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EMI — Ditching DRM is Going To Cost You

ScuttleMonkey posted more than 7 years ago | from the how-not-to-make-a-buck dept.

Music 220

33rpm writes "EMI has told online music stores that selling its catalog without DRM is going to cost them a lot of money. 'EMI is the only major record label to seriously consider abandoning the disaster that is DRM, but earlier reports that focused on the company's reformist attitude apparently missed the mark: EMI is willing to lose the DRM, but they demand a considerable advance payment to make it happen. EMI has backed out of talks for now because no one will pay what they're asking.'"

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220 comments

Hello EMI. (1, Funny)

Anonymous Coward | more than 7 years ago | (#18155392)

Gooooodbye.

I think we can all safely say... (-1, Redundant)

Anonymous Coward | more than 7 years ago | (#18156744)

DRM gets on our chimes! Our chimes dammit, stop with the DRM!

"We'll give you what you want... for a fee" (2, Interesting)

Anonymous Coward | more than 7 years ago | (#18155402)

So this basically proves that DRM exists for the sole purpose of providing record companies with silly amounts of longterm income by reselling stuff we already own? Excellent news.

How does it cost more money to go non-DRM? (5, Insightful)

garcia (6573) | more than 7 years ago | (#18155404)

$9.99 albums of lossy content and no physical medium supposedly make up for the fact that I have no recourse if I lose the data I purchased. So how can they justify charging more than that (closing in on the average cost of a CD) when it costs them money to have the CDs pressed, packaged, and sent to stores?

They can't. This is simply an attempt to say, "see, we tried to go DRM-less but people wouldn't do it."

Fuck that.

Re:How does it cost more money to go non-DRM? (5, Insightful)

Anonymous Coward | more than 7 years ago | (#18155560)

The extra charge is because they automatically assume that if you purchase it, you'll commit copyright infringement; the charge is a tax/levy.

Re:How does it cost more money to go non-DRM? (0)

GuyverDH (232921) | more than 7 years ago | (#18156718)

It's actually grounds for a mass slander / libel lawsuit.
If they are doing this under the "assumption" that all of us will infringe, and at least one of us doesn't - boom - instant suit.

Re:How does it cost more money to go non-DRM? (0, Flamebait)

pyite (140350) | more than 7 years ago | (#18157028)

It's actually grounds for a mass slander / libel lawsuit.
If they are doing this under the "assumption" that all of us will infringe, and at least one of us doesn't - boom - instant suit.


Hi, welcome to Canada's recordable media tax. Oh, and the Universal/Microsoft deal over the Zune. Why are you throwing out random ideas with no legal basis? Oh, this is slashdot; sorry, I forgot.

Re:How does it cost more money to go non-DRM? (4, Funny)

flaming error (1041742) | more than 7 years ago | (#18155562)

It doesn't cost more. EMI is just doing it's best to live up to it's name - Electro Magnetic Interference.

People will do it (5, Insightful)

Mateo_LeFou (859634) | more than 7 years ago | (#18155972)

We are going DRM-less in droves. EMI and friends can go with us or not.

Re:People will do it (4, Insightful)

elrous0 (869638) | more than 7 years ago | (#18156898)

Yeah, I think that's what EMI is missing. We ARE going DRM-free. People are sick of DRM and it has reached a tipping point. The only decision they have to make at this point is whether they want us to pay them $.99 a song or $.00 a song.

-Eric

Re:People will do it (2, Insightful)

AusIV (950840) | more than 7 years ago | (#18157050)

We are going DRM-less in droves.

Do you have any sources on this? There are certainly some more technically minded people who have avoided DRM from the beginning, but I'm not aware of too many average consumers who have much opposition at all to DRM, generally because they aren't aware. I may be wrong, but I haven't seen the masses flocking towards DRM-free alternatives.

Re:How does it cost more money to go non-DRM? (3, Insightful)

Anonymous Coward | more than 7 years ago | (#18156094)

Closing in on the average cost of a CD? I rather suspect that $9.99 already exceeds the average cost of a CD. It approaches the average cost of a new, currently-on-the-charts CD. I can't tell you how many bargain bin $5 CDs there are out there. And then, there are music clubs (gross, I know, but they exist) that average out to a buck or two per CD. And then you have the used CD market. Plenty of cheaper stuff on Amazon.

No, it's clearly just a bunch of music execs who are, as you say, trying to pay lip service to DRM-free music while imposing rules that ensure that they'll never have to put their money where their mouths are. That's okay, though. EMI music has been on my blacklist since they started doing DRM-encrusted CDs anyway.

Re:How does it cost more money to go non-DRM? (1)

malevolentjelly (1057140) | more than 7 years ago | (#18156536)

I am fairly certain they're referring to the accelerated piracy. There's claims that DRM'd files get pirated just as quickly as non-DRM'd files, but this logic simply doesn't apply to the average users... maybe with experienced pirates and power-users.

With unsecured purchased files, people will be way more likely to email mp3's to their friends, etc. It's an issue of lost potential revenue. They'd rather you tell a friend to pick up a track off of (Insert Music Store you don't hate) than simply having them send the file.

Re:How does it cost more money to go non-DRM? (1)

pyite (140350) | more than 7 years ago | (#18157070)

With unsecured purchased files, people will be way more likely to email mp3's to their friends, etc. It's an issue of lost potential revenue. They'd rather you tell a friend to pick up a track off of (Insert Music Store you don't hate) than simply having them send the file.

You mean like they can do with MP3s ripped from CDs? CDs that have no copy protection whatsoever and make up the lion's share of the market? Your argument doesn't hold water.

Re:How does it cost more money to go non-DRM? (1)

GuyverDH (232921) | more than 7 years ago | (#18156684)

It's the same as everything else..

#1 - Bikinis - less fabric - more cost. (okay, we can almost agree for this)
#2 - Movies - no pan and scan version - more cost.
#3 - music - no drm - more cost.

