EMI on DRM: Show Us The Money First

    February 26, 2007

Earlier this month, rumors began swirling around EMI’s supposed efforts to extend the olive branch to online music retailers by considering the prospect of making the company’s audio catalog available in a non-DRM hindered format.

When the Wall Street Journal broke the story, waves of hope began to crest across the breadth of the Internet. Audio enthusiasts the world over, myself included, were ready to laud accolades galore in EMI’s direction. After all, the company actually seemed serious about finding a workable solution that would end the ridiculous practice of Digital Rights Management (DRM).

Unfortunately, we were in the dark about one small detail.

The monkey wrench in the whole operation is stemming from money, of course. The Los Angeles Times has more on the true motivation behind EMI’s anti-DRM initiative:

EMI demanded an upfront payment to compensate for its risk in releasing the music without software that prevents copying, the people said. The retailers countered with a lower offer, which London-based EMI rejected, and negotiations are now on hold, the people said.

I should’ve known it was too good to be true. In a moves that reflects EMI’s complete misunderstanding of economics, the company wants some sort of monetary collateral to ensure a profit should the inception of non-DRM’d music lead to a decrease in overall profits. Nevermind the fact that all figures point to an exponential increase in music sales without the dead weight of DRM hanging around the necks of the popular online music retailers.

Up front balloon payments also have a negative effect on the consumers themselves, as it could lead to an increase in music prices as a whole.

Ken Fisher at Ars Technica explains:

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.

So it appears that EMIs efforts to spur talks aimed at pulling the plug on DRM were motivated from less than idealistic intentions, and as such have passed away into the digital abyss – at least for now.

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