Is Sony BMG Hurting The Music Industry?

COMMENTARY: When Amazon launched an all mp3 download store, it seemed as if DRM was finally dead. But now things seem stalled. Napster just joined Amazon selling only mp3’s. Wal-Mart does too, though with only 3 of
the 4 major labels, and eMusic offers only indie mp3’s. But the dominate paid download destination in the world iTunes as well as Zune, Rhapsody Yahoo! and others still sell mostly copy-protected music while declaring vaguely that "DRM-free is coming".

Last week we learned who is to blame for this delay in the inevitable: Sony BMG.

Many download stores are afraid to confuse customers with multiple formats. So without the second larger major, they won’t embrace mp3’s.  And unlike all other labels. Sony BMG is insisting…

on selling mp3’s using an agency or
commission model. "Sony BMG is actually the seller and sets all retail
prices on its content while Amazon (and now Napster) acts as Sony BMG’s agent and gets a
commission on the sale," Billboard reported.

The agency model would represent a fundamental shift for
the music industry effectively turning re-sellers into mere conduits or distributions.  Amazon, familiar with digital era flexibility, said yes quickly.  But others are resisting. One online
executive told me this week that he doubted that he would ever
allow any vendor that much control over his store.

The executives at Sony BMG may see themselves as innovators. But this "innovation" is also reminiscent of the dominance that major labels once exerted over music by controlling distribution channels and dominating access to radio. They lost the power and now they want it back.

Perhaps some credit should be given to Sony BMG for trying. The
industry ceded too much control to Apple and needs
variable pricing to drive sales. But by demanding an agency model, Sony BMG is single handedly hurting the entire industry at a time when it can least afford it. Not only are consumers demanding DRM-free portability, but many innovative music services require the format.

Now is the time for Sony BMG and the entire music industry to bow to the inevitable.