at the Music 2.0 conference in Los Angeles on February 23, Yahoo
Music’s general manager Dave Goldberg startled listeners with a
statement probably never previously heard from the head of a for-pay
digital music service: Lay off the DRM.
"DRM is not a consumer
value proposition, it’s a consumer cost," said Goldberg. "It creates a
nice barrier of entry for the tech companies, rather than something
that’s beneficial to labels, artists, or consumers."
Most of his talk was hardly revolutionary (listen to it here),
but the part that caught our attention was his analysis of how DRM
discourages consumers from purchasing legitimate music files, since it
imposes restrictions on the use of that music that illegal alternatives
do not. In fact, Goldberg joked, when his PowerPoint presentation
repeatedly ran into difficulties, "We believe that music should be in
my car stereo, in my home, on my phone—anywhere but on my PC, where it
could crash on me."
"Record labels don’t like to hear this, but
consumers have always had access to pirated music that’s free. . . .
The way to get more money from listeners is to give them a lot more
music for their money," he said, promoting subscription-based access to
"Most people believe they can get enough value from what they get for free," alluding to a number of easy methods for acquiring gratis content online. That puts stores like Yahoo Music Unlimited in a tough position, especially when it comes to younger buyers. To solve the issue, Goldberg pointed to a number of strategies and innovations. That includes better playlist features, effective personal recommendations, better distribution across devices and platforms, and more seamless billing. Throughout, Goldberg drew a parallel to the successes of Evian, one of the first bottled water giants. For Goldberg, continued innovation will help to power a $30 billion digital music market ahead, which will consist mainly of transaction-based, subscription, and ad-supported content.
The pressure to create viable markets online is intense, especially as traditional sales outlets continue to lose steam. Goldberg noted that many consumers are not making repeat visits to paid music stores, deterred by aggressive price points and onerous usage restrictions. "There is a cost associated with DRM, and that is lost sales of content," Goldberg said, cutting against the prevailing major label philosophy. Goldberg called for more innovation, and encouraged the industry to experiment with more MP3-based sales plays. Citing the successes of eMusic, which offers its tracks in unprotected MP3s, Goldberg predicted that overall sales volumes would not be adversely affected by such a move.