EMI — Ditching DRM is Going To Cost You

33rpm writes "EMI has told online music stores that selling its catalog without DRM is going to cost them a lot of money. 'EMI is the only major record label to seriously consider abandoning the disaster that is DRM, but earlier reports that focused on the company's reformist attitude apparently missed the mark: EMI is willing to lose the DRM, but they demand a considerable advance payment to make it happen. EMI has backed out of talks for now because no one will pay what they're asking.'"

Hello EMI.

Gooooodbye.

"We'll give you what you want... for a fee"

So this basically proves that DRM exists for the sole purpose of providing record companies with silly amounts of longterm income by reselling stuff we already own? Excellent news.

How does it cost more money to go non-DRM?

$9.99 albums of lossy content and no physical medium supposedly make up for the fact that I have no recourse if I lose the data I purchased. So how can they justify charging more than that (closing in on the average cost of a CD) when it costs them money to have the CDs pressed, packaged, and sent to stores?

They can't. This is simply an attempt to say, "see, we tried to go DRM-less but people wouldn't do it."

Fuck that.

Re:How does it cost more money to go non-DRM?

The extra charge is because they automatically assume that if you purchase it, you'll commit copyright infringement; the charge is a tax/levy.

Re:How does it cost more money to go non-DRM?

It doesn't cost more. EMI is just doing it's best to live up to it's name - Electro Magnetic Interference.

People will do it

We are going DRM-less in droves. EMI and friends can go with us or not.

Re:People will do it

Yeah, I think that's what EMI is missing. We ARE going DRM-free. People are sick of DRM and it has reached a tipping point. The only decision they have to make at this point is whether they want us to pay them $.99 a song or $.00 a song.

-Eric

Re:People will do it

When asshat companies like Maxis are still requiring the CD to be present for The Sims to run (in this age of half-TB drives), they can kiss my ass -- I'll go download the version with the No-CD crack.

...after you've bought the game? Why not just download the crack and apply it to your legal, installed version, saving some bandwith and waiting? ;)

Re:How does it cost more money to go non-DRM?

Just look at any other 'protected media' market. All it takes is one person to break it and make it public, then EVERYBODY can just use that person's broken copy. If the Videogame or App scene is any indication, this usually happens about a week or two before the game hits retail. Don't think audio will be any special
The first time they put out an unprotected copy (say, an actual cd, the only way you could make significant money off of selling music) it will be ripped and spread. Even if you went all 'secured', all it takes is one of the 'secured' formats having a bug and you'll have lost. Then theres the analog hole (cable running from your line out to your line in on soundcard). Then theres just sniffing your computers memory or using hacked drivers to grab the PCM raw. Or any other number of ways you ca get it out, admittedly mostly beyond the common user but all it takes is the first person to break it.

Want my money? Give me something worth paying for, and incentive to pay for it. I'll gladly pay for music when I believe its's going to actually support an artist that I want to support (like local bands that are unsigned and truely need the money). I'm not going to pay for some top40 song where paying equates to giving money to the very people treating me like criminals so they can fund their next law they need passed, assinine DRM scheme to slow down my computer even further like whatever the audio equiv of Safedisc will be.

Honestly the only thing preventing me from paying more for music right now is its just inconvenient. Those artists that are actually worth supporting are probably the hardest to get money too. Ordering CDs from half the world away via creditcard just doesn't seem like the most convenient way to do things. Maybe if one of these online music stores would open up and allow indy artists to put their music on them and not ruin it with DRM then you'd see a rise in people paying for music. Until then we're stuck with p2p, which has been here since before computers and isn't going away now. Even if we had to resort back to the equiv of copying tapes for people..thats what people will do.

dashes

EMI &mdash Ditching DRM is Going To Cost You

As are en dashes and semicolons ;)

Until I see...

Someone needs to show me a study that incorporates similar (if not identical) stores and similar (again, if not identical) pricing on a DRM version and DRM-free version of the SAME song. My money is that the DRM-free version makes a lot more money, simply because of its ease-of-use. Hell, I'd even be willing to fork up that extra $.99 [bbc.co.uk] (if the song they did this with didn't SUCK.)

