iTunes Snubbed as Universal Sells No-DRM Music

By Richard Menta 8/10/07

Univeral Music, the major label that most militantly embraced the continued use of DRM on digital music downloads, has had a change of heart and will test DRM-free music sales for several months. The kicker is that the music will only be available on a few select download services and the biggest of those services is conspicuously left off the list - iTunes.

Calling the move an experiment, Universal said that the DRM-free tracks will be available on Amazon, Real's Rhapsody service, Wal-Mart, and Google starting on August 21 where they will remain at least until January. Artists represented, including 50 Cent and Amy Winehouse, will also sell the tracks on their web sites. Unlike iTunes, which charges an extra $0.30 for EMI tracks without DRM, unencumbered Universal tracks will sell for the same $0.99 as DRM-laden tracks. DRM-free tracks will also be sold at a higher quality bitrate as an added bonus with Real Networks confirming the music will be encoded in 256kbps quality.

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The decision for Universal to finally relent to sell a limited number of tracks without digital rights management offers a very interesting tactical move on their part. The biggest of the four major labels, Universal is very unhappy with the control that Apple has managed to wield over the industry. As the sales of physical media continues to drop, only digital media sales show any growth and right now Apple's iTunes dominates these sales with about 3/4th of the market. Giving iTunes' competitors a leg up could help break this dominance.

Or will it? While DRM is reviled by many, price is the bigger factor limiting sales online. Also, we are yet to see how successful EMI's DRM-free tracks have sold on iTunes. Announcing quarterly sales this week the only thing EMI said about these DRM-free sales is "Early revenue indications for this initiative are encouraging", an intentionally vague statement that suggests the strategy has only offered a minor boost in sales.

Granted, the added thirty cent per track premium EMI insists for DRM-free music may be what's most hampering that effort. Because iTunes does a reasonably good job at making the DRM on its tracks appear invisible to the average iPod user, many feel less that compelled to pay more. Even though the restrictions of DRM become much more visible should a user possess additional players other than their iPod, until all of the major labels release their full catalogs without DRM consumer incentive to switch away from iTunes is at best modest.

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