Re:How does it cost more money to go non-DRM? (1)

ucblockhead (63650) | more than 7 years ago | (#18157236)

I think it's more like:


"It'll cost a lot of money to re-encode our entire catalog in MP3 format. We want our customers to pay that."

Re:How does it cost more money to go non-DRM? (1)

M0b1u5 (569472) | more than 7 years ago | (#18157502)

"It'll cost a lot of money to re-encode our entire catalog in MP3 format. We want our customers to pay that."

Have you ever heard of "Batch Processing"? o_O

The whole job would take one guy one morning: and a whole bunch of CPU cycles.

dashes (5, Funny)

Skadet (528657) | more than 7 years ago | (#18155450)

EMI &mdash Ditching DRM is Going To Cost You

As are en dashes and semicolons ;)

redundant? (0, Offtopic)

Anonymous Coward | more than 7 years ago | (#18155602)

How is this redundant? It's the 4th post! Mods should have to take a test that proves they know how to read a clock.

If you want to mod the parent down, at least go with "offtopic". Geez.

Until I see... (3, Interesting)

beckerist (985855) | more than 7 years ago | (#18155452)

Someone needs to show me a study that incorporates similar (if not identical) stores and similar (again, if not identical) pricing on a DRM version and DRM-free version of the SAME song. My money is that the DRM-free version makes a lot more money, simply because of its ease-of-use. Hell, I'd even be willing to fork up that extra $.99 [bbc.co.uk] (if the song they did this with didn't SUCK.)

Re:Until I see... (0)

Anonymous Coward | more than 7 years ago | (#18155856)

Ummm, that's a meaningless comparison. The question is whether you can sell a DRM-free version and make the same total revenue as if you weren't selling BitTorrent seeds.

Re:Until I see... (1)

beckerist (985855) | more than 7 years ago | (#18156006)

...hmmm, yet one more person that didn't RTFA... NO! You're wrong. The argument is that DRM-free music is more expensive to the company marketing it. The argument would be dashed completely if there were something out there that compared pricing / costs (dependent variable) using "DRM vs. DRM-less" as the independent variable. To my knowledge, no such study exists...that was my point.

Re:Until I see... (0)

Anonymous Coward | more than 7 years ago | (#18157372)

If you're going to be completely obtuse, could you at least not insult me?

Nobody is claiming that it's more expensive to sell a DRM-free track than a DRM'd one. You don't need a study to show that. The point is that EMI wants to charge extra to make up for the sales they're going to lose from sharing of the DRM-free files. You can't test that in a side-by-side comparison of DRM and non-DRM files, since the availability of the non-DRM files affects sales of both of them.

mdash? (-1, Offtopic)

Anonymous Coward | more than 7 years ago | (#18155454)

Die, EMI -- and mdash, too!

DRM costs to much already. (5, Insightful)

crazyjeremy (857410) | more than 7 years ago | (#18155456)

Funny, considering one of the main reasons I won't buy DRM products is it already costs more to do so. If I want my favorite Britney song from Itunes, it costs 99 cents. If I want a ringtone of the same thing, Verizon charges me up to a couple bucks for a much smaller clip of exactly the same song. Why would I pay twice for something I can rip from my (wifes') CD and create myself anyway? Don't they see it's costing THEM more money in the long run to include this garbage?

Re:DRM costs to much already. (3, Insightful)

Dogtanian (588974) | more than 7 years ago | (#18155882)

If I want my favorite Britney song from Itunes, it costs 99 cents. If I want a ringtone of the same thing, Verizon charges me up to a couple bucks for a much smaller clip of exactly the same song. Why would I pay twice for something I can rip from my (wifes') CD and create myself anyway?
Well, *you* wouldn't obviously. But the record/ringtone companies likely figure (probably rightly) that enough people will buy the ringtone, either because they're stupid (don't know that it's possible to rip, or don't know how) or are simply lazy.

Whether it's good value or not is irrelevant. If people are willing to pay silly money for tiny snippets of music, of course they're going to sell it.

Re:DRM costs to much already. (3, Interesting)

ThatsNotFunny (775189) | more than 7 years ago | (#18155924)

Or they were idiots and purchased phones that, at least in the US, you're unable to upload your own ringtones and can only purchase the ones provided by the mobile carrier. I'm looking at you, Sidekick!

Re:DRM costs to much already. (0)

Anonymous Coward | more than 7 years ago | (#18156204)

...and Verizon. They've completely locked their phones down, but you can get around it with certain drivers. For example: http://www.hacktherazr.com/downloads.html [hacktherazr.com]

...Slightly offtopic, I'm aware, but I'm A/C so NYAH!

Re:DRM costs to much already. (1)

nine-times (778537) | more than 7 years ago | (#18157008)

Well, *you* wouldn't obviously. But the record/ringtone companies likely figure (probably rightly) that enough people will buy the ringtone, either because they're stupid (don't know that it's possible to rip, or don't know how) or are simply lazy.

Yes, I, for one, am lazy-- and I believe most people are stupid. In fact, you have to figure that a high percentage of people are either stupid and spend their money on things they could do themselves if they were smarter, or else smart and have disposable income and feel it's worth spending a couple dollars to save some time. This is exactly where the RIAA should be making their money: by making it easy and convenient to purchase and listen to music.

However, they seem somehow intent on not using this business model. Instead, they're making it harder and less convenient to use their product legally. No wonder piracy is such a problem!

Re:DRM costs to much already. (5, Interesting)

danpsmith (922127) | more than 7 years ago | (#18156062)

Funny, considering one of the main reasons I won't buy DRM products is it already costs more to do so. If I want my favorite Britney song from Itunes, it costs 99 cents. If I want a ringtone of the same thing, Verizon charges me up to a couple bucks for a much smaller clip of exactly the same song. Why would I pay twice for something I can rip from my (wifes') CD and create myself anyway? Don't they see it's costing THEM more money in the long run to include this garbage?

Exactly. And if the prices were sane, I would definitely buy DRM-Free MP3s. Definitely. But they'd have to be DRM free. I'm not buying .wmas and putting them with the rest of my collection, it's just not happening.

