The Demise of Digital Rights Management

Excerpted from MediaPost Report

Despite Apple’s announcement this week that it’s sold 2 billion songs on iTunes, digital rights management (DRM) is on the decline. Consumers, in fact, are so frustrated with the restrictive software they’ve sued companies like Apple and Universal Music Group from using DRM on their music, citing anti-trust law.

Regardless of how those lawsuits turn out, the writing is on the wall. CD sales continue to drop, down 15% since 2000, but current digital sales aren’t picking up that slack. Apple, with its 2 billion songs sold, accounts for most of digital sales – 20 times more than eMusic, the industry’s No. 2 reseller. Just about everyone else in the music game, from Sony to Microsoft to Yahoo to Amazon.com, which plans to enter the business this year, want to see DRM go away.

Why? Because Apple is able to monopolize the music download business through its DRM software. It has the market-leading music player – a music player that won’t play other music companies’ files. No one else can get users to buy a player and the music to make a dent in Apple’s monopoly. Competitors want to be able to sell songs that play on the iPod and the only way to do this is to bring Apple to court. Meanwhile, many consumers have decided that it’s just easier to steal music. Please click here for the full report.