CDs Incompatible with iPods Still Sell Well

[Chris Gohlke]

<div class='os_post_top_link'><a href='http://www.msnbc.msn.com/id/8827666/' target='_blank'>http://www.msnbc.msn.com/id/8827666/</a><br /><br /></div><i>"Recent CDs by Foo Fighters and Dave Matthews Band containing new anti-piracy technology are selling well despite a backlash among some fans angry that the discs are incompatible with iPods, experts said on Thursday. Aiming to curb piracy, labels like Sony BMG, which released both records, are rolling out copy-protected albums in the United States, which let users make three exact duplicates of a CD, and store files on a PC in Microsoft Corp.’s Windows Media format."</i><br /><br />Amazing, its almost as if a bunch of executives sat down and said, hey, how can we continue to further alienate our customers. Hopefully these CDs at least have a visible disclosure on the package to give the user some warning before they make a purchase.

[SubFuze]

That's because the copy protection can be bypassed by holding the shift key or turning off auto-run. If they start introducing more restrictive copy protection measures, there will be a much harder backlash.

[Felix Torres]

Hmm...
I wonder if this could be the "reasonable compromise" for future releases...

Let's see, now:

1- Non-PC users are covered because the CDs play fine in standard CD players. (My experience with DuoDisk, btw, was positive; the CD side played fine in my car *and* my PC and it ripped just fine. Plus, the DVD side had real added value for the extra buck I paid for the duodisk version. Wouldn't mind seeing more disks done this way...)

2- PC users are covered; they get to make up to three backup copies *and* get pre-ripped tracks. Hard to argue you need more. Properly labelled, there is no room to gripe. PC pod users? See below.

3- Apple fans get to buy the CDs from iTunes so they're covered. And unca Steve is *very* pleased because that is the *only* way iPod users can get the album. Complete lock-in achieved! All is right in the world.

Easy to see why Apple won't license Fairplay for CD-delivered pre-ripped tracks; instead of just the license fee he gets to make the full iTunes retailer profit, plus he further locks in the pod people, ensuring future iPods will sell regardless of hardware value, plus he gets the album released to iTunes on day one.

Yup! This does cover everybody's *needs*...

Except Linuxen and pirates. :-)

[SubFuze]

Yup! This does cover everybody's *needs*...

Except Linuxen and pirates. :-)

Unless you care at all about sound quality. 128k wma files make me feel physically ill if I listen to them for any extended period of time (ie- an hour+)... Honestly, that's just too low of a bit-rate to get acceptable audio quality (at least from the wma codec).

[Felix Torres]

Yup! This does cover everybody's *needs*...

Except Linuxen and pirates. :-)

Unless you care at all about sound quality. 128k wma files make me feel physically ill if I listen to them for any extended period of time (ie- an hour+)... Honestly, that's just too low of a bit-rate to get acceptable audio quality (at least from the wma codec).

physically ill?
Wow!
Gansta rap does that to me! :twisted:
You need to find different acts to listen to. ;-)
Or better headphones?

As the saying goes, different strokes and all that...
Your milleage *will* differ.

My experience with Mp3s, wmas, AAC, and org has been that for anything this side of classical music, wmas at 128kbps beat every other format. Period.
My music, my headphones.
(not to say others don't have different hardware or experience...)

Mostly I buy cds, but on occasion I've bought online because the album simply isn't available on CD or the only CD is an expensive import.
With my tastes, it happens...
&lt;shrug>
The few pre-ripped tracks I've bought come at 256kbps wma and are indistinguishable from the same content on cd or original LP.
Yes, I tested it.

Testing aside, most of my day to day listening is driving or exercising.
And for those applications, 64kbps is fine. No, its not cd quality, but it beats tape. Or the crap on the radio. It's the only way to fit 600 cds and 300 lps into my pocket, so I make do. When I can buy a 100gb player at a reasonable price ('07, I think), I'll re-rip in lossless. Till then, I get by.
And my stomache holds up fine. ;-)

Sorry your experience and needs don't match up with existing tech, but do consider that rippable cds are a side-effect, not a specified feature of the product.

It is *not* something we are entitled to by law and the creators and publishers are entitled to protect their content, or not, as they see fit just as we are entitled to buy or not buy.
Music is hardly an essential of life like food, air, or water.

In a perfect world, cd albums would be sold as shareware on the honor system with no copy-protection for a buck a disk and nobody would *ever* dare rip-off the artist and publishers by copying the cd or publishing their works on the internet.

