Personal identifiers in music
Wired's Eliot van Buskirk raised a red flag last week about Universal Music Group's new DRM-free tracks, saying they would contain watermarks that could potentially be traced back to the original buyer if the songs ended up on peer-to-peer networks. Yesterday he backstepped a bit, saying the watermarks wouldn't vary from buyer to buyer. So while a watermark could tell Universal that a track found online came from a DRM-free download instead of, say, a ripped CD, it couldn't reveal who bought the track in question.
Having ripped into UMG in my last post for some misguided aspects of its MP3 experiment, let me now backstep a bit myself. It's a good idea to use watermarks to see whether purchased MP3s fuel online piracy more than songs from CDs and other sources. It's hard to imagine how adding MP3s to the mix could make the industry's piracy problem any worse; after all, file sharing and CD swapping have thrived despite the widespread use of DRM on downloadable media. Nor does it seem likely that people who buy MP3s will be more apt to pass them around to friends and strangers than those who buy songs with electronic locks. After all, it's not rocket science to convert a DRM-wrapped 99-cent download from iTunes into an MP3 -- it's just a matter of burning the song onto a CD, then ripping the disc (or, in a less legal approach, using circumvention software).
Another reason that some label executives cite for sticking with DRM is that they don't want to undermine the wireless phone companies' mobile-music offerings, which rely on DRM to deter phone-to-phone copying (among other reasons). That's not persuasive, IMHO. In the long run, the only thing that will lead mobile users to pay premium prices for downloadable tracks is the lure of anywhere, anytime purchasing. In other words, the essential value is the mobile nature of the buying opportunity. DRM doesn't change that, although it may reduce the perceived value of the available music (a problem that exists today, regardless of whether the labels make MP3s available through other outlets).
Ultimately, the issue for UMG is whether putting songs out in MP3 increases piracy more than it boosts sales. Here's hoping that the company measures the incidence of watermarked tracks on file-sharing networks against all other versions of its songs there, and that it compares the piracy rates before and after it started offering unlocked downloads.