Warner’s DRM-loving Middlebronfman warns wireless industry it may lose music market to Apple iPhone

“Warner Music CEO Edgar Bronfman Jr. walked into the 3GSM World Congress today and pointed right at the pink elephant in the room: The iPhone. Bronfman warned the industry that if it cannot improve mobile music services, it could lose the market to Apple,” Stephen Wellman blogs for InfoWeek.

Wellman writes, “Bronfman said that while there are millions of music phones on the global market, only 8.8 percent of users of these handsets have ever downloaded a music track over the air. Why? Because carrier mobile music services are too expensive and too hard to use.”

“Ouch. Score one for Apple,” Wellman writes.

Full article here.

Marguerite Reardon reports for CNET, “Edgar Bronfman Jr. said in a keynote speech here… ‘We need to make it easy, affordable and quick to get music on mobile phones, he said. “Until we achieve this goal, we will be leaving billions of dollars on the table. On average, Bronfman said, it can take a person 20 clicks to buy a ringtone, depending on the carrier network the consumer is using. He also complained about the fact that ringtones, full-track songs, music videos and album art are all sold in separate virtual stores. ‘It’s amazing we have generated as much money as we have, given how cumbersome it is to buy music,’ he said. ‘Imagine what we could do if it was fun and easy for consumers.'”

“Apple has raised the bar in terms of what users expect even before the product has been released,’ Bronfman said. ‘While this presents a challenge, ultimately I think it will be positive for the industry because it’s getting people excited about music phone devices. Now it’s up to providers and manufacturers to fill the emerging demand.’ While Bronfman wants device makers and mobile operators to make it easier to purchase entertainment on their phones, he disagrees with Apple CEO Steve Jobs when it comes to protecting mobile music and video,” Reardon reports.

“Earlier this month, Jobs urged record companies to abandon digital rights management (DRM) technologies,” Reardon reports. “Bronfman said it is important to have DRM systems that can interoperate with one other, but he also emphasized the importance of protecting copyright and ensuring that content creators and the people selling the content all get paid.”

Full article here.
DRM is like crack to the music labels (besides their actual crack, of course).

Here’s the deal: Apple is anti-DRM and at least one major music label, along with their partner in crime, Microsoft, well, they just love DRM to death.

And so, death it shall be.

The vast bulk of Warner’s and every other major labels’ music profits comes from selling DRM-free CDs. DRM is so easily removed, that it’s pointless and illogical. DRM protects nothing. The mass pirates, about whom the music labels are supposedly worried, aren’t going to let a little DRM get in their way, so the only people that DRM is affecting are regular, law-abiding, paying consumers who just want to listen to their music. Thankfully, Apple’s iTunes Store does allow music to be burned without DRM to music CD to be played in CD players and/or transferred to any device they desire. We are all for selling music without DRM.

It is time to eliminate the middlebronfman and allow the artists to go directly to their fans via iTunes; no more outdated ideas like making an album a year (you write a song, record it and release it via iTunes whenever the creative urge hits) and no more DRM. With The Beatles’ Apple Corps settlement behind them, Apple is free to do just that.

Related articles:
Windows Vista’s DRM is bad news – February 14, 2007
Monster Cable announces full support of Apple CEO Steve Jobs’ call for DRM-free music – February 13, 2007
Microsoft’s Bach talks Apple iPhone, DRM, Zune, and more – February 09, 2007
Recording Industry Association of America wants their DRM, calls for Apple to license FairPlay – February 08, 2007
Warner’s Middlebronfman: Jobs’ DRM-free music call ‘without logic and merit, we’ll not abandon DRM’ – February 08, 2007
Dvorak: Apple CEO Steve Jobs is dead right about DRM – February 07, 2007
Apple’s Jobs jolts music industry; Zune exec calls Jobs’ call for DRM-free music ‘irresponsible’ – February 07, 2007
Apple CEO Steve Jobs’ posts rare open letter: ‘Thoughts on Music’ – calls for DRM-free music – February 06, 2007
Apple Inc. and The Beatles’ Apple Corps Ltd. enter into new agreement – February 05, 2007
Norwegian Ombudsman: Apple’s FairPlay DRM is illegal in Norway – January 24, 2007
Major music labels ponder DRM-free future – January 23, 2007
Clash, Pink Floyd manager: ‘DRM is dead’ – November 06, 2006
Study reports the obvious: most music on iPods not from iTunes Store – September 17, 2006
Warner’s Middlebronfman: ‘We sell our songs through iPods, but we don’t have share of iPod revenue’ – October 05, 2005
Warner music exec discusses decapitation strategy for Apple iTunes Music Store – September 28, 2005
Warner CEO Bronfman: Apple iTunes Music Store’s 99-cent-per-song model unfair – September 23, 2005

