The Inevitable March of Recorded Music Towards Free
2007 is turning out to be a terrible year for the music industry. Or rather, a terrible year for the the music labels. — The DRM walls are crumbling. Music CD sales continue to plummet rather alarmingly.
Context & Ripple Effects
The argument lands on the same day NBC Universal chief Jeff Zucker publicly concedes the labels' position, telling an audience 'we are losing' the piracy battle — a line the Hollywood Reporter picked up and Terry Heaton's PoMo Blog amplified with a harsher framing of Zucker as an AT&T puppet. TechCrunch's thesis is the mirror image of that admission: with free competing directly against piracy and CD sales falling alarmingly, the labels' control over distribution is eroding faster than any enforcement regime can restore it.
First-order effects
- The major labels lose their last lever over how recordings are sold: as DRM walls crumble, every track becomes portable across devices and stores, stripping lock-in from Apple's iTunes and rival download shops alike.
Second-order effects
- Retailers and device makers capture the value the labels surrender — whoever owns the player, the store front-end, or the advertising relationship around free music sets the terms, pushing labels toward licensing rather than selling units.
Third-order effects
- If unit sales keep collapsing, industry revenue migrates to access-based or collectively funded models — the direction later floated as a music tax — restructuring recorded music from a product business into a rights-licensing business.
The trend: Recorded music is transitioning from copy-protected unit sales toward free, ad- or access-funded distribution, with DRM's collapse as the accelerant.