Apple and EMI announced this morning their decision to sell digital music downloads without digital rights management via Apple’s iTunes store. Apple will sell higher quality songs (256 kbps) for $1.29 a song without DRM though consumers are free to choose lower priced DRM tracks. Album prices remain unchanged.
This is a strategic move that puts Apple’s rivals - rival services such as Napster, Microsoft, and other major record labels on a weak footing - giving Jobs the upper hand in this high-stakes game of poker.
The announcement, follows up on Steve Jobs’ open letter published back on February 6, 2007. The legal problems in Europe and constant criticism of its DRM policies (including not licensing it to others) prompted the unusual move - the open letter. In his letter, he outlined that the problem was not Apple, but the record labels who wanted their music wrapped up in DRM.
Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. [Steve Jobs]
Well, EMI bought into this vision, and in many ways Jobs called the record industry’s bluff. Basically, now the other labels - Sony, BMG and Universal - have to embrace DRM free music or else have their hypocrisy exposed. If the other majors follow EMI’s lead, then Apple might have turned on the heat on some of its rivals say, Napster or Rhapsody, who would have to follow suit or else become monthly subscription services.
Hypebot, an excellent blog that tracks the digital music business says it best, “EMI’s move along with the many indie labels who have been offering DRM free tracks for months may have finally opened the digital floodgates.”
17 comments so far
8:23 AM PT
I believe this is a positive step and one long overdue on the music industries part. Even if they secure digital downloads, music labels simply cannot prevent piracy or copying through CDs, radio stream rips and other mediums. P2P and torrents will always stay a step ahead.
They opened pandoras box when they rejected Napster’s partnership offer (paving a way for underground p2ps such as Kazaa, limewire, emule etc) and DRM is clearly not an effective tool in preventing piracy.
Danial Jameel
http://www.UReporting.com
8:30 AM PT
Great news!
8:49 AM PT
Wow, I got pwned: “Maybe Mr.Nicoli should follow the same advice in the music industry first.”
http://gigaom.com/2007/03/28/emi-ceo-mobile-can-learn-from-apple/#comments
10:08 AM PT
The brilliant aspect of this deal is that all the labels just re-entered into a multi-year agreement to sell their songs on iTS at $0.99 per song. Jobs patiently waited for them to lock themselves in before springing his open letter.
With this move, EMI is suddenly making much more profit per DRM-free song sold. The other labels now have to enter into new agreements with Apple or sit on the sidelines selling much less profitable DRM’d songs.
No wonder Jobs is confident that half the songs will be DRM-free by the end of the year.
One thing is for sure - if this turns out to be the huge hit it appears it will be, then it will be the end of music subscription services since they all require DRM. Goodbye Napster, Real, and PlaysForSure.
10:24 AM PT
Also all of the indies are being offered the option and many will choose it.
Note that it also gives Apple a differentiation for subscription if they ever choose to add that (they may not).
This also cements aac as a necessary default codec along with mp3 and probably kills wma.
Lots of swearing coming from Redmond today…
10:47 AM PT
The fact that albums will be priced the same for 128 kbps, DRM’d or 256 kbps DRM-free will be a major catalyst for selling whole albums. Should be more profitable for both apple and emi since more money per transaction. This will also be a further enticement to bring other studios on board. Classic Apple to seduce the user into spending more money rather than demand it.
11:16 AM PT
A huge leap for the credibility of digital music.
11:44 AM PT
Anyone want to speculate on the long term implications for digital video?
12:50 PM PT
It’s about time. Now if they could only figure out what to do with that pesky Limewire…
1:10 PM PT
I don’t see this as the end of subscription services; in fact, I don’t know that it is even related. Subscription allows unlimited streaming, which works well for people who like to listen from their laptops, or connect them to their stereos. DRM-free songs don’t make this concept any more or less attractive. I don’t see a sudden rush to e-mail out a personal catalog of DRM-free music to a group of friends, which would reduce one’s incentive to hold a subscription, but I suppose that is one of the hypotheses that will be tested over the next year.
2:33 PM PT
DRM-free is very important, but so is 256kbps. There is no way I’m going to pay iTunes prices for 128 kbps quality. Still, I wish they had bit the bullet and gone all the way to 320 kbps (I guess this would be the limit as it’s all the iPod will support).
3:48 PM PT
[...] Om Malik: Basically, now the other labels - Sony, BMG and Universal - have to embrace DRM free music or else have their hypocrisy exposed. If the other majors follow EMI’s lead, then Apple might have turned on the heat on some of its rivals say, Napster or Rhapsody, who would have to follow suit or else become monthly subscription services. [...]
7:52 PM PT
A more interesting test is of consumers. Their claims of being treated like criminals will fall flat if consumers don’t buy the more expensive DRM free music.
3:20 AM PT
[...] If this move by Apple and EMI becomes a success, subscription based services actually competing with iTunes such as Napster or Real will be in trouble, as they all require DRM. Also, this would make it easier for AAC (the codec Apple uses in iTunes) to become an standard together with MP3 and in detriment of Microsoft’s WMA. (All this ideas can be found in the comments at this GigaOm post). [...]
7:32 AM PT
When all is said and done, interoperability needs to be at the center of this debate. Apple choosing to use the AAC format without DRM doesn’t really make the music a whole lot more open to other devices. Currently, AAC is supported by Apple and Sony, but not most of the other popular MP3 players.
Let’s push the focus away from DRM and towards the real roadblock, interoperability.
11:51 AM PT
[...] appears that the era of DRM-free music is upon us. We can’t help but hope that DRM-free TV shows and movies will follow, but of [...]
7:07 PM PT
[...] one company is. EMI and Apple reached a deal to allow totally restriction-free songs for sale. The kicker is that the songs will cost 30 cents more that the locked-down DRM [...]
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