Digital downloading curbs to end, says boss of iTunes rival
By Stephen Foley in New York
Published: 23 February 2007
The music industry will give up copyright protection on digital music before the end of the year, enabling every downloaded song to be played on every type of digital music player and finally unleashing the profit potential of widespread, legally downloaded, paid-for music.
This is the bold, optimistic prediction of David Pakman, the bold, optimistic kind of guy who heads the online retailer eMusic, the nearest thing that Apple's iTunes has to a rival.
Mr Pakman has been proselytising on this subject for most of the decade, but now he sniffs something new in the wind.
EMI is widely rumoured to be planning to sell all or part of its digital music catalogue in the universal MP3 format, without the copyright protection - or digital rights management (DRM) software - that major record labels have traditionally demanded. Songs sold without DRM are easy to copy and share; those with DRM can be restricted to certain players and are therefore seen as a way of stopping internet piracy. Only, internet piracy has not stopped. The whole industry has been disappointed to see digital music sales growth fall behind projections, even though more people than ever have portable players such as iPods.
Mr Pakman says he knows why and the major record labels will get the message before 2007 is out. "I'm a big believer that DRM is holding music downloading back.
"The return rates on MP3 players are very high, and it is a very dispiriting moment for the consumer when they find out that not all songs are compatible. Consumers expect their digital music to perform at least like a CD, they expect that there is full interoperability; they never expected to have to learn about all these restrictions."
Because eMusic insists on selling its wares in the unrestricted MP3 format, the major record labels refuse to license their songs for sale on the site. Instead, it is home to an eclectic mix of indie rock, classical music and jazz, culled from independent labels. If iTunes is the HMV of the digital high street, eMusic is the sort of independent store you might find tucked away on the back streets of Soho in London.
And this suits the dapper Mr Pakman just fine, since he is pretty close to the ideal eMusic user. "Our average customer is a 39-year-old father of two. His kids might be downloading pirated music, but he can't even spell Kazaa. Time is more important to him than money, and he doesn't want to wade through all the spoofs and poor quality music that his kids have the time to do."
As he relaxes in the eMusic offices, round the corner from Manhattan's Grand Central Station, he describes himself as "a British indie rock fan" and reels off his recent acquisitions: albums by Gus Black, Lost Patrol and, his favourite of last year, Gomez.
Mr Pakman has one of the few jobs where you won't get the sack for spending time downloading music at work. That's perfect for someone who describes himself as "a drummer who is a frustrated songwriter" ("I work with very good songwriters, I'm trying to improve") and who has even gone as far as building a studio at his Westchester home outside New York. With a bit of practice, he was able to drag himself up to a standard where he was playing professionally in the backing group for an emerging pop-rock singer called Tara in New York recently.
As chief executive of eMusic since 2003, when the private equity group Dimensional Music bought it from Vivendi Universal, Mr Pakman has found a job that combines his passion for music with his background in technology - although he says that eMusic is neither a technology company nor a music company, rather "a direct marketing organisation".
He graduated from the University of Pennsylvania in 1991 and moved to the West Coast to work for Apple, where he worked in a nascent music division, before the iPod or iTunes had been conceived but when it was webcasting Metallica concerts to a largely unresponsive world.
"I had already been a student representative for the company," he says. "They would hire students to act as a campus expert on Mac products and as an evangelist for the company. They paid me in Apple products - it sounds terribly antiquated, but this was 1989 and I had the first laser printer in my school."
But he has travelled from evangelist to whatever the opposite of evangelist is. For the record, he's not impressed with the iPhone, saying he's fallen in love with the word "iPhoria" to describe the hype surrounding the new Apple phone.
He has also, and consistently, been a scathing critic of Apple's emerging monopoly in digital music, where DRM-encoded iTunes songs are only playable on iPods, and arches his eyebrows when discussing the recent Damascene conversion of Steve Jobs, the Apple chief executive, to the cause of interoperable music. Earlier this month, Mr Jobs said iTunes would switch to selling DRM-free music "in a heartbeat" if only the major music labels would let him.
"He's being a bit disingenuous, and it seems he is doing it because of the rumours which suggests that EMI is dealing with a bunch of retailers that specifically excludes Apple. Still, better late than never."
In other words, Mr Jobs has been sniffing the wind, too. Mr Pakman thinks his time has come. "If we're still talking about DRM in five years, please take me out and shoot me."