The Death of DRM

The recent decision of the Big Four major labels to forego embedding digital rights management restrictions into their online catalogs appears to be a step forward for the music industry. For years, labels have demanded copy-protection safeguards in licensing their music to online retailers. Proponents of new nonproprietary media Web standards have heralded the death of DRM as a sign that the majors have conceded to public demand for downloads compatible with all players and with no limits on their reproduction.

The reality of the move, however, is that the labels have discarded DRM because it created a rival monopoly for iTunes, which currently controls about 80% of the digital download market. Licensing DRM-free material to the newly launched Amazon.com digital music store and other would-be competitors is merely the Recording Industry Association of America trying to flex their quickly atrophying muscles in the face of Steve Jobs – a disturbing image on any number of levels.

Nevertheless, in abandoning DRM, the majors are hardly foregoing user-tracking software. Microsoft, smelling iBlood, has already patented an ominously named "stealthy audio watermarking" for mp3s in hopes of bedding the Big Four to assert its Zune digital player as the next-generation iPod. The watermarks don't restrict use of downloaded files but do embed unique signatures that can be traced back to the content producer, allowing illegally shared files to be tagged to the original purchaser. Currently, Microsoft has not disclosed how the technology will be employed.

While the RIAA's suits against unauthorized distribution of copyrighted material are legally justified, the policy highlights the industry's failure to recognize the bigger picture. Attacking fans as a defense strategy misses the demands and opportunities of the new digital marketplace, clinging to outdated notions rather than nurturing innovation through new open standards. Until the remaining major labels are forced to admit their proprietary stranglehold is no longer an effective business model and start developing strategies for taking advantage of the Web's open economics, their relevance and reputation will only continue to marginalize.