Nyuk Nyuk: The Three Stooges And DRM-Free Music Online.

“What are you, a wise guy?”

What would happen if the three stooges tried to take on Apple’s iTunes Store? Well, now we know, because its happened.

First we have Universal Music. Wanting desperately to sell DRM (preferably Microsoft’s) music, and to jack up prices for newer and more popular titles, they are frustrated by Apple at every turn. So in their own way of trying to poke their fingers in iTunes users’ eyes, they’re offering DRM-free music for a limited time. They claim they’ll gauge reaction to determine if they should continue the practice. Sounds good, right? So what’s the problem? The problem is it’s all a bunch of hooey:

  • The tracks are not be available on iTunes. Aside from the obvious fact that you can’t gauge market reaction by not offering it on the world’s largest and most popular (by far) online music store, it makes Universal’s real motives pretty transparent. Universal should have been more low key but, frankly, they’re not bright enough.
  • They teamed with Wal-Mart. Why them? Well, aside from the fact that there aren’t many online music sellers left, this second stooge is perfect because, like Universal, they haven’t a clue how to step into online media sales and distribution. They’re made for each other. In my opinion Wal-Mart already started off wrong because, like Amazon, they’ve chosen the wrong file format.
  • The new service doesn’t work on Apple’s Mac. I can just hear the Universal execs now: “We’re already not making it available on the store used by most Mac users. Still, in case that’s too subtle about how much we despise Apple — though they pour millions into our coffers for doing nothing but supplying source files — let’s also utilize a web site they can’t use. Ha ha! Oh, but will they get wise to this not really being an experiment? Naaaah, we’re too clever for them.”
  • Looks like only their older catalog of music is available. What, you though you’d be able to get all the Universal music on Wal-Mart DRM-free that you can get on iTunes? What part of “this is not really an experiment” are you not getting? Universal has no intention of selling current titles for .94. They abhor Steve Jobs for not raising the .99 price, they’re sure not dropping it a nickel! They’re throwing their back catalog at it and hoping to get purchases so people will at least think about buying online music somewhere other than iTunes.

Fine, but what about Microsoft? How are they the third stooge? They’re not mentioned in the press releases and articles on this. In fact, the new tracks sell alongside their own WMA music. Why am I throwing them in the mix? Simple:

  • Wal-Mart and Microsoft have been in bed since the beginning. It’s no coincidence Wal-Mart’s site only works in Internet Explorer! Not even Firefox on the PC works! This isn’t incompetence, and it’s not because Wal-Mart’s developers just wanna code like it’s 1999, it’s deliberate. Further, Wal-Mart not only uses Microsoft’s DRM, they also use their WMA file format. These guys are tighter than Larry and Curly.
  • Microsoft is tight with Universal, too, even agreeing to a “Universal tax” on the Zune. Microsoft slips a dollar to Universal for every Zune sold. Sure, this has only added 47 dollars to Universal’s bottom line, but these two behemoths share similar views of online distribution, which is to lock it down as much as possible and charge you again for what you already own. Even worse, the agreement gave Universal a swollen head, making them think they could push other companies around. Never mind that Microsoft is nothing in the media business, and was simply desperate to get Zune sales (though it didn’t work).
  • Microsoft is for anything that gets people to Wal-Mart’s music site. After all, when visitors find out they can’t get current Universal titles DRM-free, perhaps the “bait and switch” kicks in and they’ll buy the WMA version.
  • Microsoft wants Universal to succeed in this ruse as much as Universal and Wal-Mart do. If Universal “wins,” and gains clout, they can keep DRM at least for their popular titles, and whose DRM do you think they’ll choose? Universal wants to tell Apple to take a hike; Microsoft would love that, they have DRM for sale.

So maybe you’re thinking, let’s say you’re right, Tom. So what? Why should that prevent me from buying the music DRM-free as long as its available and a lower price than iTunes? If it’s not available, I won’t buy the DRM version (pointless if I have an iPod anyway), so what’s the harm?

