Lately, talk about digital music has been dominated by the major labels’ moves away from DRM. Indeed, the hassle of DRM and the complexities and incompatibilities it brings have held back the mobile music business, so the move away from DRM is being welcomed with open arms — for the most part. Debate over the fallout of the great DRM drop dominated the agenda at the “Mobile and Broadband Music: New Platforms + New Technology + More Music + Dynamic Marketplace” panel at the CES Mobile Entertainment conference Sunday.
Microsoft’s (NSDQ: MSFT) Cyrill Glockner, a senior business manager in its Consumer Media Technology Group, made the well-worn claim that DRM is necessary to enable business models around digital and mobile music. “You can’t fine-tune your business model without DRM,” he said. Several other panelists disagreed, and said that there’s still plenty of room to build successful mobile and digital music businesses.
“Taking away DRM isn’t going to solve everything,” said Victor Fredell, the Global Content Acquisition Manager for music at Sony (NYSE: SNE) Ericsson (NSDQ: ERIC). “It’s about the downloading experience, browsing, and recommendations. It’s about the experience of listening to music, not just the DRM. It’s one of the pieces of the puzzle but it’s not the whole story.”
Entertainment lawyer Paul Hertz of Goldring Hertz & Lichtenstein LLP, who represents a number of well-known musicians, said that business models shouldn’t depend on restricting access or locking down songs: “Where you are selling convenience, quality, or monetizing affinity — those are the only business models that have worked in music.”
Blanket licensing coming soon? Hertz prognosticated that the major music labels will finally turn to blanket licensing of their music in 2008, and turn to a third party to implement it and negotiate the terms. The other panelists expressed some doubt over this, with Motorola’s (NYSE: MOT) Senior Director of Music for mobile devices, Chris White, saying it had been approached by labels in Asia, asking for blanket license fees of $100 — which is obviously far too much for a mobile handset.
Artists aren’t fans of DRM: Hertz also added that musicians aren’t great fans of DRM, because revenues directly attributable to it haven’t materialized. “Artists wake up every morning thinking it’s their last day in the business,” he said, so they’re hesitant to invest in anything that’s doesn’t help deliver immediate revenues. “Artists would love to see DRM go away if it’s going to mean more content to more people and more money,” but conversely, if it can help generate some immediate revenues, they’d be happy to see it stick around.
Capitalizing on attention, not content: Paul Campbell, president and COO of QD3 Entertainment, Quincy Jones’ company, said it’s glad to see DRM disappear, and that it’s moved past the idea of simply just selling content. “The key metric for us is attention,” he said. “How much attention can we capture from our audience, then what creative ways can we capitalize on it?”
Think globally: It’s important to consider mobile music in a global context, and this means making standalone mobile services that don’t rely on a PC. “In some countries, the online experience comes through the phone,” said Sony Ericsson’s Fredell. “They don’t care if it’s dual delivery, they just want the content down to their primary device, which is their phone.”
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