What if you can’t remove the I.D. from iTunes tracks?  What if there’s a permanent watermark that connects the track to you?

That’s what lala.com has got.  I was on the phone with John Kuch at the company this morning and I was told if you buy a track directly from them, it contains a watermark, if you give it to someone else it won’t play, unless ownership is transferred to this new individual, and then the original purchaser can’t play it.

In other words, if you killed the CD, would it solve the labels’ problem?  And are they aware of this ALREADY?

That’s the problem, the CD is completely unprotected.  And trying to add DRM to it cost Andy Lack his job.  You buy the CD, rip it, and then trade it anonymously on the Net to ANYBODY!  Or, in the alternative, burn CD copies for friends, or hard drive swap ripped files.

But what if there was no CD?

Oh, you could burn iTunes tracks to CD and re-rip them.  But that’s a pain in the ass, and the labels would say there was a loss in quality.  And if you can’t get rid of the I.D., you can’t anonymously trade them!

Or you could record/convert tracks to unprotected MP3s through the analog hole, but that’s an even BIGGER pain in the ass, and there’s the concomitant loss in quality…

Maybe the death of the CD is a GOOD THING if you’re a label.  By eliminating the leak, by making buying honest file copies the easiest thing to do, maybe piracy is stemmed.

I’m not for this.  I’m for the opposite solution.  Losing all DRM and identifying characteristics and letting the music flow freely.  The more people who own more music the greater the ultimate income, never mind the personal fulfillment of the listeners.

But the labels just want to maintain their old business model, make as much as they did in the CD era.  They want you to either buy non-transferable tracks online or rent them.  Suddenly, it looks like they can achieve their goal!

The labels are going to have to make a move sometime in the next twelve months.  CD sales are going to continue to drop precipitously and big boxes are going to reduce their inventory, which will accelerate losses.  At some point does it pay to kill the CD and move everybody into the file world, just like the labels killed vinyl, even though it still had demand, twenty five years ago and moved everybody into the CD world?

In other words, by giving up clinging to the past and jumping into the future could the labels’ problems be solved?

Are the majors just going to cut overhead, fire people and accept that most music acquisition is free?

Or, are they going to do the above, or license P2P?

Sometime in the future, not the near future, the legit way of acquiring tracks will be so much easier than stealing them that most people will pay.  But we’ve got an interim period, over five years, maybe as long as fifteen, before this becomes reality.  A plan for monetization during this period must be formulated now and enacted soon.

It’s the labels’ call.

They look like they’re going out of business, but by killing the CD would they be rejuvenated?