DRM costs to much already.

Funny, considering one of the main reasons I won't buy DRM products is it already costs more to do so. If I want my favorite Britney song from Itunes, it costs 99 cents. If I want a ringtone of the same thing, Verizon charges me up to a couple bucks for a much smaller clip of exactly the same song. Why would I pay twice for something I can rip from my (wifes') CD and create myself anyway? Don't they see it's costing THEM more money in the long run to include this garbage?

Re:DRM costs to much already.

You've got a wife, that in and of itself will cost you plenty.

Re:DRM costs to much already.

If I want my favorite Britney song from Itunes, it costs 99 cents. If I want a ringtone of the same thing, Verizon charges me up to a couple bucks for a much smaller clip of exactly the same song. Why would I pay twice for something I can rip from my (wifes') CD and create myself anyway?

Well, *you* wouldn't obviously. But the record/ringtone companies likely figure (probably rightly) that enough people will buy the ringtone, either because they're stupid (don't know that it's possible to rip, or don't know how) or are simply lazy.

Whether it's good value or not is irrelevant. If people are willing to pay silly money for tiny snippets of music, of course they're going to sell it.

Re:DRM costs to much already.

Funny, considering one of the main reasons I won't buy DRM products is it already costs more to do so. If I want my favorite Britney song from Itunes, it costs 99 cents. If I want a ringtone of the same thing, Verizon charges me up to a couple bucks for a much smaller clip of exactly the same song. Why would I pay twice for something I can rip from my (wifes') CD and create myself anyway? Don't they see it's costing THEM more money in the long run to include this garbage?

Exactly. And if the prices were sane, I would definitely buy DRM-Free MP3s. Definitely. But they'd have to be DRM free. I'm not buying .wmas and putting them with the rest of my collection, it's just not happening.

I think what companies don't yet realize is that, look, we already have collections of MP3s. Everyone under 30 probably has a large collection, and I'm one of the few that has a HUGE collection. However, there are times when I want an album and you can't find it on bittorrent and it's not available other than going to the CD store. Honestly, I don't feel like ripping CDs, and there's a lot of times when I just don't even buy the track rather than having to go and buy a CD and rip it to my hard drive. And it has NOTHING to do with cost. It did, at one point when I was a college student money was an issue. Nowadays, it definitely isn't. But when you have a large collection of high quality MP3s that you know will work on your player, in your DVD player, or any number of other devices you simply aren't going to buy a track and break the DRM to have it mesh well with the rest of your collection.

Yes, I'm notorious for downloading a lot of MP3s, but I would be willing to buy legitimate, if only companies would give me the chance to do so. Stop trying to change how we store our music and just mix with what we have. It's the only way you'll survive.

Yours truly,

A kind of average downloader.

Not mdash!

I knew EMI was a bunch of greedy bastards, and I'm not surprised about that; however, I find it very troubling that mdash, an *excellent* HTML entity, has turned to the dark side like this. Really, I never saw it coming.

It's the smei-colon's fault

Once she left him for that fancy nbsp, it was all over.

Re:It's the smei-colon's fault

This gives a new meaning to the phrase "laying some pipe".

DRM does not solve the problem

Read this: Emmy Noether on DRM [thedialogs.org]

confusing conclusion to article

I'm all for drm-free music and recently, other than non copy-protected cds, added to my source of music downloadable drm-free mp3s from eMusic. I have been extremely happy with the selection, quality, and price for the eMusic tracks.

And, guess what? Not a single violation of sharing, file swapping with any of my eMusic tracks. At $.30/track I feel anyone who likes a track I play for them can supply their own three dimes. It's a great price, and for me it works.

Not so for me with DRM... aside from the onerous assumption I'm the criminal I don't like the hoops jumped through to get an itunes track into an mp3 I can play anywhere. It isn't convenient, it isn't fun, and it isn't worth my time, especially considering what I'm paying for it. Bite me, DRM.

