Chris - 02/03/07 - DRM and online media

So I promised to update you on how I got on using the Sony eReader... in short I love it. It is lighter than a paperback, can store tens of books, I think the screen is even easier on the eyes than traditional print and it can be held with only one hand, which is a great boon while trying to read on a packed central line tube at the peak of rush hour!

In fact, it makes reading anywhere a delight - on the bus, at the airport, on a plane, curled up in bed at night with a hot cup of cocoa. The advantage it has here over a paperback is simply that it's so small and light and because you can hold the device with one hand you can use your thumb to "turn the page", so if you like to read for hours like me, you can do so without your arms getting tired, getting pins and needles while reading in bed, and so on. It's great!

However, my joy could be short lived - the Sony US Connect site won't let me buy any books because I don't have a US credit/debit card and when I bought some eBooks on WH Smith's UK eBook site, although I could download them to my PC the digital rights management (DRM) software wouldn't let me transfer the books to my Sony eReader.

It seems to me once again over protective DRM software is holding the market back, which has very strong parallels with the music market. Initially, the music companies said the digital music piracy was going to kill their business but many observers believed that the majority of users would purchase digital music legally if such avenues existed, which has now been proven by the success of iTunes and other digital music stores. However, the music companies insisted that strong DRM was required to protect legal purchases of digital music and we have now hit another impasse with multiple DRM solutions, all intrinsically tied to a specific digital music format. In most cases they are tied in from purchase to play and playing device, limiting consumer choice and putting off less technically literate music lovers.

With France and other countries threatening to pull the plug on iTunes because of what they see as the "closed" nature of the service that limits consumer choice, Apple has hit back, blaming the music industry - see Steve Jobs open letter to the Industry where he states "Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM"

He goes on to point out that 90% of digital music is sold DRM free at the moment - on CD. So why are the music companies so focused on over protecting the other 10% that is sold online?

A possible answer is that perhaps the music companies see the inevitable continuing decline of the CD in the developed world and with online sales continuing to grow they want to protect the only area of their businesses where sales are actually growing.

This week it looked there might be a paradigm shift with digital music retailers including Apple, Microsoft, RealNetworks and Amazon.com coming close to an agreement with EMI to sell digital music without copyright protection because they believe, as Steve Jobs does, that DRM is holding the sector back. However, according to reports the talks collapsed because EMI wanted up-front payments to compensate for its risk in releasing the DRM free music and the two sides could not agree on the size of these advance payments.

It is unclear how much of this protectiveness is purely self-interest on behalf of the current big four music companies in order to secure their own survival and how much is to ensure that their artists are fairly compensated for their works.

So back to books... the question of DRM is no different for the book industry. Can content creators and publishers survive in the digital world without sophisticated Digital Rights Management systems that have the side affect of limiting consumer choice and holding the market back? I would not be surprised at all if at some point a whole new business model emerged that sidesteps these issues.

Like me, anyone interested in emerging media markets will be looking on with interest.