Setting the record straight on DRM
Commentary by Dr Richard Gooch, Deputy Director, Technology IFPI
As IFPI's recently-published Digital Music Report shows, these are incredibly exciting times to be in the digital music business. New services are burgeoning on the internet and on mobile. Everywhere you look there are operators springing up with different products and different kinds of deals on offer. A plethora of mobile services is emerging. There are subscriptions, previews and downloads. And a new generation of licensed P2P is beginning to appear.
Music services are proliferating, More than 300 services worldwide; 2 million tracks available; 420 million single tracks downloaded in 2005, twenty times more than two years ago.
Something crucial is underpinning this wave of activity. It has an unlovable title, and an even more unlovable acronym; Digital Rights Management (DRM). Getting it to work in the marketplace is probably the most pressing issue today in the development of today's flourishing digital music business.
DRM is driving new flexible music services for consumers in the digital market. It has proved to be the framework that has allowed today's thriving legal music scene to flourish, making more music available to the public than ever before in more formats and distribution channels.
It is DRM that gives consumers different options and helps different kinds of services compete. Look at the differences between the services on offer today. The biggest - like iTunes - are taking digital music to the mainstream, but there are hundreds of smaller services too. Some are deliberately small and cater to a niche audience. Some are small because they are just starting out. Mobile is huge with ringtones but mobile music and video is just starting out. This diversity is great for the market and for consumers.
Take away DRM and you take away these options. There could be no subscription services. No iTunes. No Napster to Go. No super-distribution models to look forward to. Without DRM it would be very difficult to monetise digital music, and to invest in the creation of future music.
Some artists and record companies don't want to use DRM - and that is fine if it is their choice and they think they can get value from their music that way. In some circumstances I can see that it is possible to gain promotional value by giving MP3s away or to have paying customers for unprotected files. That should be a matter of choice to suit the circumstances.
The digital age has broken the mould and DRM is driving it forward. Many people want to cherry pick individual tracks, burn CD-Rs, rent tunes, subscribe to a service, download and keep music on their PC or buy ringtones for their mobile phone. DRM allows all this to happen while ensuring that the fundamentals of the music industry remain sound.
Contrary to what some may think, DRM is not a new idea. It has been around for more than a decade. For software and games it was the early 1980s, on computers like the original IBM PC and the Commodore-64. Apparently Macrovision started with protecting VHS video tapes in 1985. They protected billions of tapes. DVD was launched in 1996 (with copy protection) and became - according to the Consumer Electronics Association - the most successful electronics product ever. Today, DRM has already been widely accepted in the marketplace.
DRM is sometimes misunderstood and sometimes misrepresented. Let's look at the some of the myths put around.
First, no record company is in the business of blocking access to content - that way leads to commercial suicide. DRM protected content, like everything else made available to the public, is subject to the laws of supply and demand; if DRM is badly implemented consumers will vote with their feet and reject it. This means that record companies and others will have to deploy DRM in commercially sensible ways.
Second, the record industry does not use DRM as a 'Big Brother' tool to inappropriately gather personally identifying information on consumers. The use of DRM to ensure that the right people get paid for consumption of music does not over-ride laws about privacy and consumer protection. Indeed, DRM can ensure that they are obeyed.
Third, while lack of 'interoperability' between services and devices is currently a frustration for consumers, this is primarily an issue for technology companies. Users should be free to select among a wide range of devices and services from different suppliers while being safe in the knowledge that these will work properly together. The fact that this is not always the case is dependent on technology providers who must act in order for their systems to work together.
DRM has a crucial role in protecting music as well. It can prevent a download becoming an upload to the rest of the world. Without taking away from the rights of the consumer, it ensures the flow of payment to rights holders that feeds the virtuous circle of investment and creativity that is at the core of the music business.
The theme of a recent forum I spoke at was entitled - Digital Rights Management: "Copy Protection vs. Consumer Frustration". Nothing better illustrates the misguided notions about DRM, nor neglects its key role as an enabler of great music services, than this completely false dichotomy.
The real issue is just getting DRM to work properly; to work for rights holders, technology firms and consumers. It should continue to serve quietly and unseen as a trustworthy, reliable backroom worker - working in the background to support the music services that are centre stage in the marketplace.
DRM is the key to our successful digital music business. It enables consumers to get exactly what they pay for, and to pay for exactly for what they get. But to work in the future DRM will need support from our technology partners and from governments. It's time to get beyond the unlovable acronym and recognise the integral role DRM has to play in a flourishing future digital music market.