Seven years ago, it was an effort to get people interested in DRM issues. Today, as the internet pulsates with rumour, paranoia and conspiracy, there’s a different kind of problem. This constant background noise – and people’s willingness to jump in fear at their own shadows.

Instead of information scarcity, there’s information overload. So to make sense of this Tower of Babel, people construct a “Daily Me”, establish informal social networks of news sources. These, in turn, tell people how to feel about a news story.

Many bloggers today are attuned to the slightest indication that the Imminent Crackdown has begun. It’s Black Helicopter country: “Net Neutrality” couldn’t have happened without it.

[DRM in 2000 and today: full story at The Register]

From next month, EMI will distribute much of its repertoire without DRM through Apple’s iTunes store. Independent labels have been distributing DRM-free songs for three years, avoiding the lock-ins created by competing hardware manufacturers. But EMI is the first of the “Big Four” majors to recognise that artificially recreating the inconveniences of physical product in a digital form isn’t good business.

Let’s leave aside the many gotchas in the announcement, such as the price increase which takes the cost of an unencumbered song to almost $2 (that’s the UK price converted to US dollars, folks), the absence of the Beatles’ catalogue, and the continuation of DRM as “on by default”.

Let’s also leave aside the mutual panic which brought Apple and EMI together yesterday. EMI is in financial free-fall, it’s unsuccessfully tried to find a buyer for several years, and it’s now so desperate it will try anything. Apple is under regulatory pressure not only to modify its DRM consumer lock-in but, along with EMI and the labels, faces an EU anti-trust probe into its pricing. Both companies jumped before they were pushed.

But it’s a move that will only make the major labels’ digital agony increase. Why? Because legal digital downloads have always competed with free, illegal music. And by shattering the illusion that legal music is somehow special, because of these technological countermeasures, a like-for-like comparison can now take place. This isn’t a face-off the big labels want.

This weekend, the Torrents carried all the major labels’ premium CD cash cows. The albums are cleanly encoded and lovingly zipped up to include large, high quality JPEGs of the front and back of the CD covers. A broadband user can order all this for guaranteed overnight delivery. That’s an excellent service for “free” – and one in which songwriters, publishers, and rights holders don’t see a penny.

According to the RIAA, free downloads outnumber legal downloads by 40 to 1, although one experienced music business insider said this was an underestimate. These days, the major labels don’t over-exaggerate the popularity of free music, they underestimate it.

“If the RIAA says it’s 40 to 1, then it’s probably 100 to 1,” he said.

So how come, you might wonder, did so many of the independents agree to DRM free music when it’s a step too far for the biggest three labels, Universal, SonyBMG, and Warner?

The answer is in what creates the cost structure in each case, indie or major? Independent labels typically offer artists a 50:50 revenue share and they create a sustainable business without incurring huge expenses. The Big Four are all about incurring huge expenses, then recouping them from huge sales. Expenses include notoriously large advances to artists, such as the £80m EMI paid to Robbie Williams in 2002 for a five album deal. These are clawed back in several ways. However, it’s not the advance that’s the problem. Defending the Williams deal at the time, EMI pointed out he’d shifted around £300m worth of CDs in the preceding five years. The problem is that for every Robbie, many more artists are recruited, given large advances and marketing budgets, before eventually being abandoned.

(EMI is occasionally described – usually by Americans – as “the world’s biggest indie”. But it’s trapped in a major’s cost structures).

CDs, have made this cost-heavy model unsustainable. The independents can at least look to the future knowing they don’t have huge expenses to cover: they can cut their cloth accordingly. Indies also embraced digital quicker because it gave them what they always struggled to get in the physical marketplace – a more level playing field. Distribution has always been the smaller labels’ greatest problem.

If the future doesn’t have a place for big record labels as they look today, it will have a place for something that looks like them, because the demand is there. Some artists will always get greedy and demand global marketing operations that make them as ubiquitous as the large brand advertisers, such as Nike, Nokia, and Pepsi. They need to remind us they’re there, constantly. But most businesses will balk at such demands.

Both indies and majors can continue to provide good value CDs – top quality audio digital music that comes with its own backup copy – and if they package them well, charge a premium for the packaging. If I find a common flaw in both camps’ thinking, it’s the unjustified fear that physical sales will fall off a cliff.

However, the abundance of free illicit music creates a much deeper discomfort for majors and indies alike.

Digital evangelists hope the absence of friction, such as DRM, will make computer networks more attractive. Isn’t a DRM-free world what The Register has been banging on about for years?

Well, yes, but it isn’t clear that digital downloads will rise as a consequence. The like-for-like comparison means that if you choose to pay Apple for 10 DRM-free songs it’ll cost you almost $20, while you’ll get no artwork or backup copy. The digital maven now looks less of a pioneer, and more of a fool. By removing the ludicrous, artificial countermeasure of DRM it’s now plain that individual unit sales of songs and even albums aren’t sustainable for anyone in the digital world, except as publicity vehicles or loss leaders. For us, it makes no more sense buying digital music by the unit than it does dropping a 10p piece every few minutes into the radio set.

Do we cease to pay artists completely, or do we move to a model where music is a service? Thanks to EMI and Apple, that choice is a lot clearer today.

Bootnote: It hasn’t escaped our notice that former EMI chief Alain Levy has finally got his way. Levy was ousted in the new year, but his call for an end to one-price, 99c downloads has at last been fulfilled…

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Dear.

If you arrive for work today and discover a grisly pool of brain tissue and bone fragments where a colleague used to sit, we may have the explanation right here. For, n a move that risks causing Scanners-style head explosions across the land, Professor Lawrence Lessig has endorsed DRM.

Not just any old digital rights management, but Sun’s open source DRM initiative, the Open Media Commons.

“In a world where DRM has become ubiquitous, we need to ensure that the ecology for creativity is bolstered, not stifled, by technology,”. says Lessig – or somebody purporting to be Lessig.

“We applaud Sun’s efforts to rally the community around the development of open-source, royalty-free DRM standards that support ‘fair use’ and that don’t block the development of Creative Commons ideals,” says Lessig.

Debian coder and software freedom campaigner Benjamin Mako Hill finds this strange. “Lessig’s position seems to be that DRM is bad and should not exist. But in a world where it does exist, he thinks that not-quite-so-bad DRM is better than the alternatives. Is that the sort of message we want to be sending?,” he writes.

“The fact that the software is ‘open source’ is hardly good enough if the purpose of the software is to take away users freedom – in precisely the way that DRM does.”

Presumably, Lessig’s position is that the development process has sanctified the evil. But others may take the view that a noose is a noose is a noose. As Mako points out, Lessig sits on the board of the Electronic Frontier Foundation – which has already come out against Sun’s OMC – and the Free Software Foundation. Whose position on software freedom should be clear enough .

Maybe it’s all a terrible mix up. Or maybe … maybe it’s a really bad dream!

We’ll certainly be exploring this issue tomorrow with both Sun Microsystems and the Great Man (one of these parties is speaking to us – while the other is sulking at us – and you can guess which one is which) tomorrow.

But given the health risks this news poses, we felt it best to warn you without delay.