Executives Debate Impact of MP3-Based Sales Shift

The “D” in “DRM” might as well stand for the “Devil,” according to prevailing sentiment.

But just how much would a shift towards MP3-based downloads change the landscape?  Among digital music executives, predictions run the gamut.  Some argue that the abolition of DRM would have little impact on sales levels and consumer satisfaction, especially considering the insular environment crafted by the iTunes Store.  For those that own an iPod and buy iTunes tracks, DRM rarely becomes an issue, though some annoyances inevitably occur.  For those outside of the iPod+iTunes wall, the issue is more noticeable, potentially resulting in lowered sales.  But the iTunes Store sells about four out of every five paid downloads, mostly to iPod owners and recurring iTunes users.  The result is a relatively smooth terrain, and only mild issues related to protection.

Others see far different forces at work, and predict that a migration towards MP3-based downloads would dramatically alter the existing terrain.  Among those is Terry McBride, founder and chief executive of Vancouver-based Nettwerk Music Group.  “If they get rid of DRM, the digital space will go from specialty to big box,” McBride said Tuesday during a small executive forum held at the Canyons Resort in Park City, Utah.  “It will probably double the size of the digital footprint in digital,” he predicted, while noting that major retailers like Amazon would suddenly have a seat at the table.  That could trigger a price war, and a generate a far more level playing field, according to the executive.  McBride, who manages an artist roster that includes Sarah McLachlan, Barenaked Ladies, and BT, has been a vocal opponent of industry-led initiatives like DRM protections and file-swapping lawsuits.