But in the world we live in people do ripoff creators and the publishers, who do like to be paid (regardless of how much miney they may or not have in *their* checking accounts or their morals orvethics or lack thereof) and Steve Jobs *does* love lock in.
So *our* imperfect world has DRM.
And it ain't going away soon. :cry:

All that's happening is that publishers and consumers are "negotiating" a new status quo. The above-listed system may very well be an indicator of what the new CD feature set will look like. Especially since the DRM is *not* hurting sales. It won't satisfy 100% of the people but it will satisfy enough that we will muddle through and get on with our lives.

At least until asteroid Apophis ends civilization as we know it. :twisted:

[SubFuze]

physically ill?
Wow!
Gansta rap does that to me! :twisted:
You need to find different acts to listen to. ;-)
Or better headphones?
...
My experience with Mp3s, wmas, AAC, and org has been that for anything this side of classical music, wmas at 128kbps beat every other format. Period.
My music, my headphones.
...
Sorry your experience and needs don't match up with existing tech, but do consider that rippable cds are a side-effect, not a specified feature of the product.

It is *not* something we are entitled to by law and the creators and publishers are entitled to protect their content, or not, as they see fit just as we are entitled to buy or not buy.
Music is hardly an essential of life like food, air, or water.


Yes, physically ill- 96k MP3s and some 128k MP3s do the same to me as well. I'm not using ultra high-end equipment, but it is pretty nice- a Yamaha RX-485 Stereo Receiver driving a pair of Definitive Technology BP6 Speakers. The effects are worse with my Sony MDR-V600 headphones. In my experience I would rate the following (properly encoded) 128k files as such (on a 1-10 scale): wma: 2, mp3: 6.5, aac: 8.

As for the ability to rip- no there is no explicit law guaranteeing us the ability to rip CDs we have purchased for our own personal use, but the doctrine of fair use does allow us to without fearing legal consequence. If copy restriction continues to get worse, I'll buy an optical cable and connect my cd player to my computer and rip that way, or if I can't do that, I'll rip the analog signal, both give me the result of significantly better encoded files (in the format I want). All it takes is 1 person to rip a CD and distribute it a few times before the copy protection is rendered nothing more than a speed bump for legitimate, paying customers. If/when the music industry realizes this, they'll stop paying companies to break the product of their customers.

The music industry's motivation is greed, not the music, and not even the bottom line.


BTW- I've legally bought somewhere in the neighborhood of 1300 CDs. I know of very few other people who have purchased anywhere near the same (save professional DJs and a few others). Check out http://arcticflare.com/MyCDs/ if you wish, it has the majority of my CDs on there, but is lacking the past year and a half or so of purchases.

[sub_tex]

Unless you care at all about sound quality. 128k wma files make me feel physically ill

Hell yeah!

Along with the DRM nonsense, it's a reason why the iTunes store would never work for me.

I tend to rip at Q7 ogg mostly.

[Felix Torres]

[As for the ability to rip- no there is no explicit law guaranteeing us the ability to rip CDs we have purchased for our own personal use, but the doctrine of fair use does allow us to without fearing legal consequence.

Fair use is by definition limited.
And the end user does not get to decide what fair use is.
Rather it is determined by the courts and/or congress.
Both have, of late, been defining very sharp boundaries as to what is fair use for digital content. And in every single case, they have made it clear that some form of DRM is going to be present.

So no amount of screaming is going to make DRM go away; companies would rather lose customers that give in.

As for crying greed, well, that would be something of a non-issue; we live in a capitalist economic system where the price of product is set (mostly) by market forces. Folks like to be paid for their work and they would like for that price to be as high as possible; you don't see very many people telling their boss they're being paid too much. So I guess that makes everybody greedy...

As a rule, the price of a product is whatever the market will bear.

And as far as copy-protected CDs go, the article we're discussing points out that the market *will* bear current pricing and at least some of the DRM schemes being tested are acceptable to consumers.

Some people object.
They are screaming.
They may even boycott the protected product or the company selling it.
But boycotts only go so far before the protestors stop being customers that need catering to and becoming background noise to be ignored. Remember, the reason the studios are suing the P2P uploaders is because they no longer see them as customers but as competitors undermining their business. Customers you cater to; competitors you destroy.

Ultimately the decision lies in the hands of the creators/publishers; if they are satisfied with the sales of the protected cds, they *will* do more protected cds. They have direct focused power; consumers only have indirect, diffuse power. That is how markets work, by iterating on price/features and sales levels.

