Is this the beginning of the end of DRM? BBC reports that Yahoo US has released A Public Affair by Jessica Simpson without digital rights managment (DRM)—and you get your very own personalized version, with your name inserted in the lyrics (unless your name is Manfred, it seems).

The release of the Jessica Simpson track from Sony BMG represents the first tentative steps by a major label to release a track without copy protection. It marks a reversal for Sony BMG who were criticised last year when they released their XCP anti-piracy software on music CDs.

From an antitrust perspective, DRM schemes that restricts the choice of music player can create market power because they function as a technology lock-in: take Apple’s iPod, which will only play music downloaded from the iTunes Music Store, tracks ripped from a CD, or mp3 files without DRM protections (hence Yahoo’s claim that A Public Affair will play on any player).

On the official Yahoo music blog, director of product management Ian Rogers wrote: “As you know, we’ve been publicly trying to convince record labels that they should be selling MP3s for a while now. “Our position is simple: DRM doesn’t add any value for the artist, label (who are selling DRM-free music every day - the Compact Disc), or consumer, the only people it adds value to are the technology companies who are interested in locking consumers to a particular technology platform.”

Without DRM, switching cost between digital devices are lower, because music already owned by the consumer will play on a product that, for example, competes with the iPod. Taking a different tack, Microsoft seems to contemplate a competing music player with a competing music store, still using DRM, but Microsoft-DRM rather than Apple-DRM. Microsoft will market the music player by permitting free downloads of music already owned by the consumer (but under a different DRM). As Hanno recently wrote:

The main technological threats to locked-in content have so far been open standards (e.g., mp3). Microsoft’s announcement, for the first time as far as I can tell, shows another way: paid migration of content from one DRM regime to another.

Competing DRM-based players from Apple and Microsoft, both presumably with access to the major labels, would not make competition easy for companies selling just music players without also offering music downloads (like iRiver). If Yahoo, however, manages to convince the major record labels to publish digital music without DRM, as independent labels have been doing for a while, both Apple’s and Microsoft’s strategy of locking users into a technology platform may become moot. Competition from other manufacturers of mp3 players would be likely, as would an end to Apple’s dominant position in the market for digital music players.

UPDATE: Microsoft announced its competing music player today, branded Zune, as the Wall Street Journal ($) reports. The article contains this interesting bit about different approaches to the music market:

Until now, Microsoft has approached music much as it did the PC market, creating what it calls an “ecosystem” by licensing its software to any and all hardware makers. For media devices, Microsoft widely licenses an audio and video format known as Windows Media, in the same way it licenses the Windows operating system to PC makers. It has many partners making hundreds of music devices, and there are multiple services that provide music that can run on these devices.

The ecosystem strategy worked well in PCs. But in music, instead of turning Microsoft’s technology into the industry standard, the strategy has confused consumers with scores of different devices and services under different brand names that haven’t always worked well together. In contrast, Apple is the only maker of the iPod. Consumers have praised the device for being easy to use. It is the only device that can play music files purchased from Apple’s iTunes store.

Comment feed: RSS 2.0. You can leave a response, or trackback from your own site.