I think what companies don't yet realize is that, look, we already have collections of MP3s. Everyone under 30 probably has a large collection, and I'm one of the few that has a HUGE collection. However, there are times when I want an album and you can't find it on bittorrent and it's not available other than going to the CD store. Honestly, I don't feel like ripping CDs, and there's a lot of times when I just don't even buy the track rather than having to go and buy a CD and rip it to my hard drive. And it has NOTHING to do with cost. It did, at one point when I was a college student money was an issue. Nowadays, it definitely isn't. But when you have a large collection of high quality MP3s that you know will work on your player, in your DVD player, or any number of other devices you simply aren't going to buy a track and break the DRM to have it mesh well with the rest of your collection.

Yes, I'm notorious for downloading a lot of MP3s, but I would be willing to buy legitimate, if only companies would give me the chance to do so. Stop trying to change how we store our music and just mix with what we have. It's the only way you'll survive.

Yours truly,

A kind of average downloader.

Re:DRM costs to much already. (1, Funny)

Anonymous Coward | more than 7 years ago | (#18156842)

Yes, I'm notorious for downloading a lot of MP3s, but I would be willing to buy legitimate...

Awesome -- the SWAT Team has triangulated your position and they're on their way. Thank you for making this an easier process for us.

Yours truly,

RIAA

Re:DRM costs to much already. (2, Interesting)

Anonymous Coward | more than 7 years ago | (#18157380)

At the risk of sounding like the geezer I am - you kids today are fucking lazy! "Honestly, I don't feel like ripping CDs, and there's a lot of times when I just don't even buy the track rather than having to go and buy a CD and rip it to my hard drive"

I, too, have a huge collection of MP3s. Most of them started life not as CDs, but were ripped from CDs that were burned from sampled LPs and cassettes! But you're too lazy to click a mouse twice. Do you have your mom open your pepsi for you because it's too much trouble? Gees!

I've been buying music for decades. But strangely, I've bought damned little this decade, and what I've bought has been mostly from local bands. I've been too busy sampling (and thereby rediscovering) some great stuff I hadn't listened to in years, from my collection and my friend's collection (yeah, I'm a thief for BUYING something and sharing a COPY and so is he... according to some of you dimwits).

If the labels want me to download tracks, theye're going to have to change a few things:

1. I want QUALITY sound. I have a pair of three way JBLs with twelve inch woofers, and Mike's speakers are even better. The difference between a high quality MP3 and a CD is pronounced; they're good enough that with certain records (ones that were originally recorded analog), the LP is far better sounding than the CD (e.g., Led Zepplin's Presence). In short, MP3 won't cut it unless I need a small file size (thousands of songs on a hard drive, or hundreds on an MP3 player). I need FLAC or some other lossless compression. Like Long John Baldry sang in Boogie Woogie, "Don't feed me no TV dinner when you know I'm used to steak". You kids are not only lazy, your ears suck, too.

2. I want QUALITY music. I do NOT want to hear anything that Simon Cowell produced! Jesus, the guy has no musical taste whatever, nor does that Randy guy, nor (from listening to the radio) do any other of today's record producers! Today's music sounds like the worst of '50s pop music. I don't want to hear Paul Anka, I want the Big Bopper or the Trashmen (Surfin' Bird). I don't want the Monkees, I want Jimi Hendrix or Blue Cheer. I don't want the Eagles, I want Led Zepplin or Ted Nugent. I don't want Milli Vanilli, I want Van Halen or Poison. I don't want Madonna, I want Alice in Chains or Nirvana. I don't want Stayned, I want Buckcherry or... uh, oh, hell, I can't think of another 21st century band that doesn't suck. Which is where the problem stems from. After fifty years of ass-kicking rock, the record companies are putting out minor key whiney pap and calling it "rock". And the bars are full of folks in their twenties listening to local bands covering Zepplin and Hendrix and Van Halen, while the record companies say sales are down because of "piracy". The established recording industry is obviously doomed, as it's obviously run by utter morons who don't have a single clue what their customers (NOT "comsumers") want.

3. I want far, far lower prices. 99 cents per song is outrageous, unless you're talking about Quicksilver Messenger Services' version of Who Do You Love, the live version of Whippin' Post, or Alice's Restaraunt, or... say, why DO they charge by the song, anyway? Shouldn't they charge by the megabyte? But I digress... I'm paying less per song for music on a physical medium, and uncompressed. You're charging me more for a TV dinner than I'm paying at a nice restaraunt! Only a fool or a twelve year old would fall for that!

Speaking of downloading (and a bit off-topic) I fucking HATE the internet jukeboxes they've got in bars these days! Instead of three for a dollar you only get two for a dollar, and if you pick the wrong song it costs a dollar to just PLAY ONE SONG! I mean, the idea of a jukebox itself is bad enough.

But what's worse, none of the internet jukeboxes have Led Zepplin! A jukebox without Led Zepplin is like a bar without alcohol! WTF???

Re:DRM costs to much already. (1)

bozendoka (739643) | more than 7 years ago | (#18157528)

I was right there with you until you said Poison was quality music. Ah, well. Different streaks for different freaks, I guess.

Re:DRM costs to much already. (1)

thpr (786837) | more than 7 years ago | (#18156178)

considering one of the main reasons I won't buy DRM products is it already costs more to do so.

The pricing is NOT related to the fact that is has DRM. I have already discussed pricing of single (DRM protected) track vs. full CDs [slashdot.org] .

Don't they see it's costing THEM more money in the long run to include this garbage?

I doubt it is. Like the parent to my other post, I suspect you are not in their target market (DRM protected, high priced ringtones are not targeted at /. readers). The underlying issue is about the target market of certain items and who will use them. The multi-dollar ringtone is addressed to people who value convenience and/or instant gratification.

Consider the social aspect of a ringtone to a teenager, and the potential need for instant replacement if a certain ringtone is frowned upon by friends. With that in perspective, it's likely that the ringtones are priced at a point the market will bear, as sad and painful as that may be to the technically inclined.

