Amazon to launch DRM-free service?

Posted Apr 25th 2007 3:15PM by Richard Driver
Filed under: Good news, Rumors, Products and Services, Industry, Competitive Strategy

The news about DRM this week is not about Warner Music Group (NYSE: WMG), as I have of late been reporting. It is again related to EMI Group (LON: EMI) this time revolving around Amazon.com, Inc. (NASDAQ: AMZN) and the online websites' desire to offer DRM-free digital tracks in competition with Apple Inc.'s (NASDAQ: AAPL) iTunes Store.

Unlike AnywhereCD, which I have tried to cover in the past couple of weeks, Amazon appears to be going about the process of selling these tracks "properly" or at least cautiously, around the major labels.

DRM, or Digital Rights Management, is the technology digital services use with mp3 tracks and other media to limit transferability between users. An easy example is the track you buy from iTunes is only accessible with your account and three other computers (but you have to take your account information with you). If you tried to share it over a file-sharing program, anyone that downloaded it from you would be unable to play the file.

Online providers want to drop DRM because it limits the bandwidth the tracks they sell have (not because they want to enhance "share-ability"). The new DRM-free tracks from EMI are at 320 kbps, while current DRM tracks are only at 128. Those numbers may not mean anything, but a higher kbps means the track is cleaner and the music is more clear. Think about it in regard to a CD made in the late 1980s and a remastered CD released this year. The average consumer may not hear the difference, but the services want the tracks that much better. From what I have read though, DRM-free tracks will be slightly more expensive than tracks that are currently available (the average price now is $0.99).

The "right" process in regard to DRM may seem comforting to the major labels, but like a commenter reminded me, the music business is still a product-oriented business. We should remember that the labels want their profits and they do own the music (don't let me get started on the "ownership" road again).

Regardless of the rightness of going DRM-free, Amazon is marking a very smart competitive strategy by beginning to take on iTunes and Apple just as it convinced EMI to drop DRM. EMI (and the other majors) have no binding ties to Apple, and if Amazon can make its move, the market will only grow for DRM, which could lead to the expansion of the freeing of music from the technology.

At the same time, I hope I do not ridicule the majors, because they do make the decision. As a consumer (who might be speaking to those major representatives) I just hope that they realize the importance of more than one service offering DRM-free tracks. Amazon is just one in addition to iTunes, but everything needs a first and second step.

Tags: AAPL, AMZN, EMI, WMG

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Reader Comments (Page 1 of 1)

4-25-2007 @ 3:31PM

Alexandra said...

I am excited to see Amazon selling DRM-free tracks, because I think it will create some strong competition for Apple. This will keep them innovating.

But, I don't think this shift to DRM-free will help the music industry, as much as they think it will. I mean, DRM-free has already been around, on CD -- so increased revenue probably won't result.

The music industry needs something all new -- something that recognizes how music is being used these days. And what are people doing? Mashing-up songs, and making user-generated videos.

Shelly Palmer wrote a good essay about what the industry needs, to cash in on all of this:
http://advancedmediacommittee.typepad.com/emmyadvancedmedia/2007/02/the_other_digit.html

Alexandra