Edgar Bronfman, the CEO of music giant Warner, is completely in love with Digital Rights Management. Perhaps it’s the only strategy he knows. Well, not quite – the other one being if someone else does something better than you, buy them out so you still look good through the absence of any competitor, such as EMI, highlighting a different strategy that actually works for shareholders better than your own. So Warner are threatening to take over EMI again.
Under pressure from falling sales and seemingly cursed with an inability to understand the opportunities the new digital age offers, Bronfman is sticking to DRM more and more tightly, despite the majority of music industry executives from the majors saying DRM is bad and actually prevents sales.
Bronfman’s view is that DRM prevents copying, but that either shows a total lack of understanding of digital music, or a total lack of understanding of his own company! First of all, even the newest and tightest DRM systems only just released, BluRay and HD-DVD have already been hacked. Secondly, 90% of music sold today is sold via CD. But CD’s have no copy protection in place, they have absolutely no DRM at all – and that includes Warner’s own CDs! Anyone wishing to avoid DRM just copies the CD onto their computer and onto their iPod where it plays quite happily without any DRM in place at all.
Now, not everything that Bronfman says is quite so naive, misguided, or unsupported by the facts. But he’s an adept at taking things out of context in the hope that he won’t be noticed. Of course, the regular media just take a quote at face value, they don’t analyse it, query it, or even think about it most of the time. They just report it, often without querying the answers they get. That’s where blogs come in – we can spend a little more time pulling the relevant information together, and put some thought into tearing poor arguments apart.
So, what is it that Bronfman said that I do agree with? In a widely reported speech at the 3GSM World Congress in Barcelona Bronfman said:
“I don’t agree that intellectual property should have no protection. We should all agree that intellectual property deserves some measure of protection“
I’m talking of the second sentence here: creators of intellectualy property should have some protection – just not digital. They have the full protection of Copyright Law, after all. Most people respect that. And most people object to being treated as a criminal just because some overpaid executive short on ideas feels like it.
OK, I know he has a responsibility to his shareholders to enhance the share price, so you could argue he has to act like he does; but is his strategy paying out less than alternatives? On the evidence so far, if you said he doesn’t know what he is talking about I’d believe you. Still, maybe it isn’t him who has the problem, maybe it’s the people he picked to run Warner’s marketing department?
At his last employer Vivendi (which he left with a sour taste) there were questions about his salary, and guess who he picked as his Executive Vice President of Digital Strategy and Business Development? None other than his brother-in-law, Alex Zubillaga who in the mid-’90s built a cable company called Netono in Venezuela, but came with no music industry experience.
Ironically, it was Bronfman who encouraged the other big labels to work with the iTunes music store, and he brought a focus on digital to Warner, rationalising its operations and coordinating what had become a haphazard business. He brought all the heads of department Warner had into one place on the same floor of Warner’s Manhattan office block. Perhaps with the rush to get them all talking, moving Warner’s publishing arm from California, the centre of the digital revolution, was a bridge too far? New York isn’t renowned for it’s developments in computing or digital media, from what I’ve read.
As Bronfman is clearly an intelligent man, how come he refuses to admit the genie is out of the bottle? DRM is a blind alley, as the future will show. From Cryptoblog:
As Levitt and Dubner put it in their Freakonomics the question is not why people cheat, a more appropriate question is why people do not.
And that’s what many in the music industry seem to be forgetting: most people are actually fundamentally honest.