The big news today is that EMI Music announced a new higher quality DRM-free music download offering. It is a premium service, covering EMI's entire digital catalogue, and will enable full interoperability of digital music across all devices and platforms. Steve Jobs of Apple was there at the announcement, to emphasize that iTunes supports the move towards DRM-free - indeed it is the first real sign that Jobs' call in February for record companies to abolish DRM, was more than just PR bluster. Apple iTunes will be the first online music store to receive EMI's new premium downloads, offering EMI music "at twice the sound quality of existing downloads" and with their DRM removed, at a price of $1.29/€1.29/£0.99. Complete albums from EMI Music artists purchased on the iTunes Store will automatically be sold at the higher sound quality and DRM-free, with no change in the price. Further details are in the EMI press release and the Apple press release.
So what does this news mean for the Online Music industry? Well firstly it emphasizes the stranglehold that Apple has over the online/digital music market. You have to hand it to Steve Jobs, his February open letter to record companies can now be seen as a masterstroke of strategy - positioning Apple as 'the good guys' in the digital music industry and giving EMI Music a golden opportunity to take the DRM-free initiative, with Apple holding its hand. It's win-win of course for both companies - Apple reinforces its dominance and gets DRM-free music, while EMI (which had been publicly struggling to compete with the other big record companies) gets to be seen as a leader in the digital music business.
As Techcrunch reported from the webcast: "Jobs says they are trying to do similar deals with other labels, and expects that 50% of all of their tracks sold will be DRM free by end of year." So Apple has gotten the first domino to fall (EMI) and others will surely follow.
Steve: "Mua ha ha!"
EMI guy: "Does this mean I'm cool now?"
Steve: "Not in that pink shirt..."
Also the fact that the music is no longer tied to the device is significant. From the webcast: "These songs will no longer be tied to iTunes and the iPod - any device that plays AAC format will play these songs."
While this may seem like a concession from Apple, in reality iPod/iTunes is so dominant (85% of the market last time I checked) that this will have minimal downward impact on Apple's sales. In fact because Apple is aligning itself so closely with DRM-free and EMI's news, and they are the first vendor to implement it, their sales might go up! And long-term, people will still flock to use iPods and iTunes - just as people still flock to use Windows PCs.
The other thing this augers for online/digital music is that prices are about to go up - and "quality" is the excuse for this. Apple is going to offer EMI's DRM-free music at twice the quality on iTunes, but at 30c per song more. While it's interesting that EMI/Apple decided to offer album downloads at the same price, in reality this is no different to a retailer offering you a bulk discount (buy 10 songs for the price of 7, etc).
Is it the end of DRM? Well not quite... as it's noted near the end of the EMI press release:
"EMI Music will continue to employ DRM as appropriate to enable innovative digital models such as subscription services (where users pay a monthly fee for unlimited access to music), super-distribution (allowing fans to share music with their friends) and time-limited downloads (such as those offered by ad-supported services)."
So DRM is still being seen as a competitive tool. But this move by EMI and Apple is a great first step for DRM-free music from big record companies. EMI was struggling, so really they were pushed into it (with a helping shove from Apple), but it's a brave move nonetheless.
UPDATE, 4/5/07: I've since heard from industry sources that EMI had decided on, and made moves towards, removing DRM before Steve Jobs' letter in February.
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drm free I think this is a good thing
Posted by: eshop600 | April 2, 2007 2:19 PM
From my post over at ZDNet:
EMI is attempting to compete with piracy by charging more for the convenience that non-DRM'd tracks offer, under the guise of 'higher quality'. This is a stupid strategy that I predict will have limited success. If this is to be the test case that proves that ditching DRM will invigorate the market place then I wish EMI (and the rest of the music industry) good luck — as they'll surely need it.
Posted by: steve | April 2, 2007 2:22 PM
Great, now I might finally go buy an ipod... DRM was a big turnoff for me
Posted by: Brendon | April 2, 2007 2:42 PM
While I don't want to guess EMI's true intentions here, I would like to point out that "higher quality" is not just a meaningless phrase. A 128 kbit/s MP3 is not CD quality, although we've been hearing it a lot in the last couple of years. Lossless compression, for example, would be a very significant improvement over any MP3, and I would pay the extra price for it.
Posted by: Stan Schroeder | April 2, 2007 2:44 PM
I agree with you Stan, higher quality is something a lot of people want - and will presumably pay a higher price for. I also think this strategy might 'save' the album too...
Posted by: Richard MacManus | April 2, 2007 3:29 PM
Although this is definitively a step in the right direction, I still feel that you receive less value for money compared to the 'traditional' CD.
Steve Jobs mentioned: "we are offering people nothing more than what they get when they buy a cd directly and rip it."
