The Internet Strikes Again...

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Every once in a while, somethng pops up in the news that just grabs me as a jarring reminder of how the internet is fundamentally changing businesses.

Never mind that the last dryer I bought was over the internet with one of the oldest US retailers – Sears. Never mind that I can call China for 2.1 cents/minute using Skype, or free if it’s PC-to-PC. Never mind that my son bought a diamond engagement ring over the internet that appraised way over purchase price.

Today I see that EMI Group will sell music online through Apple WITHOUT copy protection – now THAT’S news!

This stands in stark contrast to the increasingly futile copy protection stance of the rest of the major music purveyors. Some facts:

  • CD sales are down 20% from last year
  • Peer-to-Peer music downloads last year: 5 Billion
  • “Official digital music services” downloads: 509 Million

When was the last time you saw a new music store opening up? Or more to the point, what store took over the vacated space where the music store used to be?

In this instance, I think the Borg would advise the rest of the music industry that “Resistance is futile” – and I think they’re right. Entrenched companies and technologies typically respond to paradigm shifting events by circling the wagons; I remember a story about how the vacuum tube manufacturers responded to the transistor – they came out with a better vacuum tube.

The music industry’s vacuum tube is copy protection. A quote from Ken Hertz, a prominent music industry lawyer:

“This appears to be the final acknowledgement on the record companies’ part that the guiding principles of their digital distribution strategies have been fundamentally flawed.”

Translation: “Resistance is futile”

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NOTE: Peter sent a email that I thought should be shared among our readers:

“Except it’s not that cut and dried, sadly. When I first saw the news
about EMI/Apple’s ground breaking decision to offer songs without DRM, I
said to myself “FINALLY THOSE A**HOLES ARE GETTING IT.”

And then as I read more and more articles about it, some truths came to
light – facts like…

EMI is in dire financial straits. Following your
analogy – they are no longer circling the wagons, but fleeing pell-mell
to the “safe place” they were told about years ago but didn’t believe
in. Will they make it? It might be too little, too late.

I really hope,
deep down in my bones, that they start making money from this. I hope
they have the cash reserves to survive their current empty wallet
syndrome. I really hope this works and the rest of the industry and
related industries (cough… MPAA members) sit up and take notice of
this brave, new world where people are innocent until proven guilty. I
really do. I’m not betting on it, however.

And as far as Apple goes…

They’re in trouble in Europe for their
proprietary formats on their proprietary devices from their proprietary
online stores. Offering some music in more open formats, without DRM, is
just a first step to avoiding closing of entire markets for them.

EMI and Apple aren’t bravely testing the waters here – they have been
dragged kicking and screaming to the poisoned well, and I have no doubts
whatsoever that the executives think the bucket is drawing up a huge
dose of fatality.

I hope EMI can survive the effects of their former lunacy long enough to
realize the bucket is delivering lifeblood unto them.

And in closing… you know what first crossed my mind when I read the
first hint of this?

“I’ll be damned. Maybe I’ll buy some music online for the first time ever.”

Not because I’m a dirty pirate who contributes to that illicit 5 billion
illegal downloads per year, but because literally over a decade ago,
when DRM enabled CDs that surreptitiously installed software on PCs when
inserted were starting to go mainstream, I said “To hell with you and
your industry.”

And it’s a personal boycott I have maintained until this day. I relish
the thought of it being over.”

Peter’s sentiments were echoed among the emails I received on this story – we’ll follow this closely.

Email Joe

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