And, from the article, I'm a little confused by the last paragraph and implied (or outright) conclusion (emphasis mine):

Some readers have indicated to us that they'd happily pay more for DRM-free downloadable music from an online retailer, yet it is unclear as to why DRM-free music should cost more. To return to a point made famous by Steve Jobs, the overwhelming majority of CDs sold today already come without DRM on the discs. Furthermore, pirated copies of music are readily available online. As a result, it's not very clear to us why online music that is sold without DRM would need to cost more, but given the razor-thin margins in that market, a "no DRM tax" is quite likely to be passed on directly to consumers.

I'm not sure where I've seen any evidence the music industry is running on razor-thin margins. This sounds like pure BS, and only hurts their credibility every time they try to state their "case"... So far, I'm not convinced.

Re:confusing conclusion to article

Some readers have indicated to us that they'd happily pay more for DRM-free downloadable music from an online retailer, yet it is unclear as to why DRM-free music should cost more. To return to a point made famous by Steve Jobs, the overwhelming majority of CDs sold today already come without DRM on the discs. Furthermore, pirated copies of music are readily available online. As a result, it's not very clear to us why online music that is sold without DRM would need to cost more, but given the razor-thin margins in that market, a "no DRM tax" is quite likely to be passed on directly to consumers.

I'm not sure where I've seen any evidence the music industry is running on razor-thin margins. This sounds like pure BS, and only hurts their credibility every time they try to state their "case"... So far, I'm not convinced.

A more interesting question is why the music industry thinks that DRM matters. Their logic violates a very simple law of computers: if one copy exists in an unprotected form, all copies exist in an unprotected form. If somebody says "Hey, check out this cool song," and somebody else asks, "Can I get a copy of that," and the answer is, "No, it has DRM, but you can download it from eMule," that's not an improvement over "Sure, here's a copy." Actually, it's worse than "Sure, here's a copy" because it is encouraging the second person to pirate the music, while giving someone a copy is encouraging that person to watch for other music by that band and maybe buy the CD.

And I'll say it again: ignoring the one-hit-wonder teeny-pop crap, real musicians benefit overwhelmingly from music piracy. It increases exposure, which in the long term, increases sales. Therefore, all anti-piracy measures are, by definition, short-sighted foolishness by people who don't understand the basics of doing business in a modern economy. Is it any wonder, then, that music sales continue to be in the toilet despite substantially decreased piracy? Guess what? Music copying and sharing was going on before Napster. The only thing that Napster did was bring it out into the open where the industry could total it up and say "Oh, no, we're losing all these sales!" when in reality, by shutting down those services and annoying their customer/fan base, they really killed one of their biggest sources of advertising....

But I guess some people will never learn.

royalties

"we'll remove DRM, but it'll cost you!"

I presume that cost is the royalties being paid to the artists? [sarcasm!]

I agree with the other posters, they're just setting this up for a failure so they have a "look see!" business case for DRM.

Tom

I have a similar situation.

Hello and welcome to my malt shop chain, TurdShakes(TM), featuring shakes made from genuine excrement, in a secret family recipe that is sure to please.

Am I serious, you ask? Of course I am! I am quite passionate about my flagship product, the TurdShake(TM), and stand behind it totally even though sales have been slightly disappointing. That is to say, not quite as successful as I had hoped. Frankly, I'm shocked by the fact that nobody wants to buy milkshakes made from excrement. Im my eyes, TurdShakes(TM) were a goldmine waiting to happen.

Wait, come back! Okay, you win. I am willing to adapt my business model to suit what the people want. Therefore, I have decided to remove excrement from my TurdShakes(TM) entirely, possibly replacing it with chocolate or ice cream or some other such boring shake ingredient. You'd like one now, wouldn't you? A regular shake? No Turd(TM)?

Well, that's just what you'll get, then. A delicious normal shake... That is, of course, provided you give me a large bag of moneys first. A really big bag, with lots of moneys. Otherwise, you'll just have to go on buying the original TurdShakes(TM), with heady flavors of... wait, where are you going? Come back!!

