Digital Rights Management and the Bottom Line

Sony had a problem. The hit British rock band, Oasis, wanted to create buzz for its latest CD, Heathen Chemistry, by promoting certain songs before the CD was to hit store shelves last month. Trouble was, the band's record company, Big Brother Recordings Ltd., an arm of Sony Music Entertainment Inc., knew that giving fans advance access to music tracks would be tantamount to profit suicide. The songs would surely find their way online and onto various peer-to-peer networks, letting millions of people download them. Not only would that cool anticipation for the new album; actual sales also would suffer.

Then came an idea—and an important new test of thinking in the post-Napster world of digital commerce. On June 23, nearly two million Britons opened their Sunday edition of the London Times and found a free CD containing three not-yet-released song clips from the band's new album.

But this was no ordinary promotional CD: Using new digital content controls, Sony had encoded it with instructions that, in effect, banned people from playing the three clips for more than just a few times on their home PCs. Fans also were unable to copy the music file and post it to file-sharing networks—thereby making it harder to steal. Oasis fans who wanted to hear more had to link to the band's Web site and preorder the new album from U.K.-based retailer HMV—or wait until it was released. The idea: Use software code not to ban, but to create buzz for new products without getting burned in the process.

Did it work for Oasis? Preorders of the album exceeded company expectations by 30,000 during the week following the Sunday Times' promotion, and Oasis' record company gained data from 50,000 fans who registered online—new information that could be used to sell more CDs in the future. HMV was able to raise the number of visitors to its retail Web site, and even the Sunday Times was able to score a win in the deal: Circulation that day was 300,000—its second-highest Sunday circulation ever.