32 Comments

  1. Almost two-thirds of music industry executives think removing digital locks from downloadable music would make more people buy the tracks, finds a survey.

    The Jupiter Research study looked at attitudes to Digital Rights Management (DRM) systems in Europe music firms.

    Analyst Mark Mulligan, one of the authors of the report, said the survey was carried out between December and January. This was before Apple boss Steve Jobs published his thoughts on music DRM and galvanised the debate about these protection systems.

    http://macdailynews.com/index.php/weblog/comments/12629/

  2. There’s that word again…

    “Interoperate”

    That’s apparently becoming the new buzz word that those companies who want something but can’t have it will say needs to be provided because they want their slice of the revenue from that pie.

  3. I take great encouragement from seeing that some of these people are very concerned about the threat from Apple.

    To his credit, Bronfman is at least aware of the threat, but doesn’t seem to have a practical response. Most of his colleagues prefer to bluster about how the iPhone will fail because it isn’t like existing phones.

    As a consumer, I reckon that anything that can threaten the mobile phone industry AND the music industry at the same time has got to be a great thing and I look forward to seeing how it all pans out.

  4. Hold on, wasn’t Edgar “I’d be a non-entity if my ancestors hadn’t made a huge amount of money during Prohibition” Bronfman Jr. one of those who has spent a lot of the last couple of years arguing that people should pay more for their digital music and using the pricing model for ringtones as the justification for that point of view.

    What’s changed?

    Hmmm…could it be that, having run Universal’s film and music interests into the ground and having now decided to inflict his innate genius on Warner Mucous Group, he’s realised that he’s actually bought into a market that is on the verge a cataclysmic shift and he’s trying to make as much as he can before he pisses away the family fortune?

    I wish that Apple, who are now free of The Tiresome Twosome (previously known as The Fab Four), would buy a controlling interest in either WMG or EMI and put these c••ksu••ers on the scrapheap where they belong.

    WMG is now trading at a 52-week low and could be bought with the money that Apple keeps under the mattress (around $2.7 billion, EMI Group could be purchased for around $3.3 billion).

    Come on, Steve – flash the cash and piss off some music industry executives; how does it get any better?

  5. I can’t imagine myself buying digital entertainment for a phone. I’ll take a data plan if I must, but a ringtone? A music track? A TV program? A Paris Hilton video? Never have and never will. Uploading stuff I own to a phone would be a different matter.

    On average, Bronfman said, it can take a person 20 clicks to buy a ringtone, depending on the carrier network the consumer is using.

    Yep, 20-clicks for a ringtone, and they keep coming on a weekly basis charged to your bill until you can figure out the 120-clicks that cancel the service. Isn’t that how they work?

  6. “If Apple Corps were to sell Beatles songs on ITMS DRM free, THAT would get everyones attention!!!”

    Better still, have an iTunes Super Store, containing only DRM-free music, but at higher sample rates than ordinary iTS music. Give the customers a double improvement and at the same time eliminate confusion about which tracks have DRM and which don’t.

  7. The problem with music download sales via wireless phone is simple. It’s the wireless phone. That’s what makes it cumbersome and expensive. Unless I missed something, nothing will change with iPhone in terms of how online sales are made; you still use a computer to buy and download the media file, and then sync it to your iPhone. So iTunes will remain dominant, and perhaps iPhone will make it more dominant. There’s nothing the wireless companies can do about that, because they are still stuck trying to sell the media over the wireless phone.