Standard southern reply

You lost your semicolin in there, hon. Need another one?

It's not going to cost me

I don't purchase that crap.

(no, I don't download it either)

Paying for What?

So we have to pay for their failed DRM R&D costs? Bahaha.

Ah.. Right...

So they have a strategy of unknown risk and reward, and they're quite happy to go about it if someone else takes the risk but doesn't benefit from the reward.

Here's my counter proposal. I'll pay the upfront cost. I get to choose how much I charge. My cut is double what they pay Apple.

Question / Answer

For $10 I can buy a physical CD, and get: 1) Liner notes. 2) Artwork. 3) Plastic casing. 4) Plastic compact disc. 5) Files on said disc which are lossless. I can then convert the lossless files into any format I want depending on my needs, put them on my iPod, put them on my hdd. If I lose the CD, I still have the files. If I lose my iPod, or my hdd, I have the CD. Why would I spend $10 on low-quality files that are DRM-infected that I can't do shit with, and that I can lose much easier? Oh yea, I won't. -ACA

New CDs are too cheap to put up with this

You can buy many Billboard top 20 albums for $9.99 at amazon and get free shipping if you buy a few at a time. If you buy used then your looking at ~5 a CD.

We already have DRM-Free music for cheap. We've had DRM-Free music for 25 years you, why would we pay more now? WTF is wrong with these people?

Capitalism at work

EMI has backed out of talks for now because no one will pay what they're asking.

That should tell EMI that their extortion price is not "what the market will bear".

Pricing model

Sounds like EMI went to the SCO school of pricing.

Well, at least they seriously considered it.

EMI is the only major record label to seriously consider abandoning the disaster that is DRM

EMI has backed out of talks for now because no one will pay what they're asking.

Wow that's serious consideration.

good news for allofmp3.com

allofmp3.com [allofmp3.com] would like to thank you for your business. It knows you have no choice in DRMless online retailers who offer high quality files without DRM at a good price (well, with the exception of magnatune [magnatune.com], but they have a limited catalog), and appreciate your choosing them for your online music needs.

what EMI didn't take into account..

is how much its going to cost them in lost sales through pissing off customers by keeping DRM.

Par for the course

As someone who has intimate knowledge of how the entire licensing thing goes between the majors and a digital music provider let me just say that this is in no way shocking. The labels will take as large an advance as they possibly can and it is really a matter of whose legal counsel is better. A couple of years ago there was no way you could license all of the (available) major label content for under 500k... unless you paid one of the better known music industry lawyers a couple hundred K. There are only a half-dozen big shot lawyers in the music biz and they tend to play both sides of the field... and charge whatever the hell they feel like.

The contracts for the labels are all wildly different but all of them consist of at least technical due diligence (what are YOU going to do to make sure OUR content does not fall into the wrong hands), financial due diligence, and a marketing plan. This is heavy stuff and can takes months and months to push through. In short, this is a very time-consuming and spendy process to go through.

EMI, under the digital music strategy of Ted Cohen, has far and away been the most open of the majors when it comes to licensing. They are simply making an attempt to protect their assets... since it takes so much effort on both sides to conclude a licensing agreement, it makes sense that they (the majors) want to recoup as much of that investment up-front as they possibly can.

People on Slashdot get this wrong all of the time. You see, the majors and the digital music services are in a death-match, with the DMS being hounded by the customer and the majors being hounded by the shareholders. The ONE thing that binds all of those people together (with the possible exception of the customer) is DRM. The major feels a little more secure "knowing" that their music can't be mass-reproduced, the DMS is happy because they can sell the content, the customer is happy because they can get the content, and the shareholder is happy because, well, there is an additional revenue stream.

And FYI...I have never met a music executive who DOES NOT understand that DRM is nearly useless as far as protection of content goes. BUT... as I said above, it is the glue that keeps everything together.