The answer is, maybe none. But I’m not going to do it. I’m not a boycott person, but this move seems so transparent and disingenuous, I’m not going there. But if you snapped up lots of Universal’s back catalog DRM-free, I couldn’t say I’d blame you.

If Wal-Mart sells a lot, and manages to become a player in this game, Universal will have the leverage to force a price hike on popular stuff and still keep it DRM’ed. This is their primary goal, and one Apple will not help them achieve. If Wal-Mart sells very little, Universal will claim it as proof that people don’t care about DRM. Either way, I don’t see a DRM-free current Universal catalog anytime soon.

Personally, I don’t think Wal-Mart will sell much. It’s more than just money, the iTunes store is very slick and well-integrated. Rather, I see iTunes users raising their collective hand up sideways in front of their nose to keep Universal’s fingers out of their eyes. In other words, we’ll moidelize ’em!

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5 thoughts on “Nyuk Nyuk: The Three Stooges And DRM-Free Music Online.

  1. Cool graphic with Curly, Moe, and Larry! Great analogy, too. 🙂

  2. I more less agree with your conclusions but would go further.
    As far as I can see this ‘experiment’ follows the line they wanted to push with iTunes, ie variable pricing and possibly getting a slice of the iPod pie, but it’s the follow-up scenario that is more interesting…
    If we assume that Universal had no intention of having a successful DRM’less business and want to continue to base their business on crippled tracks – preferably with multiple vendors, each with a decent percentage of the market, so that they can leverage the price differential upwards for current artists, I think they have seriously misinterpreted their market strength. The largest label sure, but likely to become the most reviled label too since they are poking the userswhowantnodrm fair and square in the eye. How will this pan out?…well I can see the grassroots user poking Universal in the eye by reverting to P2P rather than making-do with DRM’d tracks – and just when digital downloading was beginning to gather some momentum. The outcome will likely be accelerated reduced earnings because prospective purchasers will eschew ANY paid-for Universal track.
    Some would argue that I am forgetting that not all people read web discussions on Universal’s duplicitous behaviour, know the difference in file types, or have ipods and so know what a superior service iTunes is. I would counter that the proportion of digital file buyers using iTunes is so high that effectively it IS so.
    This is an argument Universal simply cannot win. EMI have shown that in order to regain revenue losses from P2P users, that you have to give something in return. By holding onto the tough line with users and their favorite on-line retailer, they only manage to sully their already-poor-name even further.
    Now, what happens when losses reach a point where both shareholders AND artists start to object?…possibly votes of mismanagement and no confidence will remove Bronfman for good. Before that happens of course, they will try other misinformation tactics, probably aimed fair and square at Apple’s market strength, hoping they will be joined by the other labels. I can’t see this succeeding, file-sharing will always be a great leveller.
    I reckon the labels greed has brought about a Chinese curse – ‘may you live in interesting times…’

  3. The whole thing stinks. I wonder if iPod owners will be suckered into this. The non-DRM files are WMA and won’t even play on the iPod. Wal-Mart better be prepared to refund some money.

    I’d read about the “watermarks,” but wasn’t clear if this wasn’t similar to the info Apple puts in their DRM-free music.

    If what you say is true, then these tracks are NOT DRM-free, and the whole thing is one big false advertisement.

  4. Tom … this is a good point that i don’t think anyone has pointed out:

    < "Microsoft is for anything that gets people to Wal-Mart's music site. After all, when visitors find out they can't get current Universal titles DRM-free, perhaps the "bait and switch" kicks in and they'll buy the WMA version."

    Because Walmart IS offering them side by side and you do have the coice of paying a 9 cents less for the DRM version. That to me IS a bait and switch by tugging at a wallet!

    From what I’m reading the Universal tracks actually do have DRM with watermarks at the front and rear of the tracks … meaning that one day a firmware could be uploaded to disable them AND they could be tracked on file sharing services.

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