In fact, they offer less. So why raise the price with 30c?
Posted by: Jochem Prins | April 2, 2007 3:47 PM
I was thrilled when the iTMS made it's debut since it was the first digital music service with a decent catalog, a decent price, and DRM I thought I could handle. I didn't end up buying much music from it though. The quality wasn't quite good enough and the DRM was unacceptable if I was going to buy more than the occasional track here and there. So for the last few years, most of my music spending has been for CDs.
This new scheme might be enough to tip me towards more iTMS purchases. The price of individual tracks is still good, low enough not to make me think twice about buying a couple of tracks on a whim, and now the quality is good enough, and the DRM is gone. Albums are even more attractive since they are priced under $10 (which is just a little more than I pay for a used CD).
Posted by: eas | April 2, 2007 9:04 PM
For those people making comments who don't get the price increase, it brings the price in line with plain MP3 downloads from bleep and Playlouder (but not the bundled deal that emusic do).
The whole reason Apple were originally able to negotiate cheaper prices with the majors was the restrictive nature of the Fairplay DRM. Fairplay tracks have less value than open tracks and are therefore cheaper.
The positive thing is that this also opens the doors to other vendors selling non-DRM tracks to iPod users, which should lead to price competition. It will probably also lead to certain albums being exclusively available at an initially higher price on other stores, where it makes market sense, but piracy will work as a cap on trying to push this too far.
>EMI is attempting to compete with piracy by charging more >for the convenience that non-DRM'd tracks offer, under the >guise of 'higher quality'.
As a business you have a few options - one is to bring prices down enough to get sales from the bottom end of the market, with small margins and making profit through volume. The other is the Apple approach, where you make higher margins on a smaller segment of the market. To a degree, it's not actually worth competing with piracy, if the 'consumers' in the pirate market aren't actually lost revenue - i.e. when I was at school I taped everything as I had no money to spend anyway.
The fact that albums are the same price also shows it's an attempt to push people back from the cherry-picking approach iTunes encourages towards album purchase (interesting to note that this comes days after iTunes introduced the 'upgrade to album' feature where you have bought tracks on an album.
And of course, bigger and higher bit-rate files will help sell large capacity iPods. I'm sure there is a market for an 'audiophile' portable player.
Posted by: JulesLt | April 3, 2007 1:42 AM
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.
Posted by: David Repas | April 3, 2007 7:37 AM
OT -
This YouTube clip shows Pirate Bay, one of the largest illegal P2P music sites, admitting that it started up with the help of Carl Lundstrom, the financial backer of the Far Right Sweden Democrats....
Don't think that pirates are the heroes...
http://youtube.com/watch?v=Eg1S9n81ras
Posted by: al gathercole | April 3, 2007 8:32 AM
The interoperability part is a real potential stumble, as is the near universal tendency to refer to such devices as 'mp3 players'.
MP3 is the lowest common denominator. It has little going for it in terms of musical quality, but is very common and makes for relatively small files. (Its compression algorithm is 'lossy')
AAC is also 'lossy' but frequently held to be more musical. But on the other hand it is a proprietary Apple format, as WMA is Microsoft.
There are alternatives, OGG-Vorbis is a highly superior lossy format with good audiophile credentials, but has poor portable player support (mainly the fault/decision of the hardware manufacturer) or FLAC which is lossless and sounds great, but has big files (so less music fits in a given player) and also poor support in hardware.
The real stumbling block is that correctly identified by the EU commission, tieing formats distribution to hardware to boost sales. If AAC is now an open format, then Apple have complied - it is not their fault that their rivals in the portable music player business aren't adopting it. But I bet they will soon...
Posted by: t h | April 3, 2007 8:54 AM
Sigh.
In a bit of total non-news, Apple want to sell a new product. And this is met with non-scanning lines like "Apple reinforces its dominance". Yeah. And so? Lots of people like the product, then. Quelle horreur!
If you don't like what they sell, if you don't like DRM, if you want "your" music (it isn't, but we'll leave that argument alone) to play on anything, then DON'T SHOP ON ITUNES!
How hard is that, really? There are _dozens_ of alternatives.
I really wish my coffee maker cured cancer. But it doesn't -- and the manufacturer never claimed it did.
I really wish my iPod had a thousand times the storage and could give me a good hard wank when I was feeling lonely. But it doesn't -- and the manufacturer never claimed it did.
YOU bought "iTunes" for your "iPod" KNOWING exactly what the manufacturer claimed about both those products, and they deliver every inch of that.
What is the word again for a lot of people wishing for stuff to happen they've deluded themselves into believing they're owed, and blaming other people when it doesn't arrive?
Oh, that's right: religion.
Posted by: skr | April 3, 2007 9:36 AM