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What DRM-Free Audio Means for Video

By Shelly Palmer (bio), Managing Director, Advanced Media Ventures Group, LLC

Jeff Bezos, founder and CEO of Amazon.com recently announced that the company will offer DRM-Free music from EMI and other labels. Eric Nicoli, EMI CEO is quoted in the official press release saying, "We think having a trusted destination like Amazon.com offer a high-quality digital music product that will play across a number of devices gives consumers more options and will be a significant boost for the overall digital music market."

The digital audio business often foreshadows the digital video business, so I was not surprised to find dozens of emails from technology, media and entertainment executives asking me what impact this seemingly dramatic change in online audio business rules will have on the online video business.

The answer is, none. But to understand why, we must review a few key concepts.

First, to a computer — a file is a file is a file. Once a piece of content (audio or video) in an unrestricted digital file format is as easy to copy and distribute as any other type of computer file. In other words, if you know how to send an email attachment, you already know how to send every type of computer file.

Next, when they say DRM-free, they mean a file without copy protection or anti-copying software. They do not mean that the file won't have digital identification that might link it to its legal owner or other tracking software attached to it.

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The DRM-free issue instantly bifurcates people who make their living selling recorded music. Some believe the lack of restrictions will boost overall sales, others think it is, at best, a Pyrrhic victory because the increase in casual misuse will ultimately destroy the business.

To fully appreciate the ultimate impact on the music industry's bottom line, you must understand the difference between "intentional" and "casual" misuse. The removal of restrictive Digital Rights Management (DRM) software from commercially downloadable files will have absolutely no impact on the amount of intentional piracy. None! As a practical reality, there is no such thing as copy protection and almost anyone who is interested in copying a music file and distributing it to everyone on earth can do so with relative ease. This is a huge problem and removing copy protection from the files will have no impact on it whatsoever. People who are willing to steal music have never had any practical technological barriers. This has not changed.

However, selling legal unrestricted files will make it easy for people who are law-abiding citizens, with the best of intentions, to accidentally break the law. "Hey, that new song by So-and-so is great!" "Yeah, I like it too, in fact I already downloaded it … I'll email you a copy." End of story. We have not educated the consumers of music well enough to prevent this scenario. They have computers and they have email accounts. Music files are small enough to send via email — it's going to cost the industry a bundle.

Which begs the question: Will the video industry fall off the same cliff?

The short answer is, no. And, here's why.

Audio files are the singular product associated with the recorded music business. They are generally consumed in low focus. As you know from personal experience you can do anything while listening to music (browse the Internet, do chores, drive a car, etc.) except listen to other music. And lastly, music is almost never consumed with interruptive advertising. Sure, you have ads on the radio, but never in the middle of a song.

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Video files are very different. They are generally consumed in high focus. You really can't be driving a car and watching a video. Consumers are used to advertising associated with and throughout video content and they are already looking at the screen. Also, video is played in a video player. Whether it is a television set, a personal video device or a computer screen, there is salable advertising "real estate" associated with viewing environments. And, lastly, video files are big. Much bigger than audio files, high-quality video files simply cannot be moved around the house in a casual way and they are way too big to email. The practical size limitation will slowly disappear over time as computers become more powerful, compression software becomes more sophisticated and bandwidth becomes more available, but for the foreseeable future, on a mass scale — size matters.

The DRM-free debate will probably remain a divisive issue until history declares a winner. But, the eventual outcome won't teach us very much about how people will consume video files or how they might be monetized. Even when you are able to move a file of a hit movie as easily as you can move a file of an audio recording, the video file will always need to be played on a device that you have to watch. This will always allow for additional value chains that simply do not exist for the recorded music industry. So be careful with your audio foreshadows video metaphors this week — audio and video content are simply not the same.

About the Author: Shelly Palmer is Managing Director of Advanced Media Ventures Group LLC and the author of Television Disrupted: The Transition from Network to Networked TV (2006, Focal Press). Shelly is also the 1st vice president of the National Academy of Television Arts & Sciences, NY and Chairman of the Advanced Media Committee of the Emmy Awards. You can read Shelly's blog at http://www.emmyadvancedmedia.com. Shelly can be reached at shelly@palmer.net.

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