Will DRM-free tunes turbocharge music sales?

John McFarlane, is chief executive and founder of the consumer electronics company, Sonos Inc. Contrary to most of his peers, McFarlane believes that his company, and the entire digital music industry, stands to benefit from the DRM free music movement.

Apple and Amazon were the among the first to jump on the DRM free bandwagon. There are some who believe that by end of 2007, nearly 50% of music for sale online will be free of messy DRM software. The “download anywhere – play anywhere” approach, McFarlane argues, will make the notion of “digital music” redundant.

“Music will be music again,” he says.

While online music downloads have grown rapidly, DRM (regardless of the flavor) has added more friction than security to the process, often slowing total sales, especially amongst the non-techie music fans.

“DRM free music is going to help digital music expand from the iPod generation to the mainstream market,” McFarlane says. Many non-techie consumers still buy their music in CD format from retailers like Amazon, WalMart, and BestBuy. Then they rip the tunes to load them onto their mobile devices or home entertainment systems.

Sonos, based in Santa Barbara, is one of few companies to establish a sizeable enough customer base to survive in the shadow of Apple’s all dominating iPod/iTunes. Sonos has done this by integrating consumer-friendly music services into its devices.

Sonos was the first device maker to support Real’s Rhapsody subscription service. Other music services followed, and the company is about to begin supporting Pandora ($36 a year after initial free trial.)

“Pandora, is like terrestrial radio 2.0,” McFarlane says. Sonos owners can now listen to Pandora-powered personalized radio on their hi-fi systems instead of being tethered to the computer—a major upgrade to Pandora’s services.
pandora on sonos

Soon music fans will be able to do the same on their Sprint Mobile phones, for just $3 a month. “This service basically allows you to get Pandora everywhere – on your [mobile] devices and on your computer,” says Tim Westergren, Pandora’s CEO. “We are really trying to redefine the company, as next evolution of radio.”

One hurdle: the Emeryville, Calif.-based start-up faces a serious challenge due to some draconian changes in the Internet radio royalty structure. That problem, despite some recent developments, isn’t likely to go away.