Are Music Labels Finally Seeing the Light?

I'm not sure where it began, except to say that iTunes is the likely ignition source for labels embracing online downloads and legal file sharing. Lately, it seems that the record studios are finally negotiating on a massive scale to allow social networking sites and other commercial enterprises to distribute music in a myriad of ways that will guarantee some revenues from the transfer and consumption of digital music. In addition, 3 out of the four labels have now allowed Amazon.com to sell their music DRM-free. There's change in the air.

This week, Facebook has approached major music labels (Universal Music, Sony BMG, Warner Music, and EMI) about launching a music service, according to a report the Financial Times issued on Wednesday. The talks were described in the article as "preliminary." Last week, Reuters reported on the major labels holding similar talks with MySpace, the leading social network site owned by News Corp.

Let's recap some recent events that have led us to believe the large, hulking ship that is the Recording Industry may be turning it's tiny rudder towards acceptance of downloadable music - possibly even free downloads with other sources for revenue.

• April 2003 - Apple launches iTunes for the Mac community, and creates the first sanctioned downloadable music store containing music from all four major labels at the tune of about $0.99 each ($9.99/album). iTunes sells nearly 10 million songs in the first 4 months. FairPlay DRM.
  
• September - Dell launches its MusicMatch service to compete with iTunes. Price is identical and, in fact, the system is very similar to iTunes. This is the first music system to hit Windows users. Microsoft DRM.
  
• October 2003 - iTunes goes Windows-compatible. FairPlay DRM.
  
• October 2003 - Napster rises like a Phoenix from the ashes of bankruptcy and emerges as a legitimate, legal downloads for $0.99 and subscription-based music streaming for $10/mo. Microsoft DRM.
  
• December 2003 - Wal-Mart launches music download service that provides WMA files for $0.88/ea. Microsoft DRM.
• September 2004 - Virgin launches MP3 download site with $0.99 downloads and a $7.99 subscription model for unlimited music streaming. Windows DRM.
• October 2004 - Microsoft officially launches its MSN MP3 download store with $0.99 tracks. It is not Mac-compatible. Windows DRM.
  
• November 2006 - Microsoft shuts down its MSN Music download service.
  
• June 2007 - imeem launches ad-supported free music streaming service based on the SNOCAP peer-to-peer technology. The service continues to be free and allows the customization of playlists which can be played back through an Internet-connected PC with no additional software requirements.
  
• May 2007 - Apple's iTunes launches DRM-free downloads called "iTunes Plus" for $1.29 which includes artists from EMI. Other labels are slow to allow DRM-free tracks.
• August 2007 - Sony announces it will kill off its Connect MP3 store and proprietary ATRAC music format (how did these guys win the HD-DVD format war?) Switches to Windows DRM.
• August 2007 - Wal-Mart makes good on its threat and announces new DRM-free MP3 downloads for $0.94 per track, $9.22 per album. DRM-FREE.
  
• September 2007 - Amazon's launches a DRM-free MP3 online store with support from two (EMI and Universal) out of the four major labels. All songs are compatible with iTunes and Windows Media player since they are DRM-free. Many tracks are actually just $0.89 with older albums coming in as low as $4.99. DRM-FREE.
• September 2007 - Virgin dumps its online music download service.
• January 2008 - Qtrax has the most embarrassing non-launch in history as it sends out press releases all over the Internet, throws a congratulatory party and then fails to deliver free ad-supported DRM-free MP3 downloads as promised. To-date they still have not launched.
  
• February 2008 - Sony BMG allows DRM-free music to be sold on Amazon.com and Pepsi launches a major nation-wide points/ad campaign with Amazon's MP3 store which is advertised during the Super Bowl. This now means that Amazon.com is the only online MP3 download service who has 3 of the four labels allowing DRM-free music to be sold. It is compatible with iPods, iTunes and WMA-based players.

So where are we now? In a pretty interesting place. With Amazon.com getting permission from labels to sell DRM-free music, it will be interesting to see how this unites consumers and allows the realization of truly cross-platform files. Why the labels have snubbed Apple is beyond us, however it may have to do with Steve Jobs' strong-arm tactics and incredible ego (we can always hope, anyway).

DRM-free music is the future and will open up the market to enable more manufacturers to produce cheaper, smaller, faster, better MP3 players that don't simply work with a single prescribed music service. Competition is good and we're glad the music industry seems to be waking up to the fact that reactionary lawsuits are NOT a good way to make money. You have to be proactive, not reactionary in order to grow your business.

Perhaps they're tired of hemorrhaging sales and are ready to think out of the box.