Re:DRM costs to much already. (1)

gmack (197796) | more than 7 years ago | (#18156630)

I doubt it is. Like the parent to my other post, I suspect you are not in their target market (DRM protected, high priced ringtones are not targeted at /. readers). The underlying issue is about the target market of certain items and who will use them. The multi-dollar ringtone is addressed to people who value convenience and/or instant gratification.

If it were a simple matter of market targeting then they would not have locked so many phones from being able to transfer over USB or bluetooth. Those phone features were already coded into the phone by the handset makers but were disabled by the telcos so it's not the development cost of having the feature. With my last phone the disable consisted of flipping two bitflags in the phone's config. It is price gouging pure and simple.

Re:DRM costs to much already. (1)

danpsmith (922127) | more than 7 years ago | (#18156646)

Consider the social aspect of a ringtone to a teenager, and the potential need for instant replacement if a certain ringtone is frowned upon by friends. With that in perspective, it's likely that the ringtones are priced at a point the market will bear, as sad and painful as that may be to the technically inclined.

The price of ringtones is reasonable only to spoiled teenagers and people with more money than brains. Everyone sane usually uses a stock ringer, or gets one ringer every 2 years. Nobody wants to pay 1.99 for something you'll have to replace if you get a new phone. People who I wouldn't consider exactly technologically proficient have enough brains to realize these things and might get one midi ringtone and stick with it for the rest of the phone's life. Maybe there's some trendy hip-hop loving teenagers that have to have "I want to love (f**k) you" as their ringtone this week and then something else next week, but I believe this makes up the vast minority of consumers.

My phone I can just put straight MP3s as ringtones, so I win, and for other people who feel the need to get ringtones, you guys should try a service such as mbuzzy [mbuzzy.com] which only costs you the account (if you buy one) + download per kb charge from your service provider.

Ringtones seem fun at first, but get old fast.

Re:DRM costs to much already. (1)

thpr (786837) | more than 7 years ago | (#18156926)

The price of ringtones is reasonable only to spoiled teenagers and people with more money than brains.

Their target markets.

Nobody wants to pay 1.99 for something you'll have to replace if you get a new phone. People who I wouldn't consider exactly technologically proficient have enough brains to realize these things and might get one midi ringtone and stick with it for the rest of the phone's life.

Would your behavior change if it was 0.99? What about 0.49? Most likely, people like you and I wouldn't change the ringtones that often anyway (or would do so from MP3s, as you talk about), so the market volume we are driving is relatively small, and therefore, does not weigh on their decisions.

Maybe there's some trendy hip-hop loving teenagers that have to have "I want to love (f**k) you" as their ringtone this week and then something else next week, but I believe this makes up the vast minority of consumers.

But are they the majority of purchases? Because while the market for music lovers is large, that market is also driven by the purchases of music by people in their teens (due to volume of purchases, not volume of consumers)

Re:DRM costs to much already. (1)

l0b0 (803611) | more than 7 years ago | (#18156680)

... my (wifes') CD ...

Here I was, thinking Mormons didn't hold with high tech. Well, you learn something new every day. Is your PC crank-driven, by any chance?

Re:DRM costs to much already. (1)

javaxjb (931766) | more than 7 years ago | (#18157090)

That's funny, because the only reason I buy DRM is so I can pay less to get ringtones. For example, go to iTunes, download the ST:TOS theme song (not the whole album of themes and incidental music from every spin-off). Burn it to CD, import as mp3, clip the exact portion I want for the ring (this is the part I like best, because I don't have to rely on the taste of the person who selected the sample for the phone), and transfer it to my phone. And it's not like my phone is Hi-Fi.

Not mdash! (4, Funny)

Virak (897071) | more than 7 years ago | (#18155488)

I knew EMI was a bunch of greedy bastards, and I'm not surprised about that; however, I find it very troubling that mdash, an *excellent* HTML entity, has turned to the dark side like this. Really, I never saw it coming.

Re:Not mdash! (1, Funny)

Anonymous Coward | more than 7 years ago | (#18155608)

I knew EMI was a bunch of greedy bastards, and I'm not surprised about that; however, I find it very troubling that mdash, an *excellent* HTML entity, has turned to the dark side like this. Really, I never saw it coming.
Everyone has changed. They've all changed, man. It used to be about the hypertext presentation, now it's just about the &dollar

Re:Not mdash! (1)

Technician (215283) | more than 7 years ago | (#18156266)

I knew EMI was a bunch of greedy bastards,

No, they are fat and lazy. If they were greedy, they could clean up the market by providing value. Think about it. If you realy wanted to make money and you had a fantastic back catalog, you could sell flash player MP3 CDs with 4 or more albums on each CD at above 128K bitrate for under $10. Man I would be first in line for the back collections of Pink Floyd, ELO, Styx, Guns & Roses, Chicago, etc. They are happy with $0 instead of 100's of dollars for the back catalog at value pricing.
Fat and lazy. They will sell an occasional back catalog item at new catalog prices just to keep the percieved value up. They have no intrest in high volume value sales. They are fat, lazy and content with the average consumers purchases of 2 LP's or CD's per year.

If they were greedy, they would look for ways to encourage a CD per week sales even with a lower price per unit. How much do they have to spend to open the back catalog at value pricing? They are too paranoid of de-valuing the curent catalog.

Slow dimes. (1)

Ungrounded Lightning (62228) | more than 7 years ago | (#18156654)

If you realy wanted to make money and you had a fantastic back catalog, you could sell flash player MP3 CDs with 4 or more albums on each CD at above 128K bitrate for under $10. Man I would be first in line for the back collections of Pink Floyd, ELO, Styx, Guns & Roses, Chicago, etc. They are happy with $0 instead of 100's of dollars for the back catalog at value pricing.

They either haven't heard, or don't believe in, an old saying:

"Fast nickels are better than slow dimes."

For two reasons:
  - You get far more money once you add it up.
  - You start getting it earlier.

