Economics of the MP3

18Dec06

This article and discussion over at Brooklyn Vegan got me thinking about DRM again. Not only about the restrictiveness of the actual music playability but the economics of it. My preliminary thoughts are that DRM was not created to protect the intellectual property of the artist. It is a device used for product differentiation not by the music industry itself but the industry that conveys the music to the consumer. With music there will always be a middle man, you have to have equipment to play that new track. The music industry does not provide the equipment to play their product, the device companies are the gate keepers. Apple, Microsoft and others have become those gate keepers.

With the advent of the MP3 music has become more and more commodified. All MP3s are treated as equal, you can essentially buy them in bulk. As such the ‘gate keepers’ needed to find a strategy for product differentiation. While the devices (Zune, iPod and etc) perform the same task they will only play media that is either from the company that manufactures the device or media free of any affiliation. I liken this to a microwave that will only cook Kraft food. If you want to use this microwave you have to eat Kraft. If you want to eat Kraft you only have one choice of microwave. The same goes for MP3’s, if you want to use a Zune you have to get your music from Microsoft. If you want to listen to the music that Microsoft provides you have to play it on a Zune. Music purchased from Apple won’t play on a Zune and vise versa. As such DRM is an economic tool rather than a protector of copyrights.

1 Response to “Economics of the MP3”


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  1. 1 EMI Drops DRM at iTunes. | Music Sucks. Pingback on Apr 3rd, 2007
    "[...] just peachy to me. Read more about it here and here. I’ve wrote about it in the past over ..."

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