With the self-imposed timeline running out, rumors continue to swirl regarding EMI's catalog becoming available, DRM-free, on Apple's iTunes.
It's possible in the midst of the technical jargon to lose track of the importance of this gesture (if it indeed comes to pass). The significance of a reduction in DRM basically allows other entrants into the market. This is crucial!
DRM is - in economic terms - a "transaction cost." When you encumber songs with DRM, it adds another layer of cost that the customer has to contend with - or not. In other words, faced with the "cost" of DRM (restrictions, etc.) versus the lower cost of DRM-free tracks many customers will opt for the latter.
By getting rid of DRM, it strips away one more level of "cost," and inches us closer to a place where the customer will debate more seriously whether or not to buy or steal music.
Of course, I'm not naive, and it is impossible to compete with free. However, this so-called "free" music isn't really. In addition to the less-tangible costs involved (depriving artists from royalties, etc.), there are real costs involved - again, turning to economists - that are often referred to as "opportunity costs."
These would be the cost of your time (the scarcest of all resources) that is wasted by downloading files that contain viruses; downloading files that are incomplete/corrupted, etc.
At the current model, these "costs" are less significant to the customer than the monetary cost and the DRM. As stated, stripping the DRM eliminates one of the costs. In order to reduce the others, three things must happen: 1. labels must reduce the price, 2. there must be no middle-man, 3. the credit cards must reduce their transaction charges.
Lack of DRM heads us in this direction. We must reach a place where artists are selling directly to their fans - no via CDBaby, not via iTunes, not via MySpace (SnoCap), but directly from their site to their fans (or at shows).
In order to do this effectively, the credit card companies (and PayPal) must reduce the fees and allow for so-called micropayments to take place.
Once this is done efficiencies will emerge, and - with no DRM and micropayments becoming realistic, a whole new category of "vendors" will emerge.
Bloggers will suddenly be transformed from pure mavens to people with an ability to participate financially from exposing their readers to great music.
I firmly believe that this is our future, and that this future will be a bright one for artists.
It has to start with a DRM-free world, and right now that means a DRM-free iTunes.
