Apple To Sell DRM Music? Say It Ain’t So!

by James R. Stoup Apr 02, 2007

Today Apple announced something big. They will now be selling high quality DRM free music from EMI, on iTunes. You may scream with joy now, I’ll wait.

Done? Good. Here are the details:

  • EMI is the studio involved
  • $1.29 per track
  • 256 kbps AAC DRM free
  • for 30 cents users can upgrade their old songs from EMI to DRM free songs

This is quite an important event for both music lovers and Apple. There will be many side effects of this move that we will see in the near future. Here are some of my observations on the matter.

Freedom—How this is a boon for users
Looking at this from the consumer standpoint, this is almost a deal with no downsides (notice I said almost, but I’ll get to that in a sec). The biggest draw, of course, is the lack of DRM. Now you can play your music on any device and share it with anyone you want. And, if that wasn’t enough, this deal is retroactive, meaning you can upgrade all of your old songs if you just pay the difference in price. How sweet is that? Now, the second most important thing in this announcement is the higher quality of these DRM free songs. Now, personally I felt that the current quality was just fine (but I’m no audiophile); however, I am thrilled that we now have this higher standard. And the third most important aspect of this deal is that it puts pressure on rival studios to release their own DRM free music, which of course will be another win for consumers.

The only downside to this little freedom-fest is that these new songs cost more. Not substantially more (it’s only a 30% increase in price) but enough for you to notice the difference. Here is a fact for you: the only reason that these songs come with a higher bit-rate was so that Apple could justify the price increase. Because this deal would have been a lot harder to swallow if people were asked to pay 30 cents more just for the privilege of accessing their own music. But add in the higher quality and suddenly it feels like much more of a deal. Personally, I would be happy with keeping the price and the quality the same, but that’s me. I realize Apple can’t give consumers a choice in the matter because that would make using iTunes harder and not easier. In fact, the moment the last studio signs up, Apple will kill its DRM songs, returning once again to a single price point.


Lawsuits & Money—Why this is good for Apple
The first thing that came to my mind after reading this was something along the lines of “well, at least the French et al will finally get off Apple’s back now.” Yes, the immediate win is that they are speeding down the road to no more lawsuits in Europe. Now they can forget about the hassles of making their DRM work with others because they have no DRM anymore. Score one for Apple. After that knee-jerk reaction though, here are some more insights into what they might be thinking. I would be curious as to how that extra 30 cents is being divided. Does Apple get more money? Or does it all go to EMI? Because if Apple makes anything on this deal then it is a major coup for them. Because currently iTunes hovers around the break-even point in an attempt to drive iPod sales. And so far this has worked well for Apple, but I know they must find this frustrating at best. After all, this is a company with the highest margins in the industry operating a service that just barely breaks even. I think making iTunes profitable (and I mean really profitable) is a big item on Jobs’ To-Do list.

But don’t be fooled, this is bad news for consumers. That 99 cents mark was kind of like a magic line that no one wanted to cross. But suddenly the line has surged forward! Yes, the new price is $1.29 and I am quite surprised that they didn’t just bump it up further to $1.49. The reason this is bad is because it sets the precedent that songs are worth more than a buck. Now, I recognize that at some point in time the price would have to increase due to inflation and so keeping it at 99 cents wasn’t going to last forever. But I thought it would last a little longer than it did. My ultimate fear is that within 5 years the price will creep up again. And it will continue to increase slowly as we are given more incentives to pay a higher price.

For example, I can easily see the following happening. Let’s assume that in two years all of the music sold on iTunes is DRM free and it all costs $1.29 a track. Now, if Apple said that for only 10 cents more you could get 10 pieces of cover art with your song, would you buy it? After all, it’s only 10 cents more? And wouldn’t all that cool art look great flashing across your iPhone? So you decide to buy the song at $1.39 and soon enough all songs are that price. Then a little while later Apple announces that for just 10 cents more you can get the lyrics with that song. Isn’t that great? For only a dime extra you get lyrics! So now you don’t have to sing “there’s a bathroom on the right” (as opposed to “there’s a bad moon on the rise”). And soon enough all songs have lyrics. And at some point we will look back and realize that the price has crept up to $1.49 (or more) and we didn’t even notice. Yes we will be getting a higher quality product, but we are also paying more. And it’s been my experience that people don’t like to pay more than they have to. And that 99 cents price point was very attractive to a lot of people. But time will tell.

And, lets not forget that as the price of music increases it will naturally pave the way for price increases in video. Expect TV shows and movies to all get higher bit-rates and higher price tags. In fact, I expect this to happen within the next 6 months. Will it be worth it? Probably. But that doesn’t change the fact that we will be paying a lot more for our media in the coming years. But maybe that is the price of freedom. Either way, we shall see.


Other observations

  • This makes the “squirt” feature on the Zune both useless and illegal. Good luck with that Microsoft.
  • Independent artists now have no reason not to join iTunes in force. Expect a wave of new music to hit the charts soon. 
  • This will eventually put a lot of pressure on the movie and TV studios to make their products DRM free as well.
  • I expect that P2P networks will actually lose traffic once this goes into effect.
  • The excitement from this press release will die down just in time for June’s developers event. I expect a very interesting “one more thing.”
  • Expect iPod and iTunes updates soon to handle this new DRM issue.
  • Microsoft will add this to the Zune marketplace by the summer.

 

 

Comments

  • You forgot to mention a key pricing feature.  DRM-free albums are priced the same as DRMed version.

    tundraboy had this to say on Apr 02, 2007 Posts: 132
  • iPhone can play DRM, so it doesn’t have the non-ipod tax and can play the .99 versions.

    BTW: Over the weekend my cousin was showing me his Zune. It’s OK, he actually got BROWN… But his biggest complaint was that he had to hook it up to the PC every couple days or he couldn’t play his music, not sure if that’s a DRM feature or what but he said it started doing it last month. Even cuts off his ripped down music.

    xwiredtva had this to say on Apr 02, 2007 Posts: 172
  • BTW: Shouldn’t the title state NON-DRM music… They allready sell protected rights music.

    xwiredtva had this to say on Apr 02, 2007 Posts: 172
  • If they priced albums at 12,99 it would have become all too obvious that a CD is plainly the better deal. Ahhh, iTMS, still the best way to preview music you’re ordering on CD, SACD-Hybrid, vinyl…
    So in short: The quality is now a little bit less of a joke, and you pay premium for the FREEDOM! of putting the given song… on your iPod, in about 75% of all cases. Sure, all the “1 h4t3 th3m iP0dz!!” active nonconformists are going to flock to the iTMS in droves instead of clinging to their beloved subscriptions, self-rips or illegal downloads. Not.
    Don’t get me wrong, no DRM