Sunday, February 25, 2007

EMI: We'll Do DRM-Free Music but it's Going to Cost Ya

The rumors were too good to be true. EMI allegedly will abandon DRM but not without a bunch of cash up front from vendors like Apple and Microsoft. How nice.

The article points to Warner's recent pressure on EMI as possible motivation. My cynical side tells me we all shouldn't have been so enthusiastic from the get-go. Or they are given his-Steveness a taste of his own medicine - "Don't look to us for why we still have DRM, ask Steve Jobs why he won't pony up the dough".


Nitroflames said...

At what point, I wonder, would the labels withdraw support from Steve and iTunes. If, hypothetically and eschewing contract concerns for a moment, Steve were to follow through on his ideas and remove DRM from iTunes without the consent of the labels, would the labels pull out right away. Or, in other words, how much could Steve get away with before the labels (and eventually studios) pulled the rug out?

johng said...

Contractually, Apple is obligated to wrap their content in DRM. The labels also have the right to withdraw their catalogs at any time.

If Steve were to remove DRM without telling them, the label's lawyers would have the music pulled by the end of the day.

But on the other hand, it's important to remember that the iTunes Store is the only one really making any money - if the labels removed their music, it would be a PR disaster.

Nitroflames said...
This comment has been removed by the author.
Nitroflames said...

Again, this is why I wonder if the labels would have the guts to do it, after all, iTunes is now the 3rd largest music retailer in the US, and not to mention the PR disaster you pointed out. So the question remains, if the contractual obligations are set aside, would the industry let it happen?

I think in the end, they would. There would certainly be a fight, and lawyers would certainly earn their keep, but when the dust settles, thats too much revenue down the drain for the record companies. After all Apple makes what 30 cents per song? Thats 70 cents per song going to the labels. Plus those iPod users are not going to switch over to a zune, just like that. So all of a sudden when 80% of the mp3 player using public can no longer purchase songs in that slick, easy to use manner, there are bound to be some very loud howls.

I suppose this is the wrong audience to argue this point to, though. Please tell me I'm wrong (sharpen my debate skills)!

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