    But… I wouldn’t be surprised if Apple added the capability to access the iTunes Store directly from iPhone at some point in the future. This would allow people who are “tech-phobic” to simply buy an iPhone as their iPod (the phone and web functions will be secondary). If you no longer need a computer to use an “iPod,” that opens up a huge untapped market for Apple, and such customers will be buying ALL of their media from the iTunes Store.

  8. I’m also going to take a pot shot at why piracy is so high

    1. Most pirates are passionate about music. In order to feed that passion you have to find new music continually.
    2. No one is going to pay $10 when trying to discover music, consistently anymore.
    3. We have devices (iPod) that demand being filled with enormous amount of diversity.

    The record industry needs to come to the realisation:

    1. Things have changed so dramatically that the old model is complete history and no chance in reverting
    2. Lots of some money is better than very little of high money (see their pushing of subscriptions)
    3. The retail value of a quality song is equal to the effort attempting to find a similar quality song.

    If the record industry has any chance at future relevance, I think it must look at doing the following:

    1. Remove DRM
    2. Reduce the charge per song to somewhere between 15-30 cents.
    3. Continually flood the P2P networks with corrupted, ultra-low quality and spoof songs.
    4. Ignore the Wal-mart and Amazon’s cry for “you’re selling digital songs too cheap” (CDs are instrinsic to the old model)

  9. Warner Music just posted an $18 Million dollar profit last quarter. Compare that to Apple’s $1 Billion dollar profit and you get the picture. Warner is financially irrelevant in comparison to Apple and they need to be aware of this.

  10. I made a similar post on another related topic this morning…

    We need a new paradigm for rewarding the artists. DRM works reasonably well in the Apple environment – it protects the rights of the copyright holder while providing for just about anything a user might reasonably want to do. But, as SJ point out in his letter, it depends on being able to keep one step ahead of the hackers.

    A new paradigm would need to:

    – ensure a return to the artist which is matched to the relative popularity of their art
    – allow music to be circulated and shared freely without constraint
    – ensure all music users make a fair contribution

    Perhaps SJ is working on this as we speak? Lets hope so. The DRM wars are going to hamper this industry, along with the video industry, for years to come. To see how look at what the BBC is doing by ensuring that their content will only be available to Windows users. Its madness.

    The first point is relatively easy – the iTunes store could allow direct uploads by an artist, bypassing the entire music publishing industry. Thats something of a pants-dirtying scenario if you work for a record label…

    The second point makes the first point more practical – a totally free market for music will change the way we think about music, and the way we use it. Music will become an even greater part of our lives when it can be freely incorporated into anything we do. If you “discover” a great new piece of music, you can introduce it to all your friends, link it to your personal website, add it to your “what am i listening to now” playlist etc etc.

    So the challenge is in the third point. Some people will happily pay for anything they use – others will always find a way to justify not paying…

    Here is one suggestion. It will be full of holes probably, but that just shows how tough it will be to crack this nut. But here goes:

    Lets see what Apple could do all by themselves:

    Say a portion of every iPod sale was set aside for the artists. Every iPod recorded the number of times a piece of music was played, and reported this back to iTunes every time you connected. The total pool of money was then distributed directly to the artist in direct proportion to the number of times the track was played. There would be no incentive to cheat because you have already paid your contribution when you bought your iPod.

    For the artist, uploading your new music would be easy and free. Digital music “broadcasters” would scan the new music on iTunes and create playlists much as a radio station does. If the music was popular the artist would be well paid. And the cost of this would be much less because the distribution system is so efficient. The revenue pool would eventually come from every sale of every player. There would be no DRM and the market would explode with choices. You would be able to listen to your music on a huge array of devices, and every time you bought a new player of any sort, you would be contributing to the pool of income for the artists. The artists could still engage marketing companies if they chose to, so there is still a role for the recording studios – only they would play more of a nurturing and marketing role.

    What do you think?

    ps: the industry contribution could be collected at the point of sale, just like a sales tax. it will require legislation to do this before DRM can be removed – but thats no biggie…

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