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Sony BMG Drops DRM and Maybe Logic Too

sony bmg experimentLast week, news that Sony BMG would soon drop DRM encryption from their music library leaked but details were scarce.   The company confirmed Monday the reports were accurate – more or less. It’s the “less” part that will cause some confusion.

Sony BMG will in fact begin selling unrestricted music January 15th.  The method, however, won’t be as expected (at least initially). It might not make a lot of sense either. Instead of partnering with online music stores and offering their catalog in the portable unencrypted format, Sony BMG has opted to start their DRM-Free experiment by throwing their support behind traditional brick and mortar retailers: the bellwether’s of the labels’ past successes (Only  about 10% of music sold in 2007 was online digital music). 

Sony’s BMG has also opted to support only full album sales and not the more common online practice of ala carte singles with this first foray.

The new service is called the Platinum Music Pass.  It is built around a gift card (called “Digital Album Cards”) that will unlock access to downloads on a new website.   A Customer shopping at Best Buy, for example, can buy a Bob Dylan emblazoned card.  When they get home, a scratch off section on the back will provide a unique product key. That key, in turn, will unlock a download of the Bob Dylan album from the website.

Retailers including Best Buy, Target, Trans World Stores (Coconuts, Wherehouse, FYE), and Winn Dixie will participate as sellers of the gift-cards to start.  The album cards will be priced at $12.99, except in some cases where special edition packaging will push the cost to a premium.   Some may be bundled with prizes and incentives including bonus content.  A Canadian offering supported by Wal-Mart, HMV, Best Buy and other retailers is planned to roll out later this month.

Sony BMG’s US Sales President Thomas Hesse says: "We see MusicPass as a great way to bring digital music to the physical retail space.  We believe it will have strong appeal for a broad range of consumers”

That belief seems suspect.  At first glance, the service seems awkward and perhaps even ill conceived.  For one thing, the nature of its sales process emphasizes a trip to a store to gain access to an online program.  It’s inefficient to the point of being confusing.   The concept may capture the occasional "impulse buy" but to a consumer actively seeking digital music it’s otherwise inconvenient.  Why force them to a store? Instead of using technology to make a purchase easier, it adds a layer of additional tasks.    

Additionally and even more troubling, this offer begs a form of channel conflict that calls into question the value proposition for a consumer.  Ask this question: if a consumer goes to a store and decides to buy a full length album – what motivates him/her to buy the gift card over the CD?  In both cases, having the music on a portable device will require a few steps at home.  Pricing being similar why does he/she choose the card? 

•With the card, there’s the music to download.  Likely in a lower quality than the CD too.  (Sony BMG hasn’t revealed the bit rate planned). Next there’s the need to distribute the music to the portable device.  If there’s paranoia about computer crashes, there’s also a need to burn a backup CD so you don’t lose the music if your hard drive fails.    

•With the CD, the buyer gets a tangible copy from the start.  There’s no time lag, no waiting for a download. They can listen to it right away.   And there’s less need for a backup.  If the impetus for the purchase was to have the music in digital form: plop it into the computer and let iTunes (or equivalent) convert it to MP3.  It’s simple enough. The software does the work.  Why go another route?

Legality may be one answer but that’s a big debate nowhere near reaching a clear cut resolution.   Legal minds are largely split as to whether ripping a CD you’ve purchased is a copyright violation.  Some in the music industry, especially their lawyers, have suggested it is.  Others, including an apparent majority of consumers, and their advocates, take the position that creating an MP3 from purchased music for personal use is perfectly legitimate under the doctrines of Fair Use.  They further point out there’s no encryption to bypass on a CD (CD’s are unencrypted e.g. DRM-Free) so there’s no apparent Digital Millennium Act infractions either. 

So if you set aside the legal debate and instead focus on what is already widespread consumer behavior (most music is still bought on CD’s and then converted to a digital format),  is there another reason to opt for the card?  If not, and none seem obvious, the value proposition is simple:  for similar price, there is more value with the CD than one of these album cards. You get quality, durability, portability and options.

As a channel conflict, that points back to the same simple question: Why buy a card?

Sony BMG suggests it is partly because consumers like to buy gift cards.  They cite an American Express study that claims nearly 25% of consumer gift spending will be directed toward gift cards.  Trouble with that logic is that the majority of gift cards function same as cash within a store (online or in person). Platinum Music Pass isn’t a cash equivalent.  It’s an album without the packaging and without the CD.  What you buy is what you get, you just don’t get to take delivery until you get home and go through the authentication process. That means, Platinum Music Pass is not the same class as most gift cards.

Logically, the only way Platinum Plus seems to compute is from the vantage point of a retailer.   In 2007, album sales fell approximately 15 percent while digital sales grew (Nielsen SoundScan).  Brick and mortar stores lost business as digital rivals expanded.  With those trends are only continuing, stores want  solutions that save their lucrative revenue streams however experimental they might be.   In that regard, the Music Pass program reads like an effort to support the retailers. 

The paradox is it’s the consumer that’s supposed to always be right.  It’s the consumer whose needs are supposed to be addressed.  Music Pass cater’s to the sellers not the buyers.  That, in turn, reeks of the same lack of customer awareness and sensitivity, the same kind of awkward effort to provide an ideal business solution at the expense of an ideal consumer one which has already plagued the music industry’s transition into the digital age.

Maybe, in fairness, judgment should be reserved until Sony BMG reveals the rest of their DRM-Free strategy.  This thirty seven album experiment can’t be their entire vision.  There’s just got to me more, something that makes sense.  There has to be.  Maybe the catalog will be licensed to Amazon’s MP3 Store soon, or iTunes…maybe they’ll try and revive the failed Sony Connect music store and make it home to a DRM-free catalog.  There’s got to be something beyond Music Pass.   Otherwise like Tom Hanks in Big, a lot of people should raise their hand and say, “I don’t get it.”

Some of the 37 Albums initially offered in this experimental format will include:
Alicia Keys, “As I Am.”  Bob Dylan, “Dylan”.  Brad Paisley, “5th Gear”.  Britney Spears, “Blackout.”
Brooks & Dunn, “Cowboy Town.” Bruce Springsteen, “Magic.”  Carrie Underwood, “Carnival Ride.” Daughtry, “Daughtry.” Elvis Presley, “Elvis 30 #1 Hits.” Jennifer Lopez, “Brave.” John Mayer, “Continuum.” Martina McBride, “Waking Up Laughing.”  Santana, “Ultimate Santana.” The Fray, “How To Save A Life.”  and Tony Bennett, “Duets”


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