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What The RIAA Needs To Do
The RIAA is screwing up the music business. Their hatred of Napster has led to a jihad on free mp3s that is slowly but surely killing the music business. The major labels will continue to merge, consolidate, and put out increasingly irrelevant music.
Something needs to change and this is what needs to happen. The RIAA needs to drop its fight against free mp3s. They need to accept that music sold online needs to be as portable as music sold offline is.
I mean how stupid is it to continue to sell CDs with no copy protection on them but to DRM the hell out of online music. It's forcing people like me who consume all of our music online to buy our music encased in plastic! It's dumb, anti-consumer, and it has to stop.
The RIAA needs to accept that some proportion of their customer base will consume pirated music. They need to just eat that as the cost of doing business.
They need to focus on the majority of music consumers who will pay for music, but want a better deal, and want the music portable so they can play it wherever they want.
The RIAA needs to stop playing into Apple's hand. As long as the music industry insists on DRM'd music, they are letting Apple hold onto a near monopoly on music sold online. Because if you want to play music you've bought online on your iPod, you have to buy it at iTunes.
The market needs choice and innovation. Selling clean mp3s online, like you sell them offline is the way to achieve this. Then everyone can compete with iTunes on a level playing field.
Take Rhapsody and eMusic. These two services are really close to what the market needs. Merge them and you've got a killer offering.
For $14.99/month I get 50 downloads on eMusic without DRM. But they don't have enough music in their library. I struggle to buy 50 downloads a month from eMusic but easily purchase 10 CDs a month at Amazon.
For $9.99/month, I get to listen to Rhapsody's entire music library which is extensive, as good as iTunes I think. There isn't a day that goes by that I don't listen to Rhapsody.
If you merged the two services, combined their libraries, charged $19.99/month, got unlimited streaming (which you have now on Rhapsody) and got 50 DRM free downloads per month (with the ability to roll over the unused downloads), you'd have a killer service.
Music lovers want to listen to a lot of music and own the music they really love. They want to put the music they buy wherever they want; their iPod, their laptop, their desktop, their phone, a USB memory stick, whatever.
So get rid of DRM, make music truly portable, level the playing field for the online sale of music, and let innovative services like Rhapsody and eMusic give the customers what they really want.
My dream service (merging Rhapsody and eMusic) may not be everyone's dream service.
But iTunes is nobody's dream service except Apple's.
The RIAA doesn't know it, but they are slowly killing the music business. They need to stop playing defense and start playing offense. Napster isn't the enemy anymore. Apple is. Wake up people.
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» Lo que debería hacer la RIAA from meneame.net
interesante artículo en inglés, escrito por un gran inversionista (fred wilson), sobre lo estupido del DRM, la imposibilidad de hacer completamente portátil la música descargada, y lo mucho que esto favorece el monopolio de Apple y su iTunes. [Read More]
Tracked on May 4, 2006 4:36:31 PM
» Music in Triple Time from Changing Way
Three musical things: first is Fred Wilson's post on the recording industry; he goes two for three (there's that number again). What I mean by that is that I was struck by the following three quotes, but can applaud "only" two of them. I'll identify th... [Read More]
Tracked on May 5, 2006 11:43:55 AM
Posted May 4, 2006 in Venture Capital and TechnologyComments
DRM sucks because the labels want DRM to suck.
Their business model is predicated on selling you 9 songs you don't want along with the 1 you do want. That's where their profit margin is. Without hugely restructuring their business, it's the only way they can stay in business.
What they need to do is massively streamline their distribution operations (which is ironic because digital distribution allows them to do exactly that) and cut head count in distribution and manufacturing departments. They need to greatly improve the quality of their research methodology and their understanding of of what consumers want by using behavioral based popularity ratings (just for instance). This will allow them to hugely cut AR departments and stop backing bad bands. Sales and radio airplay are trailing indicators of popularity, they tell you what was popular. Forwarding and sharing are leading indicators, they tell you what will be popular.
Bad DRM isn't going to go away (or improve to a non obnoxious level) until the labels figure out they need a new business model that works in a post album world.
Posted by: Erik Schwartz | May 4, 2006 7:05:15 AM
Lucky the RIAA is not running the restaurant business where 10 percent of the revenue go to theft.
We would be eating food with bar codes!
Posted by: howard Lindzon | May 4, 2006 7:17:37 AM
Agreed, agreed and agreed.
It doesn't take very long to find RIAA-hate on the Internet.
Posted by: Nathan Waters | May 4, 2006 9:31:40 AM
Your comments about the ipod are incorrect. You can easily get non DRM material on it.
Posted by: Loren | May 4, 2006 9:39:05 AM
If you owned Apple at $15 - would they still be the enemy?
They are the winners in a fast paced war - it is too early to call them the enemy.
If I short the stock - then they become the enemy.
Let's have some perspective here :)
Posted by: howard Lindzon | May 4, 2006 11:04:45 AM
Loren
what i said about the iPod is "Because if you want to play music you've bought online on your iPod, you have to buy it at iTunes."
sure you can put DRM free mp3s on your iPod but to get them you mostly have to buy CDs. If you buy music online, other than eMusic, you get DRM'd mp3s and the only DRM'd mp3s you can put on an iPod are from iTunes.
it's not obvious and that's why Apple has gotten away with it, but they effectively have a monopoly on online music because of the iPod.
Posted by: fred | May 4, 2006 11:25:05 AM
Apple gets away with it for the same reason Google gets away with the stuff they do (as far as privacy and "evil").
