Labels Fighting DRM There So They Don't Have To Fight It Here

Like President Bush, who is surging ahead with his plan to send more troops to Iraq instead of withdraw as much of the country seems to want, record labels can identify. Labels know they are going to have to eat their words on digital rights management (DRM), but they don't want to do it too soon. Maybe they want to fight the downloaders there so they don't have to fight them here because in China where most of the music is pirated EMI has done a deal with their leading website to offer free music. And the two are going to work together on music services supported by advertising.

But maybe the record labels think that in this case "stay the course" means hold out for as long as they can because eating their words is going to taste awful this time around.

Revenue from digital music sales is declining. Much has been made about iTunes sales leveling off and we all know iTunes music is protected by Fairplay, its DRM system. Apple may be selling tons of iPods but the marketplace is once again speaking and it is saying the unthinkable -- we want music for free (to try it and enjoy it). We may buy some later. And we definitely don't want DRM if we're going to be paying you.

It appears the death of DRM is near. It is on life support, but the labels may want to keep DRM alive artificially for a few more years rather than admit a mistake. Some people think this sounds like President Bush on Iraq -- even some leaders in his own party.

Once again the indies are saying "let's have a plan for withdrawal". By their actions they are making music available in MP3 so it can be downloaded, shared, copied to the enjoyment of the listener. Indies think differently. They think this new age replacement for "radio airplay" will actually lead to album sales.

They may be right. Radio's influence over music sales is strong, but declining. MTV is so yesterday. Even iTunes growth has been declining. The revolution is underway. No DRM.

So, Labels need to get an exit plan. It would be great if one of them could step forward and say -- we're listening to the next generation and they don't want DRM. We are betting that more music being played and shared will lead to more music being sold.

And it will.

Because filesharing is simply the new radio. Remember, record companies complained in the early days of radio about stations playing their music for free way back in the day. They were wrong then. And they are wrong about DRM now. Radio was their money machine. Filesharing is their new money machine.

So, labels beware. Make the world safer for more record sales. Let your viral audience promote your artists for you. Have confidence that they will support the music and want to own it. (A poll in my USC MUIN 495 class "Music, Broadcasting & The Mobile Future" showed that almost all of the 52 students purchased at least one CD in the last 30 days -- and the CD is an old music format).

Bring our DRM home and retire it. Don't send in more troops (RIAA). Listen to the generals (indie labels and Internet moguls). Do it sooner rather than later and your revenue will start rebounding.