A Bit of a Ramble on DRM and the Music Industry

So Amazon announced today that the company reached an agreement with Warner to begin distributing its music digitally (and on Amazon, this means MP3s, kids), making Sony BMG (parent company of labels like Columbia, Epic, and RCA) the last of the Big 4 music companies to roll with DRM. I just used Amazon to download a couple albums this week, including LCD Soundsystem, Feist, and The Shins (i.e., artists on labels that don't have a contract with eMusic). It wasn't the smoothest of processes yet (I tried to buy an album, it stopped me to sign in, then forgot I had wanted to buy the album; when I tried again to buy it, the system warned me that I had already purchased it -- I may have ended up paying twice), but they'll work out the kinks. It's Amazon after all; home of the evil, evil One-Click.

But I'm supposed to be applauding Amazon right now, so let me get back to doing that. The albums I bought were $1 - 4 cheaper than what I would have paid on DRM-riddled iTunes, and I got them in 256kb/s VBR MP3 format! Freaking yes, full of win, etc. (Let me recommend LCD Soundsystem, for a totally sweet $5.99. I already knew that "Someone Great" was an amazing track, but the rest of the album is rocking my face.) So I'm getting great music, at great quality, at great prices.

• The system works! EMI Records didn't have to eat the COGS on the sale, and I didn't have to pay for a plastic case that I didn't want.
• The system works! I heard a couple tracks from the album on a couple blogs earlier this year, and then bought the thing.
• The system works! I'm evangelizing the album (and the whole purchase experience) because I'm happy with the quality of the music and the quality of the product, which only means good things for the artist, the label, and the retail distributor.

Obviously Sony needs to follow suit, and most analysyts expect them to do so, simply because they can't afford to fall behind the rest of the industry in terms of putting their product in front of customers. I don't know the sales figures for the B&Ms out there, but I bet the Sam Goody aisles aren't as busy as they were when I was 15.

But to me, the interesting question here is how the major labels are going to respond to the return to a DRM-free world. Keep in mind that a year ago, DRM was everywhere -- it looked like the Wild West days of Napster and Kazaa were over, and college kids everywhere were getting sued by the RIAA for hundreds of thousands of dollars. It was fucking ridiculous. So, on the one hand, I don't blame the companies for not having a handful of awesome point-of-sale strategies lined up, attractive bundling and packaging options, etc. but on the other hand ... screw it, I do blame them. How do they not have this figured out? Is it not worth it? Has the market for CDs gotten so weak? I just made the Sam Goody crack, but still, the margins on a M.I.A. CD for $16.99 at Tower have to be better than the same album for $6.97 on Amazon. What would you do if you were The Music Industry? A couple thoughts that might work (some of which are probably already in use):

• Bundle a "Making of..." DVD
  
• Bonus tracks on-disc-only
  
• Single use codes for unlocking bonus content from the Web
  
• Partnering with concert ticket sales distributors (Ticketmaster?) for discounts on live shows
  
• Back to a Music Club model, redeemable point systems... I dunno. Sounds so 90's.
  

I guess this is why I'm not in sales/marketing... What would make you buy an actual CD?