An Alternative Story about the Success of Digital Music
Many consider digital music a success. But, looking back at the history of an older music technology – the CD – should make us pause. The CD was invented in 1982 and made its market debut the same year with Billy Joel’s album 52nd Street. It was adopted quickly and in 1987 surpassed the sales of vinyl records. Digital music, on the hand, suffered a different fate
Digital music technology was invented in the early 1980s. Several advances enhanced its marketability. The latest steps occurred in 1998 when Napster added the distribution advantage through file sharing and a fully functional MP3 player allowing portability was released. But, surprisingly, a decade later, the latest available music sales statistics show that in 2008 CD sales still compromised 77.8% of music sales, while digital music sales comprised only 12.8%.
This delayed adoption of digital music is perplexing given the overwhelming advantages of digital music over CDs. One factor that doubtless affected the sales of digital music is downloading from file sharing networks. But, I would like to offer another explanation. I believe that copyright enforcement particularly through technological measures — use of digital rights management systems (DRM) – played a role in delaying the adoption of digital music. DRM limit interoperability between digital music devices and music tracks. For example, Apple, the owner of the leading digital music device iPod, refused to license its Fairplay DRM system to competitors. The result was that music purchased from iTunes and protected by Fairplay could only be played on iPods and other Apple devices. Surveys showed that DRM’s effect on interoperability frustrated consumers digital music experience and that consumers were more likely to purchase digital music if DRMs will be removed.
This story about the delayed adoption of digital music is not commonly told. But, it is an important story to tell for two reasons. First, those objecting to copyright enforcement argue that lawsuits against file sharing systems, such as Napster or Grokster, inhibit innovation in dissemination technologies. But, they fail to address the policy argument of the dissemination failure of digital music technology itself.
Secondly, and even more importantly, by focusing on the adoption failure the parties to the digital music copyright disputes could find common ground. Both could benefit from accelerated adoption of digital music. Clearly, individuals who do not use digital music fail to benefit from the immediacy of downloading, the ability to choose individual songs and general convenience of digital music. But, the music industry could also benefit from a rise in the sales of digital music. Digital music allows direct selling resulting in savings on storage and mobilization of physical products. It does not involve physical copies so music providers do not end up with redundant copies of CDs. Music providers can also benefit from the flexibility of providing consumers with the option to buy specific songs — this lets them cater to a broader range of tastes and expand their sales. And finally. digital music allows instant delivery – again allowing expansion of sales through profiting from impulse buys.
There are good reasons then to consider the delayed adoption of digital music. For a more complete description of this alternative story, see here.