By the end of this year, virtually every digital music service that sells downloadable music will have to do so without DRM in order to remain a relevant competitor in the business.
The transition won't be easy. Each major label has its own agenda when entering into DRM-free licensing negotiations. EMI started the movement as a way to sell more files and work with more partners, starting with iTunes. UMG uses DRM-free files as a way to empower iTunes competitors in an effort to weaken Apple's negotiation position on several fronts. WMG is more interested in DRM-free licensing as a carrot to encourage partners to invest in the technologies needed for its other strategies, like bundling. And Sony BMG is angling to directly control sales by insisting on selling the files themselves through an agent relationship. And of course all of them want variable pricing.
This is why it takes so long to get such deals finalized. It's why Wal-Mart is still one major label shy from completing its DRM-free catalog, and why others are still in line waiting for their turn at the table.
So it is with that in mind that Napster deserves a lot of credit for navigating these waters and launching its DRM-free salvo with all major labels onboard. But the launch is just step one, a prerequisite to join the real game-expanding the market for digital music.
DRM-free means the potential for more partnerships with brands looking to do music-related promotions. (For instance, "Grand Theft Auto IV" developers Rockstar Games made DRM-free files a condition of choosing which partner would facilitate the sale of in-game music).
It means Napster can now convert more subscribers to music purchasers as well (a Jupiter Research poll found more than 50% of current subscription users would buy more music if it were interoperable with other devices).
If Napster or any other DRM-free digital music service is going have a long-term future, it must continue to evolve, particularly once the DRM issue no longer becomes the sole differentiator. They need to offer bundled products that include things like video, lyrics and more in a single track download. The tracks need to double as make-your-own-ringtones. They need to include opt-in messaging for more information on the artist's tour, notifications on ticket sales, or links to buy merch and other related content.
WMG's Michael Nash perhaps says it best: "We look at MP3 licensing as a short-term move to expand the field to digital music retailers. Over time, we don't think an unprotected individual file is going to grow our business indefinitely."
So congrats on getting the door opened, Napster. What you do from here is the hard part.
Once we're done patting Napster on the back for launching a DRM-free service, the time now comes to slap it in the face for its implementation.
Securing a formidable catalog of DRM-free music from the major labels is only half the effort. The Napster MP3 service needs a lot of work from an execution standpoint before it can stand a chance at making a difference.
For instance, from any given artist's profile on Napster, users have the choice of selecting a list of "tracks" or a list of "mp3s." Not sure why, unless some artists have tracks that are not yet available as MP3s for some reason. I couldn't find any in my search, but it sure seems to make more sense to just list them all under "tracks" and then show me what's available.
Another thing - tracks are listed with two buttons,":30" to stream a 30-second sample, and then "MP3" which replaces what normally would just say "buy." What happens to all those people out there who don't know what the heck MP3 is? Granted they're not a majority, but still...
The point is, branding MP3 as a separate tab or sales button ignores the broader reality that selling in unprotected MP3s (or even AAC files) isn't by itself the point. It's not an end, it's a beginning.
It's the beginning of an interoperable ecosystem of digital music where all music works with all devices. It's the beginning of reducing customer confusion and increasing ease of use.
Relying too heavily on the MP3 moniker is a roadbump in the way of that momentum, one I expect will be flattened soon enough. Because the larger issue here is sales - increasing sales. Empowering more digital music services not to act as an "iTunes Killer," but to nurture a fledgling digital music market that needs more services to attract more users to the fold.
The cliché that DRM stands for "doesn't really matter" holds true, so branding tracks as "MP3" is a bit too much insider for the mass consumer market. It's like wireless operators branding their content services "BREW downloads" based on the technology used to deliver it.
HOW the music is interoperable doesn't matter. The fact that it is interoperable is the message.