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August 10, 2007

The Internets is all abuzz over Universal Music Group's decision to drop DRM from select retailers for a trial period of time. Below are some of the comments.

Some are of the opinion that DRM is disappearing because it is inherantly bad for consumers. In this specific case, DRM inhibits market growth (not because it's bad for consumers, but because it has been very good for Apple). I believe UMG is testing DRM-free not to hurt iTunes as much as to enable iTunes' competitors. The goal here is to open up the download market. Competition is good for consumers. A more competitive download landscape will be good for consumers and labels alike. A world beyond iTunes awaits, and UMG wants to get there. Maybe dropping DRM will achieve that goal. We'll have to wait and see.

From an unnamed source at Billboard.biz: "We want to have a robust digital marketplace where there’s healthy competition. We don’t have that now. Apple has a stranglehold on the whole thing, so much so that all the other online retailers are badly disadvantaged because you can’t buy music from their stores and play it on the iPod. We want to open up the market and create a more level playing field. We want to give other retailers a chance to compete."

Farhad Manjoo at Salon: "Nobody should be locked in to one store because of what device they use to play their songs. With EMI and now Universal coming around to this view, perhaps we might soon live in a such a sensible world."

James McQuivey of Forrester Research: "That's far too much power for anyone to have, especially someone who has not seen things eye to eye with the music labels in the past. So Universal, and I would expect others, have said, 'We need to get hands on this market. We need to stimulate growth in more than one place.'"

Jupiter's Michael Gartenberg: "Clearly the handwriting is on the wall for DRM-protected content. We are seeing more of the players fall as they recognize that it's just a hassle for the consumer and doesn't really help the piracy problem."

Paul Resnikoff at Digital Music News: "Sure, UMG can withhold exclusives, threaten Apple with shorter contract structures, and hand DRM-free tracks to competitors. But does it really matter to Apple? Not as long as paid downloads remain a fringe contributor to a bottom line dominated by high-priced iPods. Perhaps that reality is difficult to stomach, especially for such a massive company like Universal Music Group. And in its grandiose self-image, the mega-label is now aiming to level the playing field by giving DRM-free music to iTunes rivals. But just like EMI, Universal has overestimated the importance of DRM, and ignored a number of other, important ecommerce variables."

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Posted by Glenn at 4:09 PM | | | DRM | Universal Music Group