The Sad State of Legal DRM-Free Music Services

Just six months after the launch of its mp3 music service, Amazon has emerged as the number two digital music retailer. While Apple still has a huge lead, that lead seems to be dwindling quickly.

The major labels may see this as some form of progress in their efforts to break Apple’s perceived monopoly in the digital music market, but the truth is they are very likely creating a new problem for their industry.

Despite the fact that the majors have begun licensing the rights to distribute DRM-free tracks to multiple retailers, Amazon seems to be the only company that has a clue about building a successful online marketplace. As a result, Amazon could quickly become something of a de facto monopoly for legal mp3 downloads. That’s astounding when you consider that the marketplace for unprotected music downloads should be wide open and highly competitive.

The formula for building a successful digital music marketplace seems relatively easy. Consumers want access to a wide selection of reasonably priced DRM-free music, presented in a well organized marketplace that supports all computing platforms. Retailers who expect to compete should offer decent search and discovery capabilities, and maybe even a few social features. This is 2008, after all.

Instead, digital music consumers have been treated a feeble assortment of mp3 offerings from traditional retailers. Consider the following:

• Wal-Mart’s mp3 store still tells me that my operating system is incompatible with its service. I dealt with the many problems of the Wal-Mart mp3 store at length last year. I’m surprised that the company still hasn’t addressed some of its more glaring usability issues, especially considering how easily some of these problems can be fixed with relatively minor site design tweaks.
• Best Buy offers 99 cent mp3 downloads, but they want me to join something. The site says it’s a free 30 day trial, but there’s no explanation of what exactly needs to be joined. The implication is that their mp3 downloads are part of a subscription service. Also, Best Buy requires the installation of some special software. Not surprisingly, when I click on the link for more information I’m told that my operating system is not supported. Seriously, how hard is it to sell mp3 files to anyone who wants to buy them?

Then there are the more traditional music download services — Rhapsody, Napster, and the Zune Marketplace. None of those services are selling DRM-free mp3 files yet.

And while eMusic is still the best value around for digital music, the service still doesn’t have a license to distribute songs from the major labels. This is likely because of eMusic’s subscription model. Which is sort of ironic considering that the major labels are trying to convince us all that subscription-based music services are the future. What they mean, of course, is that DRM-protected subscription-based music services are the future.

So, for the time being, it seems that consumers who actually want to pay for DRM-free music downloads are pretty much limited to Amazon. Which is fine by me since the Amazon service meets my needs in almost every respect. But that’s bad news for the major labels who claim to be trying to encourage competition.

If the recording industry really wants to encourage competition the labels need to be more aggressive about licensing the rights to distribute their music in DRM-free formats to even more retailers — including Apple.