Universal Music To Test DRM-Free Sales, But Perhaps For The Wrong Reasons

from the nose-cut-spite-face dept

Following the lead of rival record label EMI, Universal Music says it will later this month begin selling DRM-free music downloads through a variety of sites — but not through Apple’s iTunes Music Store. Apple and Universal have a long-running spat which culminated in Universal’s refusal last month to to renew its iTunes Music Store contract. While its music is still sold through the store, Universal could yank it at any time. Universal’s decision not to give Apple the unprotected tracks seems like little more than an attempt to reduce its influence in the music market — which is a little ironic, considering that it was the record labels’ insistence on using DRM that made Apple so powerful in the space. Making the unprotected tracks available through other retailers is about the only way that Universal can fight back, but it’s hard to see the benefit in not selling the product through iTMS, given its popularity. The problem for Universal is that few people pay attention to what label artists’ records are on, so they’re not going to go, “Oh, 50 Cent is on Universal, so I should go to Amazon to buy his unprotected MP3s.” If they’re an iTMS user, they’re generally just going to look and see if the 50 Cent songs they want are available there, then download them. In that case, they’re going to purchase the cheaper, DRM-encumbered track, since it’s what’s available, and Universal misses out on the chance to sell them a higher-priced unrestricted track. The core of the label’s disagreement with Apple is pricing — but their attempt to strike some sort of blow against the company will, in all likelihood, only end up hurting themselves.

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Companies: apple, emi, universal music

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Comments on “Universal Music To Test DRM-Free Sales, But Perhaps For The Wrong Reasons”

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13 Comments
Marc Cohen (user link) says:

Bring out the buggy whips

In his famous article “Marketing Myopia” Professor Ted Leavitt described the buggy whip industry and observed that no amount of product improvement could prevent the evaporation of the industry.

The record industry is on its way to becoming a new buggy whip industry. Eliminating DRM is the kind of ineffective product improvement Leavitt described.

The industry needs to reinvent itself is a free, ad-supported medium.

Check out the Ad-Supported Music Central blog:http://ad-supported-music.blogspot.com/

Dan says:

It is a shame that the DMCA law is exploited in order to make the industry more money. DMCA was created to protect copyrights, not to prevent fair use. It really is a shame that in order for us to legally do what we want with the music that we purchase, we have to pay more. Fair use should not have a price, as it is protected by copyright law, but that is what this does, make it so you need to pay a premium to practice fair use. I am all for DRM free music, however I fail to see why it should cost more.

W.B. McNamara (profile) says:

Doesn't really make sense to me, either...

The best explanation that I can come up with is that the plan looks something like this:

1. Undertake very short test of DRM-free online music distribution.

a. Intentionally exclude the largest online music distributor, because we’re in a bit of a snit right now.

b. Wait six months, then express disappointment with relatively small sales.

c. Conclude that results indicate that only a small segment of consumers see DRM as a significantly motivating factor when purchasing music for download.

d. Come up with bizarre and unwieldy “some music is sometimes available without DRM” scheme.

2. ???

3. Profit!

The plan seems oddly familiar for some reason, but I just can’t place it…

South Park Fan says:

Re: Doesn't really make sense to me, either...

That would be the business plan of the underpants gnomes from South Park(episode 30- “Gnomes”):
1. Collect Underpants
2. ?
3. Profit

Nice comparison, it should be an equally profitable business model for Universal as it was for the gnomes- a cave full of underpants with no way to make a profit.

Ted Wood says:

DRM is not Apple's reason for success

I’m not sure why people repeat the misinformation that DRM made Apple the powerhouse it is today. I know I didn’t buy hundreds of dollars worth of iTunes because of the DRM, but I am buying more than it’s begun to disappear. iTunes is successful because of the seamless integration and ease of use. That’s the bottom line, plain and simple.

I think Universal is just biting off the hand that feeds it. They’re the childish playground bully and Apple is not even being phased by their silly behavior.

Brandon Watts (user link) says:

Despite whatever bad feelings Universal may have towards Apple, a bad business decision is a bad business decision, and this is a perfect example of that.

By alienating Apple, they’re missing out on one of their largest audiences, and I’m sure that after a few months of working with this approach they’re at least going to be tempted to try and make nice with Apple once they see their results.

Brandon Watts
Criteo Evangelist

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