If sales drop below an acceptable level, they'll try something else; maybe more lenient protection or maybe they'll just get out of the business.

That's why I said we, the consumers, are negotiating with the publishers on the level of copy-protection of future products. Cause we are.

And that is why this article is so interesting.

We hear a lot of talk about the evils of DRM from pundits and legal crusaders like Lessig et al, but the reality of sales seem to be giving their posturings the lie: people *can* live with some level of DRM. And they are voting the way consumers always do, with their dollars.

And dollars speak louder than whiners.

I'm no fan of copy protection myself, but I'm not about to delude myself into thinking that mere decibels will stop DRM implentation.
Not when the market tells me loud and clear that it isn't doing it.

Like it or not, copy protected CDs are here and selling well.
That, is a fact.
Now we have to live with that reality.

[Macguy59]

Just means that Apple and their iPods have not reached 100% saturation yet :wink:

[SubFuze]

As for crying greed, well, that would be something of a non-issue; we live in a capitalist economic system where the price of product is set (mostly) by market forces. Folks like to be paid for their work and they would like for that price to be as high as possible; you don't see very many people telling their boss they're being paid too much. So I guess that makes everybody greedy...

...

I'm no fan of copy protection myself, but I'm not about to delude myself into thinking that mere decibels will stop DRM implentation.
Not when the market tells me loud and clear that it isn't doing it.

Like it or not, copy protected CDs are here and selling well.
That, is a fact.
Now we have to live with that reality.

I should have been a little more specific when I mentioned greed. The main problem that I see is that no record label is willing to make the jump and price their content at a reasonable price point given the market. When a DVD costs less than the soundtrack for that movie, there's something wrong. If CDs were $5 or less, very few people would think twice about pirating music. Honestly, I don't think that's unreasonable, CDs are very cheap to mass produce, I'd be surprised if more than $1 goes into the disc, packaging and shipping of any major release CD. There's also no way that I'm going to pay $18 for a DRM'ed, 128k AAC album, when I can purchase the same 2 CD set at Best Buy for $13 (after taxes).

When you drop the cost of distribution and manufacturing to almost nothing (as is the case with downloads, especially with a legal P2P service such as PeerImpact.com), you can make a greater profit off a very low selling price because more people are willing to purchase the product. This is just simple economics that the music industry has ignored for years because they place an artifically high value on the content. If you can only sell 10,000 CDs at $15 a piece but can sell 100,000 album downloads at $2 a piece, you're making *MORE* money by charging less for your product.

I wish I had the link, but there was an article about a discussion with a music industry exec. who was introduced to this idea, and when it was suggested that 25 cents be charged for a song download to make the price of entry lower and open up a wider audience, he responded with "Well, why not charge 50 cents a song and make twice as much?" It's this type of idocy and stupid greed that is hurting the music industry much more than downloading ever has or will...

That said, DRM is a similarly stupid financial move. The recording industry is paying people to break functionality of their product. This is not a one time fee that can be written off, but a license fee on every copy sold. So, they are losing money there. Secondly, they are losing money by alienating their customers. These expenses could be justified if it really stopped the problem, but it doesn't do anything to stop the problem that it's designed to stop! As I already outlined, it is still possible to make a high quality copy of DRM'ed CDs, even if it is a little inconvient. The problem with P2P is that if even 1 copy gets out in the wild, all the protection in the world isn't going to "put the genie back in the bottle." Thus the only people they're harming are their *LEGITIMITE PAYING CUSTOMERS*! It does little to nothing to stop the trade of music online.

My biggest complaint about DRM isn't that it's annoying (which it surely is), or that it takes away rights that I should have (based on a reasonable interpertation of fair use), though these surely are more than enough to be upset over. My biggest complaint is that it does those things at the expense of the artists who make the music possible in the first place, that it benefits NO ONE except for the compaines selling the protection and that the music industry thinks that it's OK because of their irrational fears about file sharing. There is plenty of data to suggest that file sharing doesn't harm, but actually helps music sales, but the music industry will hear none of it. Their real fears are that they will lose control of the distribution method (which they have almost completely locked up, and it would be extremely naieve to assume otherwise), and that those with the talent will be the ones that start making all the money instead of the label executives who take obscenely large cuts off the tops of all mainstream music sales.

Phew, that last paragraph degenerated rather quickly, but I hope it made sense. I'm quite well studied, and have put substantial though into this matter and would be happy to discuss it furthur, but I do feel we (well, probably mostly I) have already strayed quite a bit from the original topic...

