Wednesday, January 31, 2007

Now That DRM Is Dead...

Commenter Eli Dourado asks this in response to my last post on DRM.
If the fixed cost of producing a record is tending toward zero (as it is), and the marginal cost of reproducing the record is very near zero, what happens to the price of music? It seems like eventually it will have to go way way down. It may be the case that musicians will give away the digital recordings to make money on tour. Labels provide a valuable service in promoting artists (and a less valuable service in screening them), but it's hard to see how they will be able to survive in their current incarnation.
I think that the price of music won't change all that much, at least at the top end. Assuming that copyright law doesn't change the artist ultimately owns his/her own destiny.

Artists won't have to compete on price because they are essentially monopolists - distribution companies (ultimately the iTunes, Napster, Launch and similar service) will have to compete on breadth of artists and features.

I think that ultimately the Labels will play a limited role in production if at all - their role will be replaced by small firms that will assist artists with production, PR and advocate services, negotiating compensation rates with the online service providers.

The days of controlling the music industry is coming to end - and not a moment too soon.

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