They're so afraid of losing the slow dimes that they're missing the fast nickels.

confusing conclusion to article (1)

yagu (721525) | more than 7 years ago | (#18155522)

I'm all for drm-free music and recently, other than non copy-protected cds, added to my source of music downloadable drm-free mp3s from eMusic. I have been extremely happy with the selection, quality, and price for the eMusic tracks.

And, guess what? Not a single violation of sharing, file swapping with any of my eMusic tracks. At $.30/track I feel anyone who likes a track I play for them can supply their own three dimes. It's a great price, and for me it works.

Not so for me with DRM... aside from the onerous assumption I'm the criminal I don't like the hoops jumped through to get an itunes track into an mp3 I can play anywhere. It isn't convenient, it isn't fun, and it isn't worth my time, especially considering what I'm paying for it. Bite me, DRM.

And, from the article, I'm a little confused by the last paragraph and implied (or outright) conclusion (emphasis mine):

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.

I'm not sure where I've seen any evidence the music industry is running on razor-thin margins. This sounds like pure BS, and only hurts their credibility every time they try to state their "case"... So far, I'm not convinced.

Re:confusing conclusion to article (1)

TheGavster (774657) | more than 7 years ago | (#18156182)

The music industry runs considerable margins on successful acts, but the online distributors keep a small percentage of their sales. (source) [cdfreaks.com] 26% doesn't go very far when you're essentially bearing all of the costs. There are in theory displaced CD sales, but online music is supposed to capture sales where CDs are not preferred (on-demand availability, single tracks).

Re:confusing conclusion to article (1)

anagama (611277) | more than 7 years ago | (#18156206)

The razor thin margin is for the online retailer (iTunes) not the content producer (EMI in this case).

Re:confusing conclusion to article (1)

Wildfire Darkstar (208356) | more than 7 years ago | (#18156300)

I'm not sure where I've seen any evidence the music industry is running on razor-thin margins. This sounds like pure BS, and only hurts their credibility every time they try to state their "case"... So far, I'm not convinced.

If I understand the article properly, it's not the music industry that's running on razor-thin margins per se, it's the retailer. It's been said that Apple makes only a few pennies on the dollar for every song they move over the iTunes Music Store. If the industry started demanding more money for unrestricted music files, that already minimal profit would vanish. Which means that either Apple would need to start selling music at a loss, which cannot and will not happen, or they would need to raise their prices. In other words, the difference would need to be made up for by the consumer, because there's no way to absorb it.

Re:confusing conclusion to article (3, Insightful)

dgatwood (11270) | more than 7 years ago | (#18156394)

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.

I'm not sure where I've seen any evidence the music industry is running on razor-thin margins. This sounds like pure BS, and only hurts their credibility every time they try to state their "case"... So far, I'm not convinced.

A more interesting question is why the music industry thinks that DRM matters. Their logic violates a very simple law of computers: if one copy exists in an unprotected form, all copies exist in an unprotected form. If somebody says "Hey, check out this cool song," and somebody else asks, "Can I get a copy of that," and the answer is, "No, it has DRM, but you can download it from eMule," that's not an improvement over "Sure, here's a copy." Actually, it's worse than "Sure, here's a copy" because it is encouraging the second person to pirate the music, while giving someone a copy is encouraging that person to watch for other music by that band and maybe buy the CD.

And I'll say it again: ignoring the one-hit-wonder teeny-pop crap, real musicians benefit overwhelmingly from music piracy. It increases exposure, which in the long term, increases sales. Therefore, all anti-piracy measures are, by definition, short-sighted foolishness by people who don't understand the basics of doing business in a modern economy. Is it any wonder, then, that music sales continue to be in the toilet despite substantially decreased piracy? Guess what? Music copying and sharing was going on before Napster. The only thing that Napster did was bring it out into the open where the industry could total it up and say "Oh, no, we're losing all these sales!" when in reality, by shutting down those services and annoying their customer/fan base, they really killed one of their biggest sources of advertising....

But I guess some people will never learn.

Re:confusing conclusion to article (1)

shark72 (702619) | more than 7 years ago | (#18157230)

"I'm not sure where I've seen any evidence the music industry is running on razor-thin margins. This sounds like pure BS, and only hurts their credibility every time they try to state their "case"... So far, I'm not convinced."

Warner Music [yahoo.com] posted a 0.27% profit margin and a 6.29% operating margin last year. Their year over year earnings shrank by about 80%. Compare this to some "good" and "non-greedy" companies: Apple posted a profit margin of 11.75%, making them about 43 times more profitable than Warner Music. Red Hat -- about as cool and non-greedy a company as you can find -- had a profit margin of 18%, or 66 times more profitable than Warner. If music industry executives are lining their swimming pools with gold (as has been posited here in Slashdot), what are the Red Hat guys using? Platinum?

In case anybody thinks that perhaps Warner is under-reporting their numbers in an effort to convince Slashdotters that they are running on low margins, you should be aware that that is generally the last thing you want to do. Your posted numbers are where the rubber hits the road, and if you're going to fudge, you generally tend to fudge upward (see Enron and numerous other examples). You seldom see record companies with "buy" recommendations, or even on the Fortune 500.

As has been pointed out, the record industry is a hugely speculative one; the labels tend to make their money on the hits and lose money on everything else; that's why small artists are dropped so often and why record labels have a high failure rate. However, many Slashdotters just know deep down in their heart that running a record label is an easy way to make lots of cash, and that record label owners are, by extension, greedy. This perception isn't likely to change.

Not Surprising (0, Redundant)

moore.dustin (942289) | more than 7 years ago | (#18155548)

EMI is trying to connect the dots between no DRM for online sales and profit, but it is hard to see for a large corporation. It is easier to visualize how everything could (but wont) come together with a DRM scheme than without one. While EMI says they are willing, they, along with everyone else, are unlikely to embrace DRM free media until the idea of DRM free and profit being mutually exclusive is out of there heads. Once the day comes when a company can connect the dots and forecast long term profit off a DRM free scheme, it will be so. Right now the market is changing quickly and companies are sticking to their guns right now. While we all know it is the right direction to head, it is hard to convince a large corporation with huge amounts of money and jobs at stake. Would you want your employer to venture down an uncharted route when your job is at stake if it fails? Probably not.

