It's just not rock 'n' roll

Napster was a catalyst for rampant music file-sharing and put the fear of God into music industry executives worldwide - the spectre of digital rights management (DRM) has loomed over online music retailers' efforts ever since. E&T investigates.

As short-lived as the original Napster's reign was (declared bankrupt by 2002, crushed by crippling legal action from the likes of heavy metallers Metallica and record label A&M), the concept that all music could be free had firmly entered the public consciousness.

With no legal download alternative available, and numerous Napster-like peer-to-peer replacements springing forth to fill the void (such as Gnutella and Limewire), the music industry preferred to stick with its familiar physical product business model.

However, early attempts to restrict the use of CDs were clumsy and secretive and frustrated honest consumers, culminating in 2005 when dozens of class-action lawsuits were filed against Sony BMG after it was discovered that the company had surreptitiously placed digital rights management (DRM) rootkit software on a large number of its CD titles. Hackers were able to exploit this vulnerability to place Trojan viruses on users' machines.

The issue of digital music was becoming increasingly heated. Clearly, something had to change. Legal online music download offerings, such as eMusic.com's subscription service, were slowly gaining a foothold, but it was the launch of Apple's iTunes Music Store (iTMS) in April 2003 and its à la carte approach to buying songs that took downloading music to a higher level - and, more importantly, to a mass audience.

Record companies finally had a legal online outlet for music which could generate significant revenue, and music fans finally had easy, legal access to a vast catalogue of songs. The iTMS has sold over six billion songs and accounts for more than 70 per cent of online music sales.

However, there were three major caveats with iTunes: files were of only average quality (128kbps); the file type was AAC (advanced audio coding) format, the MPEG-4-specified successor to MP3 which offers better quality than MP3 but does not play on as wide a selection of music players; and files were restricted in use by Apple's own FairPlay DRM, a placatory sop to the music industry's paranoia, still raw from the Napster years. FairPlay allows the purchaser to share the song with up to five authorised devices.

The end of DRM

Despite the great leap forward by the iTMS in establishing a legal download culture among music consumers, such a concentration of power in the hands of a single retailer has made record companies increasingly uncomfortable.

Unhappy with Apple's single-price structure - whereby all tracks were 79p - there has been a gradual shift towards a tiered approach, something instantiated by other online retailers eager to establish their own unique selling point to differentiate themselves from Apple's tune-mongering behemoth, whereby dusty back catalogue nuggets attract a lower fee than chart-busting top ten hits. The change was announced at MacWorld Expo in January 2009. Overnight, DRM was virtually dead.

However, DRM limps on invariably at sites that serve Windows WMA files, such as Tesco.com and, ironically, the reborn but tragically unloved Napster.

Major online operators such as Amazon and HMV have launched download services to rival Apple and there is a buzz of intriguing activity among more independent alternatives.

Sites like eMusic, TuneTribe, 7 Digital, CDBaby, PlayDigital and AmieStreet all offer a broad range of content, vast swathes of which are not available on iTunes and which cater for specialist music genres or file requirements. Record labels such as 4AD (AAC files with no DRM) and artist-owned operations like Nine Inch Nails' http://ghosts.nin.com/ (offering a range of file formats and price points) are pioneering new approaches to online music.

Most notably, all these sites eschew DRM, favouring an open file format approach. Danny Stein, interim CEO of eMusic.com, sums it up: "Public opinion of DRM has been negative because it creates a terrible experience for the consumer - that's why eMusic has always supported the MP3 format."

Wendy Snowdon, head of digital at Cambridge-based
Play.com, goes further: "For music audio pay-per-download models, DRM is beyond doomed, it's almost extinct. The problem with DRM for music audio was that the technology was not universally compatible with music players - and consequently restricted the reasonable freedom of consumers."

Consumers' freedom is a concern echoed by TuneTribe's Clemmie Forfar, who points out that DRM has commercial ramifications for online retailers: "DRM is limiting for our customers and subsequently damaging for our relations with them. It is only fair for the consumer to have both complete ownership and flexible rights to their purchase as they would have with a CD."

Choice over DRM

However, major record labels have not relinquished DRM willingly. "When PlayDigital launched in February 2008," Snowdon says, "only independent labels and one major record label (EMI) were releasing their music in MP3 format."

Since that time, however, the other three majors (Universal, Sony and Warner) have come round. This sea-change has been beneficial for all, making things clearer for the consumer.

An MP3 kitemark was launched in November 2008, which retailers can display to broadcast the universal compatibility of their wares.

Forfar highlights another advantage of iTMS alternatives: "Alongside Play, Amazon and 7Digital, we offer 320kbps MP3 with no watermarking or restrictions. Unlike Apple, you do not need to download any software to purchase tracks from TuneTribe."

The ability to side-step the ubiquitous iTunes is also flagged by Snowdon, although it is worth noting that the iTunes software and the iPod supports playback of many different file types, including MP3 and even uncompressed file formats such as WAV and AIFF - the original full-size files as used on CDs.

In fact, one of the more interesting online music propostions comes from the recently launched HDtracks service, created by audiophile record label owners David and Norman Chesky. HDtracks offers CD-quality AIFF files as well as 320kbps MP3 files from a catalogue covering all genres.

HDtracks even hosts a 24-bit/96KHz section of DVD-quality audio files. This may prove to be an important trend, as a significant minority of music lovers become disenchanted with MP3's compression and reduction in quality. The files may be larger, but the difference in quality is clear.

Thus, as the concept of legitimate online music retailing has gained traction, so variety has opened up and DRM has been all but eradicated. There is also a thriving download culture beyond iTunes, frequently offering greater freedom and better quality. Forfar sums up the changes, noting that at TuneTribe "we are discovering increasing numbers of customers, new bands and established artists preferring the digital model. If the labels are not producing hard copies, this will see further changes in the structure of the music and online industry and pirate distributors possibly being phased out".

In retrospect, it is clear that DRM was never the answer, only serving to push fans hovering on the periphery of legality in to the pirate bays. But lessons have been learnt, customers wishes have been heeded and DRM is doomed. By the end of 2009, it will have disappeared entirely - at least from music downloads: the Hollywood hold-out over DRM for video and TV content continues.

The green shoots of recovery, visible in the variety of online music offerings and their increasing popularity, may take a while to flower, but the wholesale dumping of DRM should at the very least act as a positive spur to continued growth - all of which is good news for consumers.

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