[A2k] Yahoo exec. criticizes DRM systems

[Judit Rius Sanjuan]

Yahoo music executive David Goldberg has spoken out against DRM systems.
"The notion that a track I buy in DRM is protected and one without DRM
isn't is a fallacy," Goldberg says. "It's all nonsense. Music is never
going to be protected, and anybody who tells you that is not being honest."

<http://tinyurl.com/ycx4js>
[Reuters]

Digital rights in question as business model

By Antony Bruno

October 15, 2006

SAN FRANCISCO (Billboard) - If the music industry truly wants to loosen
Apple's iron grip on digital music sales, it should start allowing music
to be sold without digital rights management protection.
That's the theory posited by several music services these days in
response to the whipping they're taking from the dominant iTunes Music
Store.

The issue, of course, is interoperability. The iPod remains the most
popular digital music player on the market, and only music purchased
from iTunes or copied from the user's CD collection will work on the
device. The exceptions are unprotected MP3-encoded files. As such, many
Apple competitors would like to sell music in MP3 format so they can
compete with iTunes and still be compatible with the popular iPod device.

Perhaps the most successful example of this is eMusic. Despite a music
catalog limited to independent label fare, the service facilitates more
music downloads than any other save iTunes. The reason? eMusic's entire
catalog is available to consumers as unprotected MP3s.

But the major record labels by and large insist their music must have
some sort of DRM protection before they'll license it for digital
distribution. Increasingly, the wisdom of this stance is coming under
scrutiny.

DEBATE HEATS UP

Traditionally, the loudest anti-DRM voice has been the radical
"copy-left" movement, a group of advocates who focus primarily on
consumer rights. But executives in the broader digital music ecosystem
-- such as Yahoo Music general manager David Goldberg and eMusic CEO
David Packman -- are taking labels to task with a more business-oriented
argument.

DRM, they say, simply forces consumers to buy hardware with proprietary
technology that enriches software companies rather than artists or labels.

The conversation has heated up now that Microsoft is preparing to enter
the race with another closed system as part of its Zune strategy. Once
Zune is launched, there will be two large, deep-pocketed digital
services offering music that is not only incompatible with each other,
but also with the many other digital music devices and services already
in existence.

"That doesn't sound like a very exciting future to me," Packman said
during a recent panel appearance at the Digital Music Forum West
conference in Los Angeles. "There's no way you can say with a straight
face that that's something consumers want. This has to get solved for
the industry to grow."

What's more, opponents insist that DRM, in fact, does nothing to protect
music. Virtually every form of DRM has been hacked, including Apple's
FairPlay and Microsoft's WMA encryption of tethered subscription files.
Not all digital music consumers are aware of these workarounds, but tend
to discover them the minute they find they can't play their music on
their device of choice.

PROTECTION A FALLACY

"The notion that a track I buy in DRM is protected and one without DRM
isn't is a fallacy," Goldberg says. "It's all nonsense. Music is never
going to be protected, and anybody who tells you that is not being
honest. Yes, you can put up speed bumps, but the people who really want
to steal music are going to steal it. So you're just making it hard for
people who want to do the right thing to get the music they legitimately
purchased on the devices and services that they want."

This difficulty, Goldberg continues, only serves to dissuade consumers
from buying music legally and instead keeps unauthorized peer-to-peer
services in business. He calls the protected a la carte download model a
"failure," noting that legal digital download figures have remained flat
all year.

"There's been no growth this year at all," he says. "The market has
stalled."

On a month-to-month basis for this year, average monthly downloads are
flat, just as they were last year, averaging around 10 million a week.
Of late, average weekly downloads have slightly slipped, from 11.5
million in January to 10.7 million at the end of September. That's after
an all-time high of almost 20 million downloads the week after Christmas.

According to the most recent SoundScan year-to-year figures, digital
album sales through October 1 have grown 115 percent over the same
period last year, while downloaded individual tracks have grown 72 percent.

Yet these gains have not yet closed the gap with still-declining
physical sales, which are down 8.3 percent from last year. DRM opponents
say a la carte sales could do more to close that gap if restrictions
were removed, but it is impossible to quantify whether this is in fact
the case.

Yahoo Music is attempting to prove this theory by making Jesse
McCartney's new album available in both protected and unprotected
formats at the same price via a deal with Hollywood Records.

Meanwhile, labels hope Microsoft's Zune or another entity will
eventually mount a successful enough challenge to Apple that it will
force Steve Jobs to open the iPod to competing services.

--
Judit Rius Sanjuan
judit.rius at cptech.org
www.cptech.org

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