Wanted: Digital Business Models

So have you heard the one about Celine Dion's new CD called A New Day Has Come?

A new day has come alright, because Sony Music put its Key2Audio copy protection technology on it, which makes it reportedly unplayable on CD-ROM drives, some car stereos and some home and portable CD players. It also will supposedly crash Macs.

But someone already cracked the multimillion dollar copy protection technology … with a felt-tip pen. By scribbling around the rim of the CD with a felt-tip marker, the hardware will skip the copy protection. A Web site, www.cosmiverse.com, quotes a consumer who posted this on the Web: "I wonder what type of copy protection will come next? Maybe they'll ban markers." (Please, don't give the recording industry ideas.)

Audiorevolution.com also covered this debacle. In his story Jerry Del Colliano quoted Ken Lopez of the University of Southern California's Thornton School of Music about music consumers' dislike of copy protection and the recording industry. "The music industry has alienated their core audience know as Gen Y who are currently college age kids. They predominantly play their music on their PC and the music industry is making it difficult for them to hear the pre-recorded music that they want to buy when they listen to it."

Lopez went on to say that Gen Y not only hates copy protection, but also high prices for seats at live concerts and high CD prices. "They feel they are getting bilked… and now more and more discs won't play in Gen Y's CD players. Top it off with the fact that much of today's popular music stinks even by Gen Y standards. This is exactly why they are downloading music — they are fed up and pissed off. No wonder music sales were off 10 percent in 2001."

So let me get this straight: the music industry doesn't like free downloads, yet when consumers go out and buy a CD just like the industry wants them to, copy protection limits the types of hardware they can play it on? What kind of message is that to consumers? No wonder so many can't stand the recording industry.

As has been said here before, and in plenty of other publications, the recording industry's problem is not new technology that, in their view, makes every consumer out there with a CD burner a potential pirate. The problem is that the recording industry is unwilling or incapable of revamping its business model to embrace the myriad of digital technologies available.

Of course it's not just the music moguls that have their heads in the sand. The New York Times recently reported in a front-page story how Madison Avenue and broadcasters have gotten into the act, attacking TiVo and ReplayTV for giving consumers the ability to fast forward past the advertising.

While you can sympathize with their problem, time and technology march on. Or as Josh Bernoff of Forrester Research said in the Times' May 23 story by Amy Harmon, "We've trained people that you can buy things at 3 in the morning in the nude on the Internet and make a call to anyone from anywhere on a cellphone. The idea that CBS is going to determine when I watch CSI flies in the face of that trend."

Has any of this copy protection talk over the past few months affected the business of you retailers out there? Are consumers talking about it? Are you concerned about the implications of all this? TWICE would like to know. E-mail us with comments on the subject to ssmith@ReedBusiness.com.