UMG Kicks DRM—Mostly

Universal Music Group CEO Doug Morris isn't exactly a fan of portable digital players—in November 2006, he referred to them as "just repositories for stolen music." Yet, on August 9, UMG announced that it would offer at least some of its artists' music as MP3 files without digital rights management (DRM) on RealNetworks, Wal-Mart, Amazon, Rhapsody, PureTracks, Transworld, and artists' own websites. Everywhere, that is, except on Apple's iTunes Store, where UMG files will have Apple's FairPlay DRM installed.

How come? Depends on who you ask. In its announcement, UMG spun the move as a "six month test," using the world's most popular legal downloading as a "control group" against which to judge the success or failure of its move to drop DRM—a claim that does not convince most industry insiders.

Just one month ago, UMG notified Apple that it would not renew its annual contract to sell music through the iTunes Store, choosing to sell music to Apple "at will," meaning it can withdraw its tunes with little notice. The move was widely seem as a negotiating tactic designed to soften Apple's insistence on its 99¢-per-song pricing policy. Since the iTunes Store is not only the largest legal downloading site but also the US's third-largest music retailer, many insiders questioned whether UMG had enough leverage to face down the Cupertino giant.

Apple's vulnerability, however, is that its DRM system does not work seamlessly (if at all) with non-Apple players nor do DRM-encrypted files purchased from other sources work on Apple's players. Industry analysts have suggested that the confusion and frustration surrounding this situation have effectively limited the growth of digital files at the same time that the sales of physical discs (CDs) have plummeted.

The confusion doesn't end there. Apple is offering DRM-free tracks from EMI (at a 30¢ premium), and eMusic has many indie labels without DRM but nothing from the majors—and now UMG's unlocked files will be available almost everywhere else. Therefore, UMG's move is a test, of sorts—a test of whether Apple is a necessary evil.

Billboard actually managed to get a source to say so on the record. "We want to have a robust digital marketplace where there's healthy competition," the anonymous executive said. "We don't have that now. Apple has a stranglehold on the whole thing . . . . We want to open up the market and create a more level playing field. We want to give other retailers a chance to compete."

We'll just let that soak in for a minute.

Managed to get your head around it? The world's largest record label, one of the corporations that has been rushing headlong into extinction and irrelevance for the last decade, is upset at the only company that has been successful at convincing customers to pay for its commodity. We wouldn't let anybody attach our name to that quote either.

It's called chutzpah and it makes us believe the rumors that circulated at the time that UMG declined to renew its annual iTunes Store contract—that the label had demanded a $1 royalty on every iPod sold (Microsoft reportedly had acquiesced to such a demand when it introduced the Zune). This is classic record-label thinking—you'll take what we give you and you'll like it. Why can't they see it's not working?

That's not to say that we're not critical of Apple, however. We do think that the cross-platform operability issues caused by its DRM are bad for consumers and bad for the industry. We're also not content with the 256kbps "higher sound quality" of its premium files.

According to a recent NPD poll, 25% of Americans would buy more digital music if they could copy it freely to the computer, player, or format of their choice, while 23% would buy more if they could be assured it would play anywhere. In the UK, an Entertainment Media Research study showed that 68% of 1700 Britons polled said that the only music worth buying was DRM-free. In that sense, UMG is correct, DRM is keeping the record business from doing better.

Fragmenting that business further and confusing consumers about where to legally obtain music doesn't strike us as the way to encourage them to buy more, however.

We'd end on that note, except we've just heard a DRM-related report that is so monumentally wrong-headed that even a record label couldn't come up with it. A Boing-Boing reader named Samuel posted a letter he had received from Google Video after having purchased an episode of the TV series Star Trek:

"As a valued Google user, we're contacting you with some important information about the videos you've purchased or rented from Google Video. In an effort to improve all Google services, we will no longer offer the ability to buy or rent videos for download from Google Video, ending the DTO/DTR (download-to-own/rent) program. This change will be effective August 15, 2007.

"To fully account for the video purchases you made before July 18, 2007, we are providing you with a Google Checkout bonus for $5. Your bonus expires in 60 days, and you can use it at the stores listed here: http://www.google.com/checkout/signupwelcome.html. The minimum purchase amount must be equal to or greater than your bonus amount, before shipping and tax.

"After August 15, 2007, you will no longer be able to view your purchased or rented videos.

"If you have further questions or requests, please do not hesitate to contact us. Thank you for your continued support.

"Sincerely,
"The Google Video Team
"Google Inc. 1600 Amphitheatre Parkway Mountain View, CA 94043"

So what's wrong with this—other than just about everything? Samuel purchased that video (it says so in the letter) and "in an effort to improve all Google services," the company then took it away from him. He bought it fair and square and they changed the deal after the fact. Imagine buying a book and later receiving a letter from the bookstore saying that they'd changed their mind and came to your house and took it back when you weren't looking—but it was okay because they'd left you a gift certificate you could use for something else they wanted to sell you.

If Samuel had stolen that Star Trek episode, he'd have no problem. Is that the lesson DRM teaches? Sadly, we think so.

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