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Legal music downloads held back by DRM
'Interoperability is the key'

By Reuters

Published: Monday 15 August 2005

The market for legitimate music downloads is booming but the stumbling block of incompatibility is causing growth to slow, according to digital-music executives.

At the heart of the problem are duelling digital-rights-management (DRM) systems from bitter rivals Apple and Microsoft. Files using either company's DRM are incompatible with players that support the other DRM.

The recording industry and many of its digital retail partners flagged this problem 18 months ago. Today they are no closer to finding a solution, thanks to a lack of co-operation among the tech heavyweights.

Experts say the DRM dilemma might not be resolved for another two years.

Napster chief technology officer William Pence said at a recent DRM conference in New York: "It's not going to go away quickly."

DRM technology wraps around song files to block mass copying and peer-to-peer distribution of music downloads. It dictates when, where and how music files can be consumed legitimately.

Microsoft's Windows Media DRM is supported on more than 60 devices and used for digital files sold by dozens of retailers, including AOL, FYE, Napster, RealNetworks, Virgin, Wal-Mart and Yahoo!. Apple's DRM is called Fair Play and works only in Apple-controlled products and services, such as the iPod and the iTunes Music Store.

As more consumers go digital, the compatibility issues between Apple and Microsoft become more pronounced. Apple, the early market leader, has been particularly resistant to shaking hands in the interest of compatibility.

More than 184 million digital tracks were sold in the United States this year through the end of July, according to Nielsen SoundScan. That is almost double the amount sold during the same period in 2004.

Still, some digital-music executives say compatibility problems are slowing the growth of legitimate download sales and subscription services.

David Pakman, managing director of Dimensional Associates and head of digital music retailer eMusic, said: "It's unquestionably holding the market back. If everything was interoperable, then certainly sales would be higher."

Key to the long-term proposition of digital music is the idea of building a system where music can be accessed anywhere and everywhere. But in the short term, the industry is just looking for DRM rules to replicate with music files what consumers are used to doing with their CDs: moving seamlessly from home stereo to car to computer to portable players.

Even the CD presents DRM issues, because Apple has not licensed Fair Play for inclusion on copy-protected discs, thus making secure CDs incompatible with the iPod, the most popular portable player with more then 15 million units sold.

Apple declined to comment.