Music Industry Remains Divided Over DRM

Authored by Jay Baage on February 27, 2007 - 1:19pm.

From Digital Music Forum East 2007: The future of music is not dropping DRM, but offering consumers new innovative music products, according to Thomas Gewecke, SVP, Digital Business Group, Sony BMG, at Digital Music Forum in New York City. However, many other industry insiders disagree.

Attendees at Digital Media Wire’s packed two-day conference today immediately got into this key topic facing music executives trying to navigate a changing universe - is dropping DRM the best way for the industry to come to terms with illegal downloads?

Most panelists agree that the major labels should follow the lead of the independent labels and drop DRM-restrictions and move to an open MP3 standard. That way all music sold on any digital store will play on any digital device, unlike the closed system of iTunes and iPods today.

David Del Beccaro, President & CEO, Music Choice, said that Apple has caused an enormous problem for the industry by the way that iTunes is set up with its DRM and inelastic $0.99 pricing model. Most of the panelists agreed:

“DRM doesn’t work. It is the same conversation we’ve had for the last 12 years. It comes down to a shareholder problem. They [the shareholders of the major labels] don’t understand how much money is being left at the table [by not moving to an open standard selling MP3s]”, said Greg Scholl, CEO, The Orchard.

Thomas Gewecke, who represented the major labels on the panel, responded by saying that it is not constructive to focus on DRM as the main problem. The industry should instead work on being more innovative in working within the limits of DRM. His answer is not just selling ringtones and songs, but providing a constant flow of product so consumers can stay connected to their favorite artists.

"Everyone is talking about the declining CD sales and negative trends. The fact is that music consumption is at an all time high, that is a huge opportunity. Now, how do you monetize that? We have developed a whole portfolio of digital products that we sell now, it is not just ringtones. We all need to do a better job at that", said Thomas Gewecke.

Joakim Baage

Related Links:
Digital Music Forum East Conference Site
Audience Member Steals Show at Digital Music Forum East (Wired)
Digital Music Forum: The Suits Talk DRM (AppScout)
Five Questions with Dave Jaworski, CEO, Passalong Networks