out how I can post a word document or power point file on the blog).

Digital Distribution and the Music Industry 2001 by myself, Daysi Cadena, Newton Fong , Vishal Tyagi. (As you can see, I have since figured out how to upload different file formats using Google Groups). You can open the document or save it. If saved, you can review the notes for each slide. This is included here to offer some relevant background information on the Music Industry.

Highlights from Presentation include the:

• The Structure of the Music Industry (Artists, Producers, etc..)

• The Key Players in the Music Industry in 2001 (Napster, 5 Major Record Companies)



• Technology and Market forces present in the Music (Disruptive Innovation of digital music format, Nature of Technology Disruption, Strategic Inflection point, and The Technology Adoption Life Cycle and the Chasm)

• And, The Music Industry Today (to be look at in detail in a subsequent post)
  
  
  
  

I have also included a list of relevant reading material for anyone interested from the text Strategic Management of Technology and Innovation, 4th ed. Ed. by Robert Burgelman, Clayton Christensen and Steven Wheelwright published via McGraw-Hill Irwin in 2004. The work in the text was very insightful and played an incremental role in my selection of this topic. The two readings below were incremental:

• Cha, Benjamin, and Kausik Rajgopal. Digital Distribution & the Music Industry in 2001: Case II-10. 378-398.


• Burgelman, Robert A. Meza, Philip. Finding the Balance: Intellectual Property in the Digital Age.
  

Note:
I have noticed that the links on my blog cease to work after sometime. If you are unable to view any images or documents, please visit my Google Group IS 692 - IS Research Project Seminar at http://is692.googlegroups.com/. Thank you.

References:

Cha, Benjamin, and Kausik Rajgopal. Digital Distribution & the Music Industry in 2001: Case II-10. Strategic Management of Technology and Innovation, 4th ed. Ed.
Burgelman, Robert, Clayton Christensen and Steven Wheelwright. New York:McGraw-Hill Irwin, 2004. 378-398

Burgelman, Robert A. Meza, Philip. Finding the Balance: Intellectual Property in the Digital Age. Strategic Management of Technology and Innovation, 4th ed. Ed. Burgelman, Robert, Clayton Christensen and Steven Wheelwright. New York: McGraw-Hill Irwin, 2004.

Ellis, Kevin, Daysi Cadena, Newton Fong , Vishal Tyagi. (2008). Digital Distribution and the Music Industry 2001. Power Point Presentation . Pace University Seidenberg School of CSIS.

Scoot, Damine. Vibe Magine Decmeber 2007. Vibe Media Group, Pg 60

Inaugural Post - Introduction

With this blog, I wanted to focus on the issue of Intellectual Property Rights in the Music Industry. More specifically, the failure of Digital Rights Management (DRM) as a successful business strategy for the four major record companies, and the Recording Industry Association of America (RIAA). In other words, what is the future of DRM in the music industry? Is DRM a dead or soon to be dead technology?

The staying or lasting power of DRM directly affects the business models of online music stores and the long term strategic direction of the music industry. At first, the music industry was unwilling to adopt digital music distribution as an acceptable business model. This is highlighted in the prosecution of popular file sharing companies such a Napster beginning in the year 2000 and the many lawsuits brought against companies or users that used such services. A lot has changed since then, with the continued growth of digital music sales over traditional physical mediums (CDs, mini Discs). On the other hand there has been an unrelenting rise of piracy and illegal downloads of copyrighted media over peer to peer networks (P2P) and Bit Torrent protocol technology. Record companies and all those involved in their production value chain (artists, composers, producers, etc) must find away to secure their investments and protect their profit margins. DRM technology provides a way to secure digital sales of music. It was first seen a definite way to hinder the illegal sharing of digital formats of music.

However, the many different forms of DRM technologies have left music fans wanting much more interactivity and compatibility from their music management software and portable music playing devices. Not to mention, that it has not deterred or decreased incidents of online piracy.

What is the goal of this blog? My research topic will cover the following areas:

• The initial impact and subsequent use of DRM technology


• The lack of an industry wide DRM standard or format


• And finally the continued abandonment or ease of restrictions placed on consumers by the music industry in regard to DRM.

This can be seen in Napsters announcement in May that it will start selling over 6 million songs, DRM free from its online store with a the catalog supported by all four major record companies. Furthermore, most of the online music stores now offer DRM-free content at varying prices. This accomplishment did not seem possible at the beginning of this decade.

Check the news roll section of this blog for the latest news on this topic located in the upper left-hand section. Feel free to view the many videos on DRM from the video bar located at the bottom of the blog. I have tweaked them both to display new stories and videos relevant to this topic.