[Felix Torres]

(Hmm, lets see if I can make the point today...)

The only real matter at issue here is simple market elasticity.

How susceptible *is* the music industry to expanding the market by dropping prices or shrinking it by inconveniencing *some* but hardly all, its customers.

Some argue that every last single customer *must* be brought in at any cost and that the industry cannot afford to offend in the slightest even a single customer. (A lost cause that last proposition considering the offensively derivative stuff that passes for Top-40 music these days. ;-) )

Basic economics 1001 suggest neither proposition is true.
Especially in a mature business that is over a 100 years old and has been slice-n-diced into a zillion mini-markets that do *not* overlap.
(Just try selling japanese pop to english-speaking audiences and see how far that gets you.)
Dropping prices in half does *not* guarantee a raise in sales proportional to the forgone revenue. And in a mature business it usually only leads to cannibalization.
Just look at the US airline business for how well that turns out.
Consumers may or not benefit in the short term but in the long term...?

Some customers are simply *not* worth having.

Look around and you'll find lots of businesses "divorcing" or discouraging unprofitable customers.
Banks and financial institutions do it all the time.
Software companies do it.
(Who writes commercial desktop applications for LINUX? Corel tried it. Got nowhere fast. LINUX customers only want free stuff...)

Now the music industry is doing it.
And its a shock to some people that they would *dare* inconvenience them and more, shrug ofs the threats of lost business.

Some customers, say folks who rip CDs not just for personal use but for distribution to others, are not worth catering to. And since the courts have ruled such uses are not fair use, then the ability to do those things can and is being curtailed.
Principles be damned, this is all about money. ;-)
Money, corporate profits, corporate survival.
Not about fair use or pricing theory.

Its about redefining a product in such a way that it hampers undesirable activity enough to maintain profits *without* alienating too many paying customers.
Notice I said "too many".

Some *will* be inconvenienced.
They don't care.
Its triage time.
Harsh times bring harsh measures.
You cut of the leg to save the patient.
(If it turns out only the foot was gangrenous, tough luck. :twisted: )

All that matters is whether a viable market emerges for the new, copy-protected product.

And the evidence presented in the article says: yes.
The evidence says the majority of the customers seem to use their CDs to listen to them in CD players or on PCs.
The masses are satisfied, if they even notice.

We hear a lot of talk here and elsewhere against DRM and how the stuff will *never* sell.
But it *is* selling.

Disturbing, isn't it?
What if they hold a boycott and nobody shows up?
What if enough sheep keep buying the copy-protected stuff to embolden the studios to stop production of unprotected music CDs or, worse, to take the logical next step and intruduce a whole new music distribution system (blue-laser credit-card sized media, anyone?) that keeps music fully locked and uncopyable from the disk to your ears.

Oh, sure, anything can be broken, at the hardware or playback level.
But the lockdown can be done in a way that stops 99% of the copying that goes on.
And those offended will be told to take their business elsewhere.
New game, new rules.

See, thats the next step.
And its right at the horizon.
This is what the video content providers are trying to achieve with the broadcast flag, after all.
The idea is out there.
The technology exists.
Next step...?

The 90's are over.
Welcome to the 21st century.
The Age of Uncomfortable truths.
It may not be as much fun but its the only game in town...
The "kicking and screaming" line forms right behind me. 8)

[Magellan]

The harsh truth is no matter what DRM scheme they put in, it will be cracked. I will buy songs from itunes, but never a CD. I can't think of how many CD's I have that I only like 1 or 2 songs on. I think they should sell songs individually, and maybe give a bundled price for a mix CD burned on the spot. I would buy a CD if I could make my own mix in a store, which I thought they were trying in some markets.

[jerumpf]

Just as an FYI... I own both Stand Up by DMB and In Your Honor by Foo Fighters in DualDisc format. The CD side of these discs does NOT include the copy protection that's on the standard CD.

I think copy protection of CDs and DRM could work if the record companies allowed users to obtain the format and bitrate for files that they wanted. I would set it up so that users could go to a website, validate their CD and download DRM track(s) in AAC, MP3 or WMA at bitrates from 64k and up to lossless for use on up to 5 devices or so.

[SubFuze]

(Hmm, lets see if I can make the point today...)
...
Dropping prices in half does *not* guarantee a raise in sales proportional to the forgone revenue. And in a mature business it usually only leads to cannibalization.

