Apple EMI Kill DRM

By Richard Menta 4/2/07

The big announcement came at 8:00 am here on the East coast and some of the speculation from the prior night came true. Apple and EMI unveiled today a new distribution plan for EMI's catalog, which will sell music sans digital rights management. "EMI Music launches DRM-free superior sound quality downloads across its entire digital repertoire" said the press release that accompanied the presentation. Then it was announced that Apple would be the first music store to offer the new downloads. EMI also announced that music videos will also be DRM-free.

The choice of codec will not be the MP3 format, though. "128-bit AAC encoding not good enough for audiophiles", said Jobs. Increases in storage enable higher audio quality. New versions of songs and albums are DRM-free and 256kbps AAC encoding for $1.29 per song. $0.30 gives users DRM-free interoperability and superior quality".

Slide from EMI Apple presentation

With those words EMI got what all of the major labels have been griping about for some time now, a raise in the price-per-track. Album prices will remain at $9.99, demonstrating that Apple is serious in helping the labels push full album sales.

Apple expects that half of the EMI tracks will be available DRM-free by the end of the year. Jobs refused to comment on the progress of discussions with other labels, though if the DRM concept takes off it should have a domino effect. And for those who don't want to pay an extra $0.30 a track for music without DRM? The tracks with DRM and 128-bit encoding will still be available for $0.99, a fact which introduces tiered single pricing for the first time on iTunes, though one which is probably more tied to the fact it will take time to re-encode all of EMI's music. Still, give Apple credit for giving consumers something more for their money than just a rate hike.

So will the new DRM-free music make a big difference? Now that music purchased on iTunes can play on any digital music portable, not just an iPod, the purchase of music is more compelling. It also opens it up for competitors as services like Napster and Rhapsody are no longer locked out of the iPod. Of course, that only applies for EMI music. Even if the other labels come around quickly - and they will probably take a wait-and-see attitude - as EMI just demonstrated it will take them several months to re-encode their entire catalogs.

So why EMI? That label has been hit hard with the recent downturn in the sales of physical CDs and recent bids to be bought out by Warner Music Group were under expectations. EMI needs to turn itself around and this is the quickest way to achieve some traction is in the digital space. The move gives EMI a competitive advantage, at least for a limited time. With essentially every major label track already out there on the free file sharing networks, tracks loaded with digital rights management schemes have always been a moot point to be sure. Pushing the AAC codec at higher bit-rates also give iTunes tracks a significantly higher sound quality over 128kbps MP3 files, thus offering some competitive advantage over free.

Meanwhile, this news takes Apple off the hook from European regulators who felt the FairPlay DRM gave Apple monopoly control over the paid download game. It might also be pointed out that most competing MP3 players don't play the AAC codec, choosing instead a mixture of MP3 and the various flavors of Microsoft's WMA codec. While the iPod won't be exclusive anymore to iTunes purchased tracks, for many makes they will still be shut out until they redesign and ship players that can handle AAC.

Final note for Beatles fans. No deal yet to bring the Fab Four to iTunes.

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