Tuesday, April 03, 2007

by Richard MacManus / April 02, 2007

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.

Apple's Stranglehold on Digital Music

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.

Prices going up

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).

The End of DRM? Nearly...

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.