Re:Not Surprising (1)

JasonKChapman (842766) | more than 7 years ago | (#18155798)

While EMI says they are willing, they, along with everyone else, are unlikely to embrace DRM free media until the idea of DRM free and profit being mutually exclusive is out of there heads. Once the day comes when a company can connect the dots and forecast long term profit off a DRM free scheme, it will be so.

Clearly, they don't read Slashdot [slashdot.org] . Want a music example? Maybe they should read Slashdot [slashdot.org] .

Dammit, I've done it myself! I sold a thousand paper copies of a novel, not in spite of, but because of the fact that it was (and still is) available online for free. Sure, that's small change to someone like EMI, but for cryin' out loud it's not that big a mental leap. Treat your customers like adults and most of them will act like adults. Of the ones that don't, enough will act like billboards that it pays off in the end.

Re:Not Surprising (4, Insightful)

moore.dustin (942289) | more than 7 years ago | (#18155928)

It is not just the question of making profits though. They want and need to be able to _maximize profit_ for their company and shareholders. When they can say that DRM free media is the avenue which will yield the most profit, they will go that route. Again, it is not enough to just make money, they need to make the most they can with the product they sell. Right now, DRM'ed media appears to hold the promise of maximized profit.

royalties (1)

tomstdenis (446163) | more than 7 years ago | (#18155584)

"we'll remove DRM, but it'll cost you!"

I presume that cost is the royalties being paid to the artists? [sarcasm!]

I agree with the other posters, they're just setting this up for a failure so they have a "look see!" business case for DRM.

Tom

Re: The Ace up a sleeve (1)

Technician (215283) | more than 7 years ago | (#18156494)

I agree with the other posters, they're just setting this up for a failure so they have a "look see!" business case for DRM.

The ace on our side which will eat that arrogance for lunch is emusic. They provide higher quailty at lower prices without DRM and pay the artists more. Artists are starting to notice and migrate. Consumers follow. This is going to be very difficult for the DRM die hards to explain.

Value sells. High prices, low quality, and high restrictions are a killer combination. Getting all 3 wrong is obsolence as the door is wide open to the competition to take your market. Bye-bye DRM.
Apple has 3 of the 3 half right which is the only reason they are doing OK. They refused to raise prices and limited the damage from DRM and at a modest bitrate. Someone with a good catalog with great prices, less (no) DRM, and quality bitrates are going to clean up the market. emusic is building catalog and customer base.

I haven't seen the numbers, but I think emusic is growing at a faster rate percentage wise than i-Tunes.

I have a similar situation. (5, Funny)

Rob T Firefly (844560) | more than 7 years ago | (#18155640)

Hello and welcome to my malt shop chain, TurdShakes(TM), featuring shakes made from genuine excrement, in a secret family recipe that is sure to please.

Am I serious, you ask? Of course I am! I am quite passionate about my flagship product, the TurdShake(TM), and stand behind it totally even though sales have been slightly disappointing. That is to say, not quite as successful as I had hoped. Frankly, I'm shocked by the fact that nobody wants to buy milkshakes made from excrement. Im my eyes, TurdShakes(TM) were a goldmine waiting to happen.

Wait, come back! Okay, you win. I am willing to adapt my business model to suit what the people want. Therefore, I have decided to remove excrement from my TurdShakes(TM) entirely, possibly replacing it with chocolate or ice cream or some other such boring shake ingredient. You'd like one now, wouldn't you? A regular shake? No Turd(TM)?

Well, that's just what you'll get, then. A delicious normal shake... That is, of course, provided you give me a large bag of moneys first. A really big bag, with lots of moneys. Otherwise, you'll just have to go on buying the original TurdShakes(TM), with heady flavors of... wait, where are you going? Come back!!

Re:I have a similar situation. (1)

nuzak (959558) | more than 7 years ago | (#18157068)

Dammit, not only is no one buying my TurdShakes(TM), they're buying ice cream from the store across the street for a nickel. That's just dishonest and unamerican. I know, I'll lobby congress to make it the law for all malteds to require excrement in them. In fact, I'll have them require that it gets built into every cups and straw!

Its simple business (0)

Anonymous Coward | more than 7 years ago | (#18155686)

Supply the demand, if you stop the demand they will stop supplying and disappear up their own arseholes, problem is, WE KEEP DEMANDING MORE and they will keep supplying this crap! Seriously, let them shrivell up to nothing by lost money.

Im quite sure you can do without music and TV and live a more sociable lifestyle. Its so much more healthier in so many ways.

Re:Its simple business (3, Insightful)

thyrf (1059934) | more than 7 years ago | (#18156138)

That seems like a plausible argument, but then like most things in life it's not that simple. I'm not willing to dare and guess the amount of money that music and video provides to some of our nations economies. Think of all the shops that will close, the people that will lose their jobs and the public uproar that will follow. Most of us live in a society where we've been fed this for our entire lives - it wouldn't go down too well if it was taken away from us. Then there's the bands (let's be fair, most movies are made by multi-million pound companies). There are some remarkable musical talents out there and unless we buy direct from them they're sure to find other ways of making money.

I'm all for de-commercialisation and the cutting out of the 'fat cats' but stopping our spending altogether seems a little drastic. DRM is a proce that needn't be paid, it's just an excuse to sponge more money from us.

Correction... (0)

Anonymous Coward | more than 7 years ago | (#18155756)

Failing to ditch DRM will cost EMI lots of money. I will keep my transactions private and free with P2P.

Paying for What? (1)

happyfrogcow (708359) | more than 7 years ago | (#18155786)

So we have to pay for their failed DRM R&D costs? Bahaha.

