EXCLUSIVE: Rhapsody Clarifies DRM Position. Promises August Announcement.

In a Hypebot commentary last week I questioned the lack of recent progress on the DRM free front. Where was Amazon’s new store? Why hasn’t iTunes added DRM free product from the indies?  And why wasn’t Napster, Rhapsody or Yahoo! making any moves towards mp3 free downloads.

Matt Graves the Director of Music PR at Rhapsody/RealNetworks responded:

"The answer, at least for Rhapsody, is that this is the calm before the storm. As you’re hopefully aware, this is an issue we’ve pushed privately with the labels since last fall, and Rob Glaser took that discussion public at MIDEMNet. Since then, we’ve continued to speak with the labels about ways to transition to the DRM-free model for purchases."

"Look for news from us on that front in August."

GRAVES: "The one thing to note about our position on DRM is that we view it as about offering great consumer experiences. DRM can be an enabler, allowing companies to offer completely new services – a la unlimited access services like Rhapsody. Or it can be a limiting agent, as with DRM on purchases. We don’t think DRM should go away, per se, just that it be dropped when you’re selling downloads."

HYPEBOT: Why not add DRM free product from EMI and the indies now?

GRAVES: "We think it makes sense to wait until a sizable amount of music is available for sale DRM-free, (Editors note: Napster has taken a similar position.) and for now we’re continuing to encourage the labels to embrace the DRM-free model. It would be good for their business and good for consumers, and would allow anyone to sell music that plays on the #1 portable player, the iPod. Based on our conversations with the labels, we feel that considerable progress is being made on that front, and predict that 2008 will be a landmark year in the transition to a DRM-free sales model."

"As to why we’re not out now with an indies + EMI-only DRM-free offering, while it’s a substantial amount of music, from our perspective it doesn’t yet reach that threshold of being able to offer most of what consumers are looking for."

"Some people would argue that services like eMusic show that you can do well with an all-indie offering. While it’s true that they sell a lot of music based on volume, if you look at what consumers are listening to and buying through iTunes and Rhapsody, eMusic simply can’t meet the needs of what many mainstream consumers are looking for. And given their model, even when the industry goes DRM-free, they would either need to do some radical readjustment in what they charge consumers for music or convince the labels to accept 25 cents (or less) per download; given the current decline in the physical sales market, I’d say that’s not likely."