RECORD COMPANIES SURRENDER TO CONSUMERS ON DOWNLOAD DRM

A quiet victory of music consumers has occurred now that Sony BMG Music Entertainment has become the final major recording company to drop digital rights management protection on its digital downloads.

Major recording companies starting placing protection software on downloadable files in 2005 and 2006 to protect the music files from being passed on to other listeners. The digital rights management software, however, often blocked consumers who had purchased downloads from moving files to portable music players or even to new computers and from making compilations discs of their favorite music.

The software incensed many consumers because it forced consumers to purchase multiple copies or forced them to illicitly bypass the software if they wished to use music they had purchased on more than on platform. Many felt it was unfair that one did not “own” the download in the same way as a CD, a book, or a DVD and voiced their frustration in blogs, music forums, and to the record companies.

Opposition grew so strong among consumers that consumer rights and competition authorities in both the U.S. and Europe soon began to investigate and question the practice.

In 2007 EMI and Universal Music Group dropped the DRM measures and Warner Music Group and Sony BMG Music Entertainment have now followed suit in 2008.

Although the recording companies would still have preferred that consumers only be able to "rent" music and never own it--giving them the possibility to limit the number of times a download could be played before an additonal payment would be required, they ultimately gave in to consumer oppostition and are recognizing that consumers view music purchased in whatever form as substitutable.

CEASED SERVICES AND TECHNOLOGICAL WARINESS

The introduction and suspension of media services is becoming a regular occurrence and the combined effects of multiple false starts is creating turmoil in the marketplace and making consumers wary of new services.

Let me give some examples. Wal-Mart recently announced it is halting its online video download service after only a year of operation because Hewlett Packard Co. has discontinued its underlying technology due to poor market performance. The New York Times has one of the most successful newspaper websites but has changed its business model several times, most recently abandoning Times Select consumer paid model for an advertising-based model. Sony created a CONNECT Player for its Walkman, PSP, Clie and VAIO that was so plagued by problems that it ended support for the product and advised owners to use another music player and library manager instead. These are only a few of the hundreds of starts and stops of services that have occurred in recent years.

The primary reasons for failures of these types of services have been the rush to get them to market and the unwillingness of companies to financially support services for more than a limited time. These factors lead to insufficient product development efforts before introduction and rapid abandonment of products and services that may need time to be corrected or to mature in the market.

Companies of all kinds introduce and withdraw products for the market on a regular basis, but rapid introduction and withdrawal of media services tends to create more disruption for the consumer. Media services differ from other products that companies decide they will no longer manufacture because ceasing media services reduces functionality of hardware products for which the services were designed. Suspension of services also interferes with the strong habitual uses of media products and services that results from them being experience and lifestyle good and services

Media and communication technologies are changing rapidly but consumer behavior changes much more slowly. Consumers need time to learn about and get used to new technologies. The appearance of consumer technology fatigue from the constant changing and versioning of media and communication technologies is well recognized. Today, the rapid introduction and cessation of services is fueling technology wariness among consumers who have purchased hardware on the assumption that the services sold with it will continued to be offered throughout the useful life of the product.

It is a problem that media and communication companies have created themselves and it is making media markets more turbulent and complex.