Re:Paying for What? (0)

Anonymous Coward | more than 7 years ago | (#18156090)

I've very little understanding of DRM. If I buy a song, I know I probably need to play it with a special DRM-capable player. Does one exists in Linux? What if I need to convert it to MP3 for my cheapo flash MP3 player? If I need to send a 10 second clip of a song to my band, can that be done? If I backed up the purchased song and lost my harddrive, can I still play the song? Maybe those are entirely possible, but it is not something that I have the time to or want to figure out. As far as I know, online music purchase/delivery is just f**ked up by DRM, I'll stick with buying the CDs and encoding them to MP3/OGG.

DRM is Going To Cost Me??? (0)

Anonymous Coward | more than 7 years ago | (#18155848)

Believe you me, it ain't gonna cost me a fucking dime!

Ah.. Right... (2, Interesting)

91degrees (207121) | more than 7 years ago | (#18155966)

So they have a strategy of unknown risk and reward, and they're quite happy to go about it if someone else takes the risk but doesn't benefit from the reward.

Here's my counter proposal. I'll pay the upfront cost. I get to choose how much I charge. My cut is double what they pay Apple.

Question / Answer (5, Insightful)

ACAx1985 (989265) | more than 7 years ago | (#18156020)

For $10 I can buy a physical CD, and get: 1) Liner notes. 2) Artwork. 3) Plastic casing. 4) Plastic compact disc. 5) Files on said disc which are lossless. I can then convert the lossless files into any format I want depending on my needs, put them on my iPod, put them on my hdd. If I lose the CD, I still have the files. If I lose my iPod, or my hdd, I have the CD. Why would I spend $10 on low-quality files that are DRM-infected that I can't do shit with, and that I can lose much easier? Oh yea, I won't. -ACA

$10? USD? Go direct. (0)

Anonymous Coward | more than 7 years ago | (#18157210)

I can't buy any big label for $10. More like $16, $17 or $22.

Personally, I like acoustic stuff. I google/yahoo/msn my favorite singer, go to their first.lastname.com and click "Buy CD". I often find them by getting an email from someone w/ an mp3 of their work. Word of mouth. It turns out these guys allow downloads of their MP3s. You build a friendship, or at least I have, because they respond to eamils.

I then can either d/l mp3s and/or get a CD.

Wow. They control their own work.

People don't need to be rich and famous to feed their families. The labels want them to be.

Re:Question / Answer (1)

poot_rootbeer (188613) | more than 7 years ago | (#18157386)

Files on said disc which are lossless.

Tautologically so, even!

When we say an audio format is "lossless", we typically mean when compared to standard 44.1kHz, 16-bit stereo Red Book Audio.

Re:Question / Answer (0)

Anonymous Coward | more than 7 years ago | (#18157440)

You wouldn't spend $10, but if you only liked 2-3 songs on the CD? Would you be willing to pay $2-3 for those and those alone instead of buying the whole CD?

Oh well (-1, Flamebait)

Anonymous Coward | more than 7 years ago | (#18156032)

I don't care, I'll just carry on downloading music from emule and torrents. Music should be free anyway.

New CDs are too cheap to put up with this (1)

bogie (31020) | more than 7 years ago | (#18156036)

You can buy many Billboard top 20 albums for $9.99 at amazon and get free shipping if you buy a few at a time. If you buy used then your looking at ~5 a CD.

We already have DRM-Free music for cheap. We've had DRM-Free music for 25 years you, why would we pay more now? WTF is wrong with these people?

Capitalism at work (4, Insightful)

Dracos (107777) | more than 7 years ago | (#18156044)

EMI has backed out of talks for now because no one will pay what they're asking.

That should tell EMI that their extortion price is not "what the market will bear".

Well, at least they seriously considered it. (1)

LazyBoy (128384) | more than 7 years ago | (#18156074)

EMI is the only major record label to seriously consider abandoning the disaster that is DRM

EMI has backed out of talks for now because no one will pay what they're asking.
Wow that's serious consideration.

good news for allofmp3.com (5, Insightful)

fyoder (857358) | more than 7 years ago | (#18156076)

allofmp3.com [allofmp3.com] would like to thank you for your business. It knows you have no choice in DRMless online retailers who offer high quality files without DRM at a good price (well, with the exception of magnatune [magnatune.com] , but they have a limited catalog), and appreciate your choosing them for your online music needs.

Re:good news for allofmp3.com (1)

glenstar (569572) | more than 7 years ago | (#18156812)

How about mentioning some of the other non-DRMed digital music stores? You mention Magnatune and they are awesome, but there are LOTS more out there. How about Audio Lunchbox [audiolunchbox.com] with over 4500 different labels (including some quasi-major label stuff like Nettwerk, etc.? Or eMusic [emusic.com] (who actually does have some EMI content non-DRMd already)?

AllofMP3 does nothing but illicitly make available tracks to make a profit. Sure, they claim to pay the Russian equivelant of BMI/ASCAP but that is not enough! To sell digital music you technically need to have the performance rights (a la BMI/ASCAP, etc...) but ALSO have a master agreement with the label. Oh... and you are also usually required to have a separate license for each region you are selling to. Do you think AllofMP3 has all of that in place?

Re:good news for allofmp3.com (2, Informative)

Overzeetop (214511) | more than 7 years ago | (#18157276)

In Soviet Russia...aw hell.

Magnatune et. al. are great, but it's not apples to apples. AllofMP3 sells the same music without DRM that you can only get with DRM in other outlets. Its all fine to bash the top 100 here on /., but there really is a lot of market there. If you ignore the legal loopholes AllofMP3 is exploiting (they're practically Americans!) you get to see a pay-for-quality model on mainstream music. It has much more applicability than trying to compare the major lables to smaller labels, or trying to glean some data from P2P networks, because the product and the market are the same.

There must be some sort of Godwin's Law for AllofMP3 references.

Re:good news for allofmp3.com (1)

fyoder (857358) | more than 7 years ago | (#18157322)

Thanks for mentioning alternatives, the more the better.

Sure, they claim to pay the Russian equivelant of BMI/ASCAP but that is not enough!

