The Death of DRM
It took about ten years but it looks as if the death of DRM is pretty much done. Thank God that's over.
The bell started tolling yesterday as Apple declared that the
iTunes store is changing its pricing and removing DRM from here on out.
That's superb news, but I think that it was Amazon's MP3, DRM free
store which truly signalled the beginning of the end. For the past two
months or so, I've basically done all my music downloads from Amazon
MP3, which while not as slick as iTunes is faster to find a song.
All of this change reminds me of what may yet be now that these cats are out of the bag. Which is to say, what about Torrents?
Once
upon a time I tried doing that P2P thing. I don't think I stopped for a
good long time. What I found was a whole lot of low quality labeling,
odd versions of songs and very little of what I really wanted,
especially when it came to classical and jazz. I still have multiple
versions of songs in my reasonable good sized library at 96Kbps which
indicate to me that I got them from one of the old P2P sources. I was a
member of eMusic. I toyed with Shoutcast and of course used Winamp for
a long time. WinMX was my P2P client but after a while their servers
became too slow and unreliable. I'm sure I was done with it by 2002 or
so - but certainly starting in 98 a good 10-20% of my MP3 library was
gotten through P2P, the rest through ripping my own CDs.
Interestingly
enough the songs I got P2P were songs that I simply couldn't bear to by
the album for, like one or two cuts from Blink 182 or the Offspring.
Remember those guys? Yep. I still have it at 128. Title 'Keep em
Separated'. But the real name of the song is Come Out and Play. I
didn't know until I got the disk some time later. These were the pop
songs that I had to have and that I think the industry made the biggest
fuss about - the same sorts that kid hackers were interested in.
In
fact now that I think about it, the last songs I P2P'd were those from
Soul Coughing back in the days they were all that. I probably went
through three or four generations of trying to get their stuff before I
gave up and found the CDs. The lessons were learned. P2P was for geeks
with no money and lots of patience. When it came to good music, I could
come up with the buck - for the pop crap, I'd take the P2P version.
Anyway, I'm on the verge of setting up some multiple servers at Vault 107 (The new name, following Fallout, of my at home IT) one of which is going to be a media server. The lack of DRM is useful just for my own peace of mind. I've got three kids buying music from iTunes and some of that could be simplified. But I'm really interested in the implications of being able to have that kind of dedicated server and now sticking a Torrent client/server type of deally there. For me, I'd certainly want that to be a secured circle of trust for my family rather than a defiant Pirate Bay sort of joint.
It does finally come down to money and whether or not business are smart enough to figure out a business plan with the masses that is adequately profitable *and* accessible. The music market has always been a mass market which was always profitable enough to be DRM free, it's just that in the days of Kazaa and prior, a larger percentage of the market was 'hack capable', and this grated on producers nerves. But a large part of the animosity between this small hack capable community, which was essentially all of Computer Science and IT, was generated because of the perception that these grungy Dot Commers were going to eat the entire lunch of old media - and through the entire irrational exuberence of the era, there was reason to believe they were right. Instead it turns out that only somebody like Steve Jobs could make the right product and that he could do so without being the sort of pompous ass that Shawn Fanning was. In the end, Fanning got millions, but not billions and it was the hedge against the possibility of a Fanning like character eating some company like Viacom that created the legal fudge and farce that is now the legacy of RIAA's bitchslapping Congress into complicit submission.
It wasn't really until iTunes exploded the market base with a user friendly interface and kids like mine started trading iTunes music gift cards, that the mass market grew enough with a large enough balance of 'hack incapable' consumers that the economicsof DRM-free digital music made sense enough to back off the legal horse. This is the market teaching a lesson that the DRM hardliners can now easily learn. Let's not forget how many Groksters have gone bust before now. But I think it is also the buildout of VOD and the big fat price elasticity of digital last mile triple-play which has emerged over the past couple years that is making the industry turn the corner.
I should also say that without Netflix and Gamefly, the entire on-demand model would not have emerged. Those two companies have shown that digital distribution on a subscriber basis can be profitable. The DRM dependence of both models, I think, is a bit overstated. I think that the simple fact is that they proved that the market would scale up larger than big media companies thought on-demand would go. In other words, the VOD buildout by big media companies with or without DRM would not have happened had Netflix and Gamefly not proved something. Yes it's true that video arcades are a thing of the past, but that really was a long time coming.
As for the XBox, Microsoft found a very good pricing model that didn't have to change. For a $300 box, and a $50 annual subscription rate online interactive gaming was always a bargain, even on $60 titles. That is simply because it's worth $60 to get 60 hours (at least) on online interactive gaming, which is actually a lot cheaper than your WoW style PC games. The upside of hacking an XBox was not value, simply geek appeal, whereas the upside of getting the latest Blink 182 single for free against the cost of a CD was big.
People also forget that there are a lot of 'hack capable' ways of getting DRM free music that have been grandfathered into other deals. I could get a high quality audio feed from my cable TV's 200 music channels and rip thousands of MP3s without running afoul of any law.
I, for one, support digital watermarking. Even in a DRM-free world, like the open source world, there should be some easy way to get a certifiable product. I would even support a third party service that would plug-in to a good music or video player. I'd actually pay more for a multimedia client that accommodates such a validation service. But anything that limits my ability to take my collection of digital content anywhere for any reason for the rest of my life? Niente!
