Music executives judge Jobs, lament losses

At digital music conference, industry honchos debate what's wrong with their business. At the top of the list: Apple and DRM.

NEW YORK--The discussions at a music conference here Tuesday started with an all-around bashing of Apple CEO Steve Jobs before moving to the plethora of issues plaguing the music industry.

Apple, digital rights management (DRM) and the public's willingness to pirate music were discussed, debated and lamented once more by attendees of the Digital Music Forum East conference.

"We're running out of time," Ted Cohen, managing director of music consulting firm TAG Strategic, told the roughly 200 attendees. "We need to get money flowing from consumers and get them used to paying for music again."

The call to arms by Cohen, who was moderating a panel discussion titled "The State of the Digital Union," comes as the music industry suffers through one of the worst slumps in its history.

CD sales fell 23 percent worldwide between 2000 and 2006. Legal sales of digital songs aren't making up the difference either. Last year saw a 131 percent jump in digital sales, but overall the industry still saw about a 4 percent decline in revenue.

That has the industry pointing fingers at a number of things they believe caused the decline.

At the opening of the conference, some of the panel members lashed out at Jobs. Members said Jobs' call three weeks ago for DRM-free music was "insincere" and a "red herring."

"Imagine a world where every online store sells DRM-free music encoded in open licensable formats," Jobs wrote in a letter that rocked the music industry. "In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat."

Jobs' position was perceived by many in the music industry as a 180-degree shift in direction. The view expressed at the conference is that Apple has maintained a stranglehold on the digital music industry by locking up iTunes music with DRM.

Cohen told the audience that if Jobs was really sincere about doing away with DRM, he would soon release movies from Disney--the studio Jobs holds a major stake in--without any software protection. An Apple representative declined to comment on Tuesday on remarks made by the panel.

Panel member Mike Bebel, CEO of Ruckus music service, said: "Look, I don't think anybody is necessarily down on Apple. The problem is the proprietary implementation of technology...and it's causing everybody else who is participating in the marketplace--the other service providers, the labels, the users--a lot of pain. If they could simply open it up, everybody would love them."

The role of DRM
Panel members--who included Thomas Gewecke, Sony BMG senior vice president, and Gabriel Levy, general manager of RealNetworks Europe--were divided about what the music industry should do about DRM in general .

Most of the panel members, save for Greg Scholl, CEO of independent music label The Orchard, believe that some form of DRM is necessary.

Scholl said flatly that DRM doesn't work. "The idea that DRM gives us choice isn't right," he said.

"The economics of the business are over for good and aren't ever going to be the way they were before," Scholl said. This is a position that some in the music industry are starting to warm up to.

In January, EMI said it was reviewing a request by the Electronic Frontier Foundation to allow reverse engineering of its digital rights management software. That EMI would even consider the proposal was seen in many circles as a step forward by the anti-DRM camp.

Gewecke also defended record labels against the criticism that the music industry has its head in the sand and just doesn't understand the Digital Age. He said that Sony BMG is working with technologists and retailers, and is constantly is looking for technological solutions to some of the industry's problems.

He also said that despite all the bad news, there's plenty for the sector to be encouraged about.

"We routinely talk to companies about what's different," Gewecke said. "We're constantly looking for where value is being created in a business model. We are being flexible. There's still an evolution that has to happen. I say it's an optimistic time considering there's more music being listened to now than ever before. There's more opportunities to monetize the music. We want to be out there looking for new ideas and companies."

 

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