Sunday, October 14, 2007

Amazonmp3 and Thinking Past DRM

With Amazon having recently released a beta version of their digital downloading service Amazonmp3, Nate Anderson of Ars Technica presents a nicely balanced analysis of its functionality, as well as how it stacks up to iTunes and other competitors. Although iTunes is now the third-largest music retailer in the U.S., it has stuck to the same restrictions with which it first began: for $0.99 per track, you receive a file in AAC format that is incompatible with non-iPod music players, a relatively low bitrate of 128 kbps (which negatively affects audio quality), and a digital rights management policy that limits file sharing. Conversely, Amazonmp3 sells files that work on virtually any music player, possess a higher bitrate (256 kbps), and—in a first for a service offering both major-label and independent-label music—are DRM-free. They also have variable pricing, with top-selling tracks going for $0.89 apiece and top albums for $8.99, a full dollar lower than iTunes.

These are all quite positive changes, but besides astutely pointing out kinks in the pricing structure (“That's a pretty decent deal [at $8.99 for top albums], but it makes you wonder how Amazon thinks it is going to sell Wilson Phillips' Greatest Hits for $11.99”), Anderson elaborates upon the limitations that remain even without DRM:

“There are a few restrictions. One of the biggest is that there's no redownloading of tracks; you'd better make a backup, because if you lose a song, you'll have to purchase it again to get another copy. Such a policy has an obvious analogue to Amazon's CD sales. If you purchase a Tim McGraw CD and your NPR-loving uncle ‘accidentally’ cracks the disk in two, you are out of luck; Amazon won't send you another copy. In this sense, then, music downloads are treated like physical property.

But they are not property. In fact, what you have purchased is only a "non-exclusive, non-transferable license" to each song. Because you have not actually purchased something physical, Amazon's terms of service explicitly forbid both re-selling and lending. With a CD, of course, you can do both quite legally. Digital downloads can be cheaper and more convenient, but there's no legal way to extract value from them when your tastes in music change. Caveat emptor.”

As Anderson notes, Amazon is partially responsible for these restrictions. The independent music-based download service eMusic, for example, allows its customers to redownload tracks even if it’s on a different computer. eMusic is a monthly subscription service and is therefore operates slightly differently than Amazon, but it probably wouldn’t be difficult for Amazon to promote a more user-friendly policy in this regard.

Yet Anderson has raised an issue that goes beyond Amazon. Once of the inherent advantages of CDs has been the ability to resell them or exchange them as credit for new CDs. During the 1990s, this was mutually beneficial for both consumers (who generally lacked the opportunity to buy individual songs) and many music retailers (who developed a revenue source that guaranteed a high profit margin). Even as CD sales have shifted to the Internet, sites such as eBay (along with sister site and Second Spin allow consumers to update and refine their collections. In contrast, virtual music files such as mp3s obviously change the rules: they take up space, but aren’t actually tangible like previous commercial forms of recorded music. There currently isn’t a way to informally sell or exchange mp3s for purchase credit like CDs, so the only way to use one’s (unrestricted) digital music as a means of accessing new digital music is through illegal file sharing methods which major-label music companies and retailers such as Amazon have aggressively sought to discourage through DRM (and, in the case of the former, lawsuits).

In short, DRM is not a user-friendly technology, and we should applaud Amazon for developing a service that doesn’t rely upon it. This is only a partial victory, though, for as a virtual music format, mp3 files still posses an inherent drawback that allows labels and retailers to define the boundaries of “fair use.” Consequently, we are left with two questions: 1) whether mp3 files and other virtual music formats can ever become “property” like CDs, and 2) if so, whether anyone can develop a method for the legal exchange and reselling of virtual files.


Rob said...

There is a website that searches over 6,000,000 Non-DRM tracks (not including AmazonMP3, which it says its adding soon) all at once - With the addition of AmazonMP3, it'll be a pretty incredible search engine, and THE place to figure out where to purchase non-DRM music on the internet.

Chris Martin said...

Hi Rob,

Thanks for the info. The search engine's scope is definitely impressive, and offers a lot of promise with regard to searching for music without the DRM hassle. One objection to it, though: the links to the Russian mp3 sites. Consumers may think that those sites are better than outright file-sharing since you have to pay for the music (albeit for quite small prices). Yet because no one knows where the resultant royalty payments actually end up, it creates a unequivocally negative situation for artists. At least with file-sharing, most consumers will make future music purchases that provides a guaranteed revenue.

That said, it's nice to see both Amazon and iTunes now offering substantial DRM-free catalogs, and I think Songboxx can potentially provide an extremely useful corresponding function.