While that may be true...

Just look at the US airline business for how well that turns out.
Consumers may or not benefit in the short term but in the long term...?

that certainly does not make your point. It's the low cost carriers who have been not only been selling very well, but have been about the only ones who are *profitable*. *Gasp!* The only people making money are the ones selling their product at low prices! Imagine that. Also, because of the low cost carriers, I am quite sure that the industry has expanded and is now taking in more money than it ever has. Sure, the big names from the past aren't doing so well these days, and carriers like JetBlue and Southwest are to blame, but the industry as a whole is larger. Adapt or die, the blessing (or curse) of our economy.

Some customers are simply *not* worth having.

Look around and you'll find lots of businesses "divorcing" or discouraging unprofitable customers.
Banks and financial institutions do it all the time.
Software companies do it.
(Who writes commercial desktop applications for LINUX? Corel tried it. Got nowhere fast. LINUX customers only want free stuff...)

Now the music industry is doing it.
And its a shock to some people that they would *dare* inconvenience them and more, shrug ofs the threats of lost business.

Sure, I wouldn't argue for a minute that some customers aren't worth having. However...

Some customers, say folks who rip CDs not just for personal use but for distribution to others, are not worth catering to. And since the courts have ruled such uses are not fair use, then the ability to do those things can and is being curtailed.

If I were a betting man, I'd be willing to wager a hefty sum that those users are in a vast minorty. Maybe the equivilant of, let's say, cutting of your leg to get rid of a bad pinky toe.

...
Its about redefining a product in such a way that it hampers undesirable activity enough to maintain profits *without* alienating too many paying customers.
Notice I said "too many".

Some *will* be inconvenienced.
They don't care.
Its triage time.
Harsh times bring harsh measures.
You cut of the leg to save the patient.
(If it turns out only the foot was gangrenous, tough luck. :twisted: )

When you alienate the vast majority of your customers who own digital music players (after all, as of a year ago the iPod accounted for 92.1 percent of the market for hard drive-based music players, and as of a few months ago the shuffle had over half of the flash player market (these are US figures that were at the top of my google search)), you've gone too far.

All that matters is whether a viable market emerges for the new, copy-protected product.

And the evidence presented in the article says: yes.
The evidence says the majority of the customers seem to use their CDs to listen to them in CD players or on PCs.
The masses are satisfied, if they even notice.

The problem is that the only way to get the content is in some protected form. That doesn't turn out to be much of a problem when there is information all over the place (including official message boards of bands who have copy protected CDs) on how to get around the protection. Just wait 'till a system is released that isn't so easy to break (if anyone can manage that feat, the track record thus-far isn't too promising). You won't just hear a few angry cries, you'll see a massive back-lash and people renouncing bands they love because they can't do with their purchased content as they please.

We hear a lot of talk here and elsewhere against DRM and how the stuff will *never* sell.
But it *is* selling.

Disturbing, isn't it?
What if they hold a boycott and nobody shows up?
What if enough sheep keep buying the copy-protected stuff to embolden the studios to stop production of unprotected music CDs or, worse, to take the logical next step and intruduce a whole new music distribution system (blue-laser credit-card sized media, anyone?) that keeps music fully locked and uncopyable from the disk to your ears.

First of all, I don't put an microgram of faith in the prospect of the music industry being able to push a completely locked-down system on the masses. Secondly, if they do come up with such a system that sells more than a few units, it *will* be broken. Maybe a month or two after it's released, but more likely, someone will find a reasonable work-around within days or even hours of its release. Once that happens, their millions of dollars of research and development are worth nothing.

Oh, sure, anything can be broken, at the hardware or playback level.
But the lockdown can be done in a way that stops 99% of the copying that goes on.
And those offended will be told to take their business elsewhere.
New game, new rules.

See, thats the next step.
And its right at the horizon.
This is what the video content providers are trying to achieve with the broadcast flag, after all.
The idea is out there.
The technology exists.
Next step...?

The 90's are over.
Welcome to the 21st century.
The Age of Uncomfortable truths.
It may not be as much fun but its the only game in town...
The "kicking and screaming" line forms right behind me. 8)

If the industry keeps it up, they will just drive more and more people to indie artists who refuse to use copy protection and even *gasp!* release their music under CC licenses that *allow* for file-sharing, sampling, re-workings, etc. They feared that filesharing would be their demise, yet if things continue on the path they're going, they will be the ones digging their own graves. They're already well on their way.