I don't suppose I could complete this matter without talking about podcasts and Tivo. The habits of the new generation of digital entertainment consumption are set. The genius of Brandon Tartikoff is a thing of the past. It doesn't much matter what time things are scheduled to be delivered, so long as enough people know that it's coming and it's in-season. The other form of this, by the way, are boxed-sets. So long as I can get a 'boxed-set' of any serial content, its value changes. Companies understood this with regard to movies 10 years ago which is why the accounting of 'ultimates' came into practice. 'Ultimates' accounting value content products based on current and residual cashflows, plus as an asset. I haven't looked at that part of the industry in a while, but I don't think that was a mistake. Podcasts enable not only a long tail, but a longer asset value - so does the Netflix library. But the primary change is that the consumer wants control of where and when. Indefinitely. In other words, the consumer wants all entertainment content in their own cloud and they want it available on demand.
Guys in the software business, like me, understand this. And we sit and watch as it take multiple combinations of companies with small parts of small business models do bits of the big picture over multiple years. It's going to eventually go our way. Why? Because we build the technology.
Anyway, I'm on the verge of setting up some multiple servers at Vault 107 (The new name, following Fallout, of my at home IT) one of which is going to be a media server. The lack of DRM is useful just for my own peace of mind. I've got three kids buying music from iTunes and some of that could be simplified. But I'm really interested in the implications of being able to have that kind of dedicated server and now sticking a Torrent client/server type of deally there. For me, I'd certainly want that to be a secured circle of trust for my family rather than a defiant Pirate Bay sort of joint.
It does finally come down to money and whether or not business are smart enough to figure out a business plan with the masses that is adequately profitable *and* accessible. The music market has always been a mass market which was always profitable enough to be DRM free, it's just that in the days of Kazaa and prior, a larger percentage of the market was 'hack capable', and this grated on producers nerves. But a large part of the animosity between this small hack capable community, which was essentially all of Computer Science and IT, was generated because of the perception that these grungy Dot Commers were going to eat the entire lunch of old media - and through the entire irrational exuberence of the era, there was reason to believe they were right. Instead it turns out that only somebody like Steve Jobs could make the right product and that he could do so without being the sort of pompous ass that Shawn Fanning was. In the end, Fanning got millions, but not billions and it was the hedge against the possibility of a Fanning like character eating some company like Viacom that created the legal fudge and farce that is now the legacy of RIAA's bitchslapping Congress into complicit submission.
It wasn't really until iTunes exploded the market base with a user friendly interface and kids like mine started trading iTunes music gift cards, that the mass market grew enough with a large enough balance of 'hack incapable' consumers that the economicsof DRM-free digital music made sense enough to back off the legal horse. This is the market teaching a lesson that the DRM hardliners can now easily learn. Let's not forget how many Groksters have gone bust before now. But I think it is also the buildout of VOD and the big fat price elasticity of digital last mile triple-play which has emerged over the past couple years that is making the industry turn the corner.
I should also say that without Netflix and Gamefly, the entire on-demand model would not have emerged. Those two companies have shown that digital distribution on a subscriber basis can be profitable. The DRM dependence of both models, I think, is a bit overstated. I think that the simple fact is that they proved that the market would scale up larger than big media companies thought on-demand would go. In other words, the VOD buildout by big media companies with or without DRM would not have happened had Netflix and Gamefly not proved something. Yes it's true that video arcades are a thing of the past, but that really was a long time coming.
As for the XBox, Microsoft found a very good pricing model that didn't have to change. For a $300 box, and a $50 annual subscription rate online interactive gaming was always a bargain, even on $60 titles. That is simply because it's worth $60 to get 60 hours (at least) on online interactive gaming, which is actually a lot cheaper than your WoW style PC games. The upside of hacking an XBox was not value, simply geek appeal, whereas the upside of getting the latest Blink 182 single for free against the cost of a CD was big.
People also forget that there are a lot of 'hack capable' ways of getting DRM free music that have been grandfathered into other deals. I could get a high quality audio feed from my cable TV's 200 music channels and rip thousands of MP3s without running afoul of any law.
I, for one, support digital watermarking. Even in a DRM-free world, like the open source world, there should be some easy way to get a certifiable product. I would even support a third party service that would plug-in to a good music or video player. I'd actually pay more for a multimedia client that accommodates such a validation service. But anything that limits my ability to take my collection of digital content anywhere for any reason for the rest of my life? Niente!
I don't suppose I could complete this matter without talking about podcasts and Tivo. The habits of the new generation of digital entertainment consumption are set. The genius of Brandon Tartikoff is a thing of the past. It doesn't much matter what time things are scheduled to be delivered, so long as enough people know that it's coming and it's in-season. The other form of this, by the way, are boxed-sets. So long as I can get a 'boxed-set' of any serial content, its value changes. Companies understood this with regard to movies 10 years ago which is why the accounting of 'ultimates' came into practice. 'Ultimates' accounting value content products based on current and residual cashflows, plus as an asset. I haven't looked at that part of the industry in a while, but I don't think that was a mistake. Podcasts enable not only a long tail, but a longer asset value - so does the Netflix library. But the primary change is that the consumer wants control of where and when. Indefinitely. In other words, the consumer wants all entertainment content in their own cloud and they want it available on demand.
Guys in the software business, like me, understand this. And we sit and watch as it take multiple combinations of companies with small parts of small business models do bits of the big picture over multiple years. It's going to eventually go our way. Why? Because we build the technology.
Comments