It is in Russia. And there's nothing illegal for me as a Canadian to buy from them (can't say what the law is where you are). From where I stand it's totally legit and has a huge selection I can order as high quality oggs for a decent price. While I will check in on magnatune now and again to see what's new and maybe pick something up, I've yet to find anything that has the scope and value of allofmp3.com . As far as I'm concerned it's a model the US Music business should seek to emulate, not kill. My only quibble with them is that they should offer to zip the contents of one's cart so that it can be downloaded as a single file.

"considerable advance payment" (0)

Anonymous Coward | more than 7 years ago | (#18156238)

Let me guess. $19.99 per album?

what EMI didn't take into account.. (2, Insightful)

JustNiz (692889) | more than 7 years ago | (#18156298)

is how much its going to cost them in lost sales through pissing off customers by keeping DRM.

Par for the course (4, Informative)

glenstar (569572) | more than 7 years ago | (#18156588)

As someone who has intimate knowledge of how the entire licensing thing goes between the majors and a digital music provider let me just say that this is in no way shocking. The labels will take as large an advance as they possibly can and it is really a matter of whose legal counsel is better. A couple of years ago there was no way you could license all of the (available) major label content for under 500k... unless you paid one of the better known music industry lawyers a couple hundred K. There are only a half-dozen big shot lawyers in the music biz and they tend to play both sides of the field... and charge whatever the hell they feel like.

The contracts for the labels are all wildly different but all of them consist of at least technical due diligence (what are YOU going to do to make sure OUR content does not fall into the wrong hands), financial due diligence, and a marketing plan. This is heavy stuff and can takes months and months to push through. In short, this is a very time-consuming and spendy process to go through.

EMI, under the digital music strategy of Ted Cohen, has far and away been the most open of the majors when it comes to licensing. They are simply making an attempt to protect their assets... since it takes so much effort on both sides to conclude a licensing agreement, it makes sense that they (the majors) want to recoup as much of that investment up-front as they possibly can.

People on Slashdot get this wrong all of the time. You see, the majors and the digital music services are in a death-match, with the DMS being hounded by the customer and the majors being hounded by the shareholders. The ONE thing that binds all of those people together (with the possible exception of the customer) is DRM. The major feels a little more secure "knowing" that their music can't be mass-reproduced, the DMS is happy because they can sell the content, the customer is happy because they can get the content, and the shareholder is happy because, well, there is an additional revenue stream.

And FYI...I have never met a music executive who DOES NOT understand that DRM is nearly useless as far as protection of content goes. BUT... as I said above, it is the glue that keeps everything together.

Go spend some time on Digital Music News to fully understand what is going on in the industry. It's not so simple and you cannot say definitively that DRM is harming the consumer because RIGHT NOW the only way to get that content is with DRM. Better than nothing, isn't it? Things will eventually change and this announcement from EMI is a very positive step forward. Don't trash the music industry as a whole until you understand it. I am certainly not saying it is full of kind-hearted souls (very far from it!) but there is more to it than just "let's fuck the consumer and the artist to make a buck!".

Re:Par for the course (1)

kindbud (90044) | more than 7 years ago | (#18157072)

Go spend some time on Digital Music News to fully understand what is going on in the industry. It's not so simple and you cannot say definitively that DRM is harming the consumer because RIGHT NOW the only way to get that content is with DRM.

No, we can still buy regular old CDs and rip them to our iPods or whatever in one step. No DRM at all.

Better than nothing, isn't it?

Come again? We can already buy the entire catalog free of DRM, and furthermore those who care, can tweak the bitrate or codec to get the exact audio results they wish. Can't do that with online services. Downloads are lesser than CDs from the start, and become even less after encumbering them with DRM. Price is the only thing downloads can compete on, and right-this-second gratification of course. For anything else, CDs still are the superior DRM-free choice for over two decades, and they didn't kill the music industry.

Re:Par for the course (1)

glenstar (569572) | more than 7 years ago | (#18157198)

DIGITALLY. It is the only way a consumer can buy the product DIGITALLY. And DMSs are not for those of us who want to/have the know-how to rip it ourselves. The DMS exists as a mass-consumer phenomenon.

Re:Par for the course (1)

kindbud (90044) | more than 7 years ago | (#18157260)

And DMSs are not for those of us who want to/have the know-how to rip it ourselves. The DMS exists as a mass-consumer phenomenon.

And CDs are a niche product? I really don't get what you're saying.

How Much? (1)

ewhac (5844) | more than 7 years ago | (#18156616)

I suppose, if one takes the rubric of, "Defective by Design," at face value (as it happens, I do), then the defective product would naturally be worth less than the one without defects (even though the capital cost of the defective product is higher).

Okay, we'll let that point stand for the moment. How much more money are we talking about? $1.25 a track? $1.50?

Schwab

Pre-paying for content (1)

maillemaker (924053) | more than 7 years ago | (#18157312)

This is what the anti-copyright folks have been proclaiming for some time here on Slashdot - that all future work will be live concerts or commissioned works. It looks like this is just the route that EMI is trying to take. They'll sell you the song for distribution, but you are going to have to pay more for it up front, so that when it is copied freely on the back end, they will still have gotten their cut.

Maybe we really are reaching the point where before a label will cut loose a song they will demand a paid-in-advance comission first.

What a colossal waste of time and money. (1)

woadlined (1054792) | more than 7 years ago | (#18157436)

EMI, and the others obsessed with maintaining their current profit model, simply cannot win in the long term. All they are doing is wasting their money to protect an asset that cannot be protected.

What they must inevitably do is innovate. In a 5 second thought process, I came up with this idea:

Instead of seeking to make profits on shrink-wrapped products, they should actually invest in artists - help them tour more comfortably, give them resources to play their music, in short...stop screwing them at every turn.

While artists with integrity might be said to thrive off of adversity, is it really necessary to try to maintain Dickensian conditions for the vast majority of artists? I wonder if the thought has ever occurred to them...invest in their product, sell more units because their offerings improve.

Still and all, if execs had a creative bone in their bodies, I guess they'd be strumming guitars, instead of shuffling Benjis.
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