StreamingMedia.com writer Tim Siglin has another interesting installment on the Yahoo Music License Server controversy.

Tim and I have had some interesting conversations in the past year and while I don’t necessarily share the same views as him on DRM in general, I think this piece does bring to light the real situation we are facing today in this industry.

The media claims users didn’t want DRM. All of Apple’s competition couldn’t sell encrypted music to the iPod so they wall went “DRM-Free.” Unfortunately that experiment has been a massive failure and Apple still continue to rule the roost as the #1 Retailer of music in the world….using DRM.

Image from ARSTechnica.com

The graph above clearly proves that:

A. Consumers are not opposed to DRM-managed content
B. DRM is a key component of the World’s Leading Music Retailer Success

Wait… consumers didn’t want DRM and Apple said DRM was bad [and then increased their DRM managed music catalog and _didn’t_ drop DRM] so all the music retailers went for it hook line and sinker and dropped DRM but they still can’t beat Apple who uses DRM? How does something that is rumored to be soo bad become such an integral part of the complete domination of online music sales? Is this the beginning of the Global War On DRM?

Is this making sense to you? It doesn’t make sense to me.

It is quite interesting though to think about what is going to happen when Apple gets out of the money-losing music business they are rumored to be in today. I cannot wait to read what the press has to say then.

Today in the News.com machine we find a small story about a new company called FreeWheel who proposes to have an “opposite approach to DRM.” The funny thing is that Hollywood is big on DRM and it’s the sole technology driving the viability and valuation of their media at large. Nobody in Hollywood has publicly acknowledged to be using onto technology publicly and yet CNet pitches it like they have. [Editor’s Note: CBS now Owns CNet]. No hit to the fine folks over at FreeWheel but it is interesting to see CNet using their launch to bag on DRM one more time.

I have written many times about how Anti-DRM and Anti-Microsoft News.com is but this story takes it to new heights. How does managing ad-inventory have anything to do with DRM? DRM’s sole job is NOT to limit distribution but to enforce rights and enhance the reach of your content. DRM provides a pathway to acquire new customers that no other technology provides today. Furthermore what happens when a user goes offline to view content on their portable media device? Where do ad-banners and video-ads come into play there. I would propose that for the forseeable future, they don’t.

Here is the real kicker. IMHO there are very few places where ad-supported media will be successful. In the music space I see it as a near-term reality and companies like QTrax are pioneering this space today as we speak. However in the video space, we have nearly 30 top-shelf video sites distributing free streaming video with ads. CBS, ABC and NBC all do it. And if you missed it there, Hulu.com has more free ad-supported video for you. And if you missed it there you can go to Joost or several other P2P plays.

About 16 months ago at the Digital Music Forum in New York I sat on a panel where I made a very strong point that the market will quickly be saturated with free, ad-supported content and the revenue just won’t ramp to where it needs to go for this play to be successful.  For all the free ad-supported content that is available, none of it has any value because it’s available on 10 different sites. How many sites can Coca Cola buy ads on where the same CBS video is available?

So let’s take a look back a year from now and see how far ad-supported video on the Internet went and post back the results here.

For about a year now I have been watching as news sites, bloggers and industry insiders cover advancements in the arena of watermarking and fingerprinting for digital media. Articles like DRM Watch’s piece “New Applications for Music Fingerprinting” provide some interesting reading for sure however the reality is that today, not a single P2P Application/Network company is using either technology to prevent the illegal uploading of pirated copyrighted works to their platforms.

Having quite a bit of visibility into the inner workings of these companies, I can tell you that neither are motivated to spent countless hours and dollars implementing technologies that are innefective.  For example, the DCIA did a real bang up job on White Paper about Watermarking digital media content in 2007 which exposed a variety of mechanisms for implementing watermarking and yet none of the sites selling music are watermarking content uniquely in real time when consumers buy it for privacy reasons. And even if they did, what would compel P2P Application/Network companies to implement watermarking scanners and detection platforms?

The answer is nothing. Watermarking and fingerprinting technologies require more effort to deploy than the benefit they promise. For either technology to be viable content distributors, P2P Applictions/Networks and User Generated Content sites would all have to implement the same technology ecosystem. Furthermore, file-level DRM provides all of the benefits that watermarking and fingerprinting promise, with a lot less headaches in the implementation process. DRM also provides an extremely valuable component that watermarking and fingerprinting do not, a pathway to upsell potential new customers into goods and/or services.

That’s a major benefit that file-level DRM offers and that is probably why DRM is the prevailing model in our digital economy today.

Well so much for another iPod like walled-garden where Steve Jobs is the man behind the curtain. It took less than a week for the “iphone Dev Team” to own the iPhone 3G. Now using the new “PwnageTool 2.0″ "new">iPhone 3G users are able to blow out the locked in OS Apple ships the iPhone with and, cue the sound of Jobs shrieking, install all kinds of free 3rd party applications. 

 This is music to my ears. Apple deserves a smack down for shipping a product that is, like the iPod, on lockdown. Users deserve more freedom than Apple gave them credit for. I am sure this will be one of maaaaaany announcements coming out this week on this topic

Gang,

 Sorry for the lack of posts. Last month I decided to get engaged and I have been completely caught up in the process. For that I apologize for lagging on the posts but you can all join me in congratuling my wonderful girlfriend Pearl for saying “Yes!”

This past Monday I was also notified I have been awarded my 4th consecutive  Microsoft Valued Professional for Digital Media with a focus on DRM. Good stuff and more to come.

 Ok I will be posting hard this month so stay-tuned.

Bill Rosenblatt’s piece on 7digital’s recent announcement pretty much reinforces what I have been saying in print for over a year now.

Consumers want’ music for their iPods and they don’t care if it comes with DRM or not. In a year’s time Amazon and Napster and Rhapsody will all be re-evaluating their business’ future because they are not going to even come close to out-selling Apple who uses DRM on their iTunes offering for the iPod.

 Bill is right to point out that the real focus is that people want music for their iPods.  Ongoing research shows consumers don’t care about DRM. They just want music.