Record Labels Are Goldfish

They may not share the same physical characteristics, but they sure do exhibit similar memory spans.

Six years ago, after reaching a decent compromise with digital music retailers, like iTunes, record labels seemed to finally have a way to earn revenue from digital media. Their largest competitor was at the time, and remains until this day, music pirates. Back then, peer to peer websites contained high-quality digital songs without any digital restrictions (DRM). The first legitimate retailers sold lower quality tracks, compared to their underground counterparts, and your rights to that purchased music was highly regulated. Consumers, at least, now had a legitimate channel to purchase music al-a-carte.

During the next few years, legit track qualities remained very much the same while digital restrictions loosened up a bit. All the while, the lawsuits against consumers continued. If these lawsuits were designed to spread fear, it failed miserably. If it was designed to sue all the pirates, it faired even worse.

Enter the Amazon MP3 Store. I’m not sure if they were the first digital retailer to carry DRM-free tracks of all the major labels, but they were certainly the most popular. It seemed the record labels were sick of iTunes’ success and they figured they’d give Amazon a chance to take a piece of iTunes’ market share by giving them first dibs at DRM-free tracks. But who cares why they did it? Consumers now were able to purchase DRM-free tracks at double the previous quality for the same price! These guys were finally starting to get it…

Fast forward to today, and iTunes has just announced that their whole catalog is now DRM-free. The exception: popular songs have gone up in price $0.30/song while unpopular songs have gone down $0.30. At first I didn’t know what to make of it. But after looking at the catalog of songs that are $1.29, I realized they aren’t just new popular songs, but rather all popular songs.

I’ve read the free market rants and I understand your argument. But understand this: the real competitors in your market sell their music for FREE! The poor bastards that listen to only ‘hit’ songs are going to see this as a price hike no matter how you try and spin it. Moreover, the price increase comes at an awful time for consumers. Dropping DRM saves record labels time and money and provides consumers with the rights to their music that they’ve enjoyed for decades. This is not a value-add, this is just record labels giving you your rights back at a $0.30/song premium.

It’s almost been 10 years since Napster and long enough for the record labels to forget who it was they were competing with in the first place. I better not see them in line for a bail-out.