Saturday, April 15, 2006

Vive la France. While I'm usually not a big fan of government intervetntion in the economy, especially the new kind, I do respect governments that step in on the side of consumer liberty.

First to clarify, I disagree with the implication of this article that this law would have any significant long-term impact on Apple's position:

1. In Europe there is far more music activity on phones than on dedicated mp3 players. In fact it is worth noting that ringtones worldwide dwarf download sales by a magnitude.
2. DRMed downloads represent a very small fraction of the activity on even iPods them selves. Unprotected mp3s are the primary currency of the iPod generation...well, and "friends", what ever they are ;)

So who does care about this? The traditional record label. Remember that there were mp3 players before DRM and the iTunes Music Store was developed specifically to make the record labels happy (and make Apple look good).

That's not to say Apple is a saint either. They make a huge margin on the iPod (much bigger than on download sales). Why? because of their vaunted "design" or "marketing" or "status". Perhaps, but I think a much under counted source of the economic value of the product lies in the knowledge that you can fill it up with unprotected mp3s.

In the worst case, the artist does not get paid for this consumption (i.e. pirated or P2P or "borrowed"). In the best case, the mp3s are *freed* from their plastic cage (the CD). In the worst, case no new economic value is being created. In the second Apple (well not really Apple, but that is a different story) has done a huge service of breaking down a level of inefficiency in the music industry.

Either way the whole digital music economy depends on content being created and artists being compensated sufficiently to motivate them. That, of course is not something this French law addresses (and frankly no law really could). So it's back to us, the people building companies in this space to always keep in mind that everything we do should motivate the creation of new music (or at least not kill that motivation).