Go spend some time on Digital Music News to fully understand what is going on in the industry. It's not so simple and you cannot say definitively that DRM is harming the consumer because RIGHT NOW the only way to get that content is with DRM. Better than nothing, isn't it? Things will eventually change and this announcement from EMI is a very positive step forward. Don't trash the music industry as a whole until you understand it. I am certainly not saying it is full of kind-hearted souls (very far from it!) but there is more to it than just "let's fuck the consumer and the artist to make a buck!".

How Much?

I suppose, if one takes the rubric of, "Defective by Design," at face value (as it happens, I do), then the defective product would naturally be worth less than the one without defects (even though the capital cost of the defective product is higher).

Okay, we'll let that point stand for the moment. How much more money are we talking about? $1.25 a track? $1.50?

Schwab

Pre-paying for content

This is what the anti-copyright folks have been proclaiming for some time here on Slashdot - that all future work will be live concerts or commissioned works. It looks like this is just the route that EMI is trying to take. They'll sell you the song for distribution, but you are going to have to pay more for it up front, so that when it is copied freely on the back end, they will still have gotten their cut.

Maybe we really are reaching the point where before a label will cut loose a song they will demand a paid-in-advance comission first.

What a colossal waste of time and money.

EMI, and the others obsessed with maintaining their current profit model, simply cannot win in the long term. All they are doing is wasting their money to protect an asset that cannot be protected.

What they must inevitably do is innovate. In a 5 second thought process, I came up with this idea:

Instead of seeking to make profits on shrink-wrapped products, they should actually invest in artists - help them tour more comfortably, give them resources to play their music, in short...stop screwing them at every turn.

While artists with integrity might be said to thrive off of adversity, is it really necessary to try to maintain Dickensian conditions for the vast majority of artists? I wonder if the thought has ever occurred to them...invest in their product, sell more units because their offerings improve.

Still and all, if execs had a creative bone in their bodies, I guess they'd be strumming guitars, instead of shuffling Benjis.

Somebody explain...

Today, it is technically "wrong" to redistribute music. Very few people don't do it. DRM is a little added push away from it, because for some it just makes it too difficult.

So how is removing probably the last barrier to a complete free-for-all going to help the bottom line?

Of course, it might speed the exit from the market of commercial music that that would probably be a good thing. I mean, since it really will be free for everyone all the time how could anyone get revenue from selling music anymore? Sure, it could be an advertisement for porn or some kind of concert, but the music itself becomes valueless.

Not that it isn't pretty much valueless today anyway.

I figure there are some over-40 types that just don't know how to download stuff that are still paying. Some more that bought an iPod and just know they have to buy all their music from Apple or it might not work. Still a few more folks that are sure they money they are paying to some site in Russia will send some money to Donny & Marie because they deserve it. But aside from the above, is anyone really paying now?

So would removing DRM just make things easier for everyone and we can all drop the pretense of paying? Or does someone really think that paid-for commercial music has any kind of future at all?

Blindness

This is all so stupid, if you buy DRM'd music, burn it to CD, then reencode it to MP3. BAMMM! no DRM anymore. Why don't these dinosaur sized companies have someone to tell them that there is no way to truly protect their music, and I use 'their' as loosely as possible. The greed behind it all is blinding them to reality. DRM is NOT a good idea on ANY front. It does't stop anyone from doing anything, and it sure as heck doesn't have any advantages.

DRM costs them money!

I know I'm preaching to the choir, but... what I don't understand, is why EMI hasn't yet figured out how that DRM costs them money?

I went into a CD store recently, saw a number of alums for sale by EMI, considered buying them, but saw the largely-printed "DRM" warning. Perhaps I'm unusual, but this prevented me from buying a single one of those albums. If not for the DRM, I would've bought one of the albums, and I would have likely purchased the others over time. Over the last few years, I've probably spent few hundred at AllOfMp3. Why? Because I could buy the music I wanted, not only at the price I wanted, but in the format I wanted.

Does the music industry really think if people didn't want CDs, that they would've switched from cassettes and vinyl? Of course people switched, because they WANTED compact-discs, there was an advantage. Does EMI think that if the masses wanted CDs and they only sold cassettes, that anyone would continue to buy EMI's music? Likely, the masses would just put their money elsewhere. Customers buy what they want, remember: "The customer is always right." As long as the layman wants MP3 files, and the audiophiles want FLAC files, DRM will not sell. If music is only available underneath DRM, then music will not sell.