Their brand is such that no one looks too carefully.
Can you imagine the hue and cry if MSFT had the DRM of iTunes or the eMail indexing of GOOG?
Posted by: Erik Schwartz | May 4, 2006 11:44:45 AM
You can burn itunes store bought music to cd, and then take it off the disc minus DRM if you feel the need.
Posted by: Loren | May 4, 2006 12:48:57 PM
Two things.
Fred: There's plenty of places other than iTunes Music Story to buy non-DRM music online, that will play happily with your iPod... bleep.com, audiolunchbox.com, tunetribe.com, allofmp3.com
Erik: "by using behavioral based popularity ratings... This will allow them to hugely cut AR departments and stop backing bad bands."
Isn't there a risk that behavioral based popularity ratings lead to "group think" and a continuing appearance of the same old music? Hugely cutting A&R depts and relying only on the recommendation power of what people are already consuming could lead to stagnation of what music is available.
Unless of course, A&R's traditional role of going out and listening to unsigned bands at small gigs (which A&R is notoriously bad at) can be taken on by real punters at these gigs, buying and listening to recordings that these bands have self-produced and then 'injecting' that, as fresh oxygen, back into the popularity rating system.
Posted by: Ben Haldenby | May 4, 2006 12:59:49 PM
Ben - kudos, couldn't say it any better.
Posted by: jackson | May 4, 2006 1:15:47 PM
ben,
i agree with your second comment.
as for your first, i do use these other services but none of them have libraries that compete with iTunes or Rhapsody, unfortunately
fred
Posted by: fred | May 4, 2006 1:37:19 PM
I hate DRM as much as anyone. I often refer to this lock-in annuity as "building a monoply on the installment plan." I would like us to avoid the coming train wreck and drop DRM altogether - the sooner the better.
That said, I think it is a bit unfair to call Apple the enemy in this case. Apple was dealt the same hand as everyone else - they have just done an exceptionally good job executing on both the content and platform sides.
The other big player in this space - Microsoft - provides the software platform used by almost every major device manufacturer outside of Apple. Unlike Apple, they promote a whole range of DRM technologies for both content producers and consumers. A piece of their business is selling locks to the media folks and keys to player folks. Overall, the MS ecosystem has done a terrible job with both products and packaging. Where the iPod and iTunes work seamlessly, the MS/Partner experience feels like a patchwork. Though less successful, they are probably more complicit.
To add perspective, Apple has done a lot of the needed spade work with the media companies to get the marketplace to where it is today. Prior to iTunes there was 'PressPlay' - a media owned service best forgotten. Was FairPlay a deal with the devil? Sure, but it was probably the only way to get anything off the ground.
Apple's power in the marketplace today - more then being evil - is the only counter balance to complete control by the media companies. Without Apple, I could see big media consider pulling the entire process back in house where they have complete control. It may be overpriced and too restrictive now, but it would be much worse if that were to happen.
At the end of the day, most music purchased online (Rapsody, Napster, and iTunes all included) can be burned to a standard Audio CD, efectively removing the copy protection. This 'liberated' media can be used with any jukebox software and any player.
Is it ideal? No.
Does it even make sense? No.
Is it Apple's Fault?... No.
At a macro level, its the media companies that are calling the shots. It's their tune, everyone else is just dancing.
-john
Posted by: John | May 4, 2006 1:58:38 PM
Apple's no more to blame for the current DRM situation than MS or Sony, both of whom promoted similar schemes but could never get their act together on both the hardware and software side -- it's kind of sad that at least in my view, they got beat not just on the combination but each component individually (MS by iTunes, Sony by the iPod and iTunes) which is pretty sad indeed.
My only wish is that there was a subscription service with DRM compatible with my iPod(s), since I like to sample music. But I'm not going to go buy a whole new device (and worry about using its kludgy software) just so I can use Rhapsody/Napster.
Posted by: Tom | May 4, 2006 3:15:30 PM
I've been kind of thinking lately that the acronym DRM must really stand for "Doomed to Repeat Mistakes."
What the RIAA has *really* succeeded in doing for me is convincing me to *never* buy music again. That doesn't mean I don't listen to music… but until they come around to a more reasonable position I'll just stick to podcasts, free downloads, live concerts, etc.
The greed and hubris of the music industry has reached a level where I just can't in any conscience do business with them. And I won't.
When the "war on drugs" was announced, my feeling was that if everyone who had ever tried an illegal substance were to arm themselves and join the battle, it would be over inside of a week. Bloody, yeah, and no better than the official policy… but the point is that when these kinds of wars are announced, the only reason they continue is because the battle is one-sided. If both sides chose to fight, the war would be over, stat.
Or to put it a bit differently… the only reason these jerks feel safe declaring war is because they know that no one from the other side is going to show up with tanks (or the equivalent).
Posted by: johntunger | May 4, 2006 4:42:38 PM
With all the well placed ranting about the resistence of the legacy music industry perhaps its time to begin to create a new one. Form a new music company with people that get the new reality. One would start with nothing with everything to gain as opposed to thinking you have a decent business and defending it against the new reality
Posted by: Eric Risley | May 5, 2006 9:00:16 AM
I agree with you Fred. I only buy online music through Emusic. Since I haven't been a member there that long there is still a bit of music for me to pick up. It will be iteresting to see if they ever run out of music for me.
I have been buying quite a few CDs a month. I have very little space for them. I would love it if I could have gotten them all as mp3s online... along with some artwork.
Posted by: spi | May 6, 2006 10:04:33 PM
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