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July 21 Yahoo! Music debuts DRM-free MP3 downloadsSo far legitimate online music services have been trying to compete on features and selection. Yahoo is trying a different approach by trading off DRM restrictions against a premium price. (The only other service which allows users to download unrestricted MP3s is the gray-market AllMyMP3.com website based in Russia, which has been the subject of great controversy recently, with speculation that its existence may imperil Russia's bid to join WTO.) Describing the strategy on the official team blog, one employee puts it very bluntly: As you know, we’ve been publicly trying to convince record labels that they should be selling MP3s for a while now. Our position is simple: DRM doesn’t add any value for the artist, label (who are selling DRM-free music every day — the Compact Disc), or consumer, the only people it adds value to are the technology companies who are interested in locking consumers to a particular technology platform. These are fighting words, considering that the recording industry has pinned its hopes on stronger DRM enforcement as part of its digital distribution strategy. In keeping with the bold nature of the move, the first offering is a "customizable song" where the customer can hope to find his/her name in the lyrics. (Foreign nationals including this blogger and those with less common names are out of luck-- maybe one they will get one of those speech synthesizers to superimpose names into the music.) This costs twice as much as the a la carte pricing of individual songs from mainstream services such as iTunes. It is not clear whether that is supposed to compensate for expected increase in piracy due or to the cost of recoding multiple variants of the lyrics. Changing both of these variables makes it difficult to compare, which may have been intentional: the blog posting itself suggest s that the price correction required for free MP3 puts the market value somewhere between $0.99 and $1.99. One would expect that 2x is a small increase to compensate for increased piracy since each unrestricted MP3 could arguably reach much more than a single additional customer. Considering that the profit margins are massive to start with, any unauthorized copying would require effectively selling one more copy to compensate. Economics suggests that 2x increase corresponds to an expected 100% piracy rate where each MP3 sold on average is made available to one other person who otherwise will have paid for the full DRMed copy. It will be interesting to see how these dynamics play out-- whether Yahoo! cancels the program unceremoniously or succeeds in positioning itself as the legitimate home-brew alternative AllOfMP3.com. cemp |
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