Universal Music Group Testing Sale of Unrestricted Tracks
Tracks from thousands of albums will be available for purchase on the recording artists' Web sites and through several established online music retailers, although Universal is excluding Apple Inc.'s iTunes store, the No. 1 online music online music retailer.
The songs, however, will play on Apple's market-leading iPods, as well as the slew of other devices compatible with the MP3 format.
Although many independent music labels have for years sold their tunes without copy restrictions, the major recording companies have insisted on so-called digital-rights management, or DRM, technology in hopes of curbing online piracy.
Earlier this year, Britain's EMI Group PLC became the first of the major labels to embrace DRM-free tunes, letting Apple sell versions of songs with higher audio quality and without any built-in copying hurdles.
The test by Vivendi SA's Universal Music Group, while only encompassing a portion of its catalog, is significant because Universal is the world's largest recording company. That raises the prospect that other major labels could follow.
"Clearly the handwriting is on the wall for DRM-protected content," said Michael Gartenberg, an analyst with Jupiter Research. "We are seeing more of the players fall as they recognize that it's just a hassle for the consumer and doesn't really help the piracy problem."
DRM technology is designed to block or set limits on copying and CD burning.
Although DRM can help stem illegal copying, it can also frustrate consumers by limiting the type of device or number of computers on which they can listen. Copy-protected songs sold through iTunes generally won't play on devices other than the iPod, and iPods won't play DRM-enabled songs bought at rival music stores.
By excluding iTunes from its test, Universal is looking to undermine Apple's hold on the online music market, Gartenberg said.
"There's no doubt these guys are poking a stick at Apple," he said.
Universal Music spokesman Peter LoFrumento said, however, that the company isn't selling DRM-free tracks on iTunes for now so it could use the Apple store as a control group for measuring the impact on pricing, piracy and sales.
In a statement, Universal Music Chairman and CEO Doug Morris said the test is one of many the company is conducting this year and "will provide valuable insights into the implications of selling our music in an open format."
"Universal Music Group is committed to exploring new ways to expand the availability of our artists' music online, while offering consumers the most choice in how and where they purchase and enjoy our music," Morris said.
Apple spokesman Tom Neumayr said the company had no comment.
Universal Music will make DRM-free songs available Aug. 21 to Jan. 31.
Regardless of whether it ultimately decides to continue selling DRM-free tracks beyond that, Universal said it plans to support online music subscription services and ad-supported download sites that rely on copy-protection technology.
Among the online retailers that will be selling the tracks are Amazon.com Inc., Google Inc., Wal-Mart Stores Inc., Best Buy Co., RealNetworks Inc.'s Rhapsody, Transworld, PassAlong Networks and Puretracks Inc., according to Universal.
The retailers are expected to sell the tracks for 99 cents and in a variety of bit rates. Universal will be offering the tracks in the MP3 format, but the retailers will be free to sell the tracks in any DRM-free format they choose.
Best Buy plans to sell the songs in the MP3 format for 99 cents each, said Mehrdad Akbar, an executive in the retailer's music division.
"This is pretty exiting for us and it's something we feel consumers have been asking for," Akbar said. "We're hoping that this will set the path for everyone to move toward the MP3 format."
Earlier this summer, Universal Music broke ranks with other major labels and declined to renew a one-year music licensing deal to sell its recordings on iTunes. The record company opted instead to enter into month-by-month arrangements similar to deals it has with other major online music retailers.
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On the Net:
Universal Music Group: http://new.umusic.com
Major labels are killing music
Friday, 10 August 2007
Universal Music's experiment in dumping DRM is to be welcomed, but can the company really afford to annoy music fans by making buying music online more complicated?
The news today is that Universal Music is preparing to sell thousands of tracks without digital rights management (DRM) wraps through online music stores.
The company will begin the experiment this month, making its music available through Amazon, Google and other online music services - but not through iTunes.
Universal says it will continue to sell music through iTunes with DRM attached, in order to assess the impact on buying habits.
The industry says Universal is doing this in order to stimulate interest in services other than iTunes. The company is unhappy at Apple's present dominance of online music sales for some reason.
While any move to stimulate competition in the online music market is to be welcomed, Universal's decision strikes deep against the one device that today occupies the heartland of digital music, the iPod.
And its decision will annoy and infuriate customers, who want their music to be available through whatever legitimate service they choose, and want it to work on any device.
The move matches the latter need, but at the cost of seamlessness.
I do hope Universal chooses now to make its music available through services such as eMusic, 7 Digital and Wippet in the new DRM-free format. But I have a feeling the old-fashioned thinking behind what arguably could be seen as an anti-competitive move won't extend far enough.
I say the move is potentially anti-competitive because it shows the world's largest record label using the depth of its catalogue to artificially influence market development.
And the thinking is muddy. People mainly use iTunes because they own iPods and its an easy shop to use. They choose to use an iPod. They choose to use iTunes. They choose these solutions because they like them the best.
Any move to reduce the value of the service may deflate sales - and may serve to reduce the power of iTunes, to an extent - but will also create a fresh wave of consumer antagonism against the label that makes things complicated.
Universal also wants to charge more for the tracks. The company has always wanted to levy a bigger tax on online sales - even though any fool could tell you that making legal tracks widely available in an attractive format at a price people are happy with is the one sure fire way to increase music sales.
Making music more expensive will drive music fans who want to be legitimate back to the file-sharing services.
Universal should be focusing on growing its sales. it should be focusing on giving consumers what they want and where they want it.
It should step away from looking constantly at its bottom line, accept the period of change, and work to make its artists more popular.
At the same time, Universal's move is a massive improvement on the notion put forward recently by Warner Music chief, Edgar Bronfman.
That old music industry dinosaur wants to re-introduce scarcity. He wants to make releases available through a limited number of websites in limited amounts, and wants to drive prices up.
Like that's really going to work.
That stupid idea is going to damage Warner, its going to hurt artists, and is going to drive consumers back to file-sharing once again.
The labels have had a decade to do it right. Apple did it right. And now the labels are rejecting Apple, because it did the right thing.
I'm going to make a prediction. It may not come wholly true, but here it is. The major labels now have limited time - perhaps just months.
Listen up, music industry. Right now, things work. People are buying music, digital sales are rising.
One day digital will reach a point at which you'll forget you ever had a problem during this current period of transition, when digital sales don't alleviate the savaging of sales in physical formats.
They will in future. If you do the right thing.
Both Universal and Warner are doing the wrong thing, trying to force music fans to dance to their tune. That didn't work against Napster. Hasn't worked against file-sharing. It won't work now.
Music labels don't own a market, they simply serve a market.
If Warner and Universal annoy consumers too much then their actions will damage the entire music industry.
The damage it may cause iTunes is irrelevant.
Sure, Apple's power over music distribution may wane - history shows that empires usually change in time.
But that historical record works the other way too. Universal and Warners are also empires. If they fail to do the right thing, then they will see their empires collapse completely.
Will somebody please put some switched-on people on the music label boards? I'd be happy to help, and there's a million others like me.
Don't kill music please. Killing music is worse than stealing it. And it's impossible. The human connection to music is much, much, much stronger than consumer connection to the labels. If labels stand in the way of that human music connection only one outcome is possible.
It makes sense to do the right thing.
Ignore the accountants, and make like Prince.
