Industry sees sunnier side of digital copying

Music and film companies have always been concerned at the threat that copying their material might pose to their business models and revenue streams.

The Motion Picture Association of America famously lobbied to ban video-recorders in the late 1970s, arguing that home recording would destroy Hollywood’s film industry. Ironically, sales of video cassettes and later of DVDs came to account for a major share of the film industry’s income. With the advent of digital technology, the rise in the number of personal computers and the development of digital media players like Apple’s iPod, copying has become progressively easier. The growth of file-sharing networks such as Napster made it easier for users to swap songs using the global reach of the internet.

Faced with these threats, music companies launched a flurry of lawsuits to close down file-sharing networks. They also started introducing different types of digital rights management (DRM) technologies to protect their material against what they saw as abusive copying.

Bertelsmann Music Group introduced DRM on some of their CDs in 2002. But the move provoked a backlash from consumers who found that the copying protection technology was limiting where they could play the discs. In some cases, the CDs would not play on PCs or on car CD-players.

There was an even stronger reaction against DRM after Sony introduced copying protection without telling customers. The existence of the protection programmes was revealed by independent software analysts who discovered that the programmes could introduce security weaknesses. Sony faced lawsuits from consumers upset that their systems had been put at risk by secret software.

Hostility to the record and film industry was heightened by a wave of lawsuits, particularly in the US but also in the UK, against individuals using file-sharing networks. The Record Industry Association of America (RIAA) has sued more than 20,000 music fans, according to the Electronic Freedom Foundation, a group which campaigns for citizen’s rights in the digital world.

In 2001 file-sharing network Napster closed down after a court injunction brought by music companies for the service’s breach of copyright. The company agreed to pay €26 million in fees to rights-holders. Bertelsmann tried to buy the network in 2002 but a judge in the US blocked the sale, forcing the company to seek bankruptcy protection.

In recent years, paid-for music download services have taken off with Apple’s iTunes leading the field.

The Free Software Foundation, which promotes open source software, has drawn attention to iTunes’s copying restriction in its anti-DRM campaign ‘Defective by Design’. It is only with great difficulty that files bought on iTunes can be played on digital music players other than Apple iPods.

In February this year Apple Chief Executive Steve Jobs called on music firms to offer music in digital formats without DRM protection, saying that it was the music companies that insisted on using DRM to control use of their catalogue. At the start of this year, EMI announced that it would no longer market music with DRM protection. iTunes has started offering a premium service, iTunes Plus, with DRM-free music files available for $0.30 more than the normal price of $0.99 per download.

EMI reports that sales of non-DRM protected songs have rocketed thanks to iTunes Plus. EMI senior vice-president Lauren Berkowitz said that sales of Pink Floyd’s Dark Side of the Moon rose by 350% in the week after iTunes Plus launched.

With pressure on music companies from a major industry player such as Jobs to drop DRM protection and with indications that ending restrictions can boost sales, it may be the beginning of the end of this technology, especially as music companies have adapted their business models to derive revenue from digital music services.

Music and film companies have always been concerned at the threat that copying their material might pose to their business models and revenue streams.

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