Labels: Set iTunes DRM-Free

Universal, Warner Bros. and Sony BMG have been holding back DRM-free license approval from iTunes while extending that approval to Amazon.com and some other startups. Only EMI has offered its music in DRM-free, MP3 format to both vendors. This marketplace inequality appears to be a punitive measure against Apple, for refusing to agree to label demands for variable pricing and other issues. But if the license refusal is punitive, who is really getting hurt?

Let’s take a quick look. Which industry is choking on consolidation and shrinking sales? Which company has amassed a growing cadre of loyal consumers plus record earnings? Apple has demonstrated its digital marketing superiority over the record industry and its expertise should not be discounted. Also who was it that only a few years ago led the record labels out of a black hole where none of the music was being monetized and a whole generation of consumers was learning to get music for free?

Consumers are totally frustrated with DRM and its attached restrictions. They want music to be platform independent and play on all players. By not offering DRM-free music to iTunes which controls 70-75% of the market, labels are effectively further alienating consumers. It’s surprising that artists, managers and publishers, who are also hurt (much more than Apple) by this tactic haven’t risen up to complain to their respective labels. Labels should remember that consumers have legal and illegal choices when it comes to getting music. Denying the consumer at the largest store is a dangerous strategy, when FREE lurks everywhere; via e-mail, instant messenger, file sharing and CD burning, to name a few. Making it harder to get digital DRM-free music will ultimately sell less music.

If Apple refuses to comply with the label’s wishes there may be some compelling research to support its position. In any case, a punitive temper tantrum is counterproductive for everyone in the creative food chain and will result in selling less music. Universal, Warner Bros. and Sony BMG would be well advised to rethink the current DRM-free inequalities, focus on what makes economic sense for their companies and continue to argue differences with Apple on a merit, best-idea basis.