I only assume that EMI believes that stopping DRM will stop illegal downloads, and the revenue gained by recouping the "losses" of illegal downloads will outweigh the losses that they now incur due to DRM. However, I believe that of those illegally downloading, there are the following groups:
  1. People that would purchase the product if there was no DRM, but download illegally instead.
  2. People that won't pay regardless.
  3. People that use illegal downloads as time-shifted radio, driving sales.

Based on this list, I can only see DRM hurting EMI. Group #2 won't pay regardless, and they're driving away users from groups #1 and #3. Thus, their DRM is only removing a significant number of potential customers. There is NO advantage to EMI to continue pushing DRM.

Haha, they miss the issue miserably

If they don't ditch their DRM it will cost them their business, in 5 years.
There will be more and more 'free' music available, with competitive quality, availability and amount.
So they'll run out of business even without piracy.
DRM just lets some pirates get rich during this transition.

Who cares?

Normal advance royalty payments...

... for setting up an online music store are typically around $1-2m per major label, which isn't too hard to find. (this is from real inside experience)

So the advances on this must be insane for the negotiations to fail. I can only think it's not just a money thing, there must be other crazy clauses in there too.

The Entertainment Mafia Strikes Back!

When is the entertainment mafia going to wake up and realize that collusion and extortion is not a way to do business? They may make money in the short term, but they are only killing their own business. The entertainment industry causes their own "piracy" by alienating their customers through collusion, extortion, crap music/movies, and high prices.

To all DRM users.

Making claims that "dropping DRM will cost you" is the wrong thing to say to a growing population that is rejecting it. Here is the statement to the various companies EMI included, "Not dropping DRM will COST YOU!".

DRM is on par with terrorism.
DRM is extortion.
DRM takes away the rights of consumers.
DRM is not wanted by the majority of the population of consumers. Fail to remove it, and they will go else where. Its not a matter of IF but rather WHEN.

DRM and DRM-free music in a secure way. It's easy!

About the mixure of DRM and DRM-free music, it could be done without exploiting FairPlay or making any changes to iTunes.

All songs should continue to be DRM, if a song is sold to be DRM-free, it is downloaded and DRM'ed like any DRM song, but the user key for this song should be stored seperatly in iTunes.

The song could continue to be DRM'ed as long as the user wants it to be, and if the user wants the song to be DRM-free just click on the "export as DRM-free" or "Remove DRM" button in iTunes.

No changes are needed to be med to iTMS to sell DRM-free music.

Re:Not Surprising

While EMI says they are willing, they, along with everyone else, are unlikely to embrace DRM free media until the idea of DRM free and profit being mutually exclusive is out of there heads. Once the day comes when a company can connect the dots and forecast long term profit off a DRM free scheme, it will be so.

Clearly, they don't read Slashdot [slashdot.org]. Want a music example? Maybe they should read Slashdot [slashdot.org].

Dammit, I've done it myself! I sold a thousand paper copies of a novel, not in spite of, but because of the fact that it was (and still is) available online for free. Sure, that's small change to someone like EMI, but for cryin' out loud it's not that big a mental leap. Treat your customers like adults and most of them will act like adults. Of the ones that don't, enough will act like billboards that it pays off in the end.

Re:Not Surprising

It is not just the question of making profits though. They want and need to be able to _maximize profit_ for their company and shareholders. When they can say that DRM free media is the avenue which will yield the most profit, they will go that route. Again, it is not enough to just make money, they need to make the most they can with the product they sell. Right now, DRM'ed media appears to hold the promise of maximized profit.

Re:Its simple business

Yeah, unfortunately, the masses don't agree, or even care for that matter

Re:Oh well

Music should not be "free".

Re:Its simple business

That seems like a plausible argument, but then like most things in life it's not that simple. I'm not willing to dare and guess the amount of money that music and video provides