Jan 8, 2009

Tech - Apple's Music Deal Could Mean the End of DRM

Jennifer LeClaire

In what could be the final nail in the coffin of digital-rights management for music tracks, Apple on Tuesday announced a deal with Universal Music Group, Sony BMG, Warner Music Group, and EMI, along with thousands of independent labels, to offer music files on its iTunes Store without DRM protection.

The DRM-free music is available through iTunes Plus with higher-quality 256 Kbps Advanced Audio Coding for high-quality audio. The music can be downloaded from a computer or to the iPhone 3G.

The DRM-free songs will be available at three price points: 69 cents, 99 cents, and $1.29, with most albums still priced at $9.99. The prices are dependent on what the individual labels charge. Apple CEO Steve Jobs promised "many more songs priced at 69 cents than $1.29."

The RIAA's Sudden Move

The timing is noteworthy. The Recording Industry Association of America began moving to end its lawsuit strategy in December. The RIAA has sued thousands of people over the years for allegedly stealing music on the Internet -- about 35,000 people since 2003 -- but the group is reportedly looking for better ways to protect its members from online piracy.

"The RIAA has been backing away from lawsuits. This deal with Apple might explain why they have been doing that," said Phil Leigh, senior analyst at Inside Digital Media. "Apparently the RIAA was negotiating a big deal with iTunes to sell DRM-free tracks. It seems to me like the RIAA has accepted the inevitable here. This is an endorsement of the abandonment of DRM, signaling a more friendly relationship with the consumer."

Leigh expects the hottest bands to see the higher prices, while older music sells for 69 cents. Even though DRM-free music offers consumers more versatile ways to use tracks on a number of devices, it's the target audience with the least money that may have to pay the most for music: Teens.

"With the economy the way it is, I think a lot of people are going to be disappointed with the price increase," Leigh said. "I do think the youngsters that really go for the latest hot bands are going to see their prices go up. But they are also the ones that will be most appreciate of the abandonment of DRM."

Upgrading Your Library

The iTunes Store is offering a one-click option for consumers who want to upgrade their library of previously purchased songs to the iTunes Plus format. That costs 30 cents per song or 30 percent of the album price.

The iTunes Store began offering eight million of its 10 million songs in iTunes Plus format on Tuesday. The remaining two million songs in the iTunes library will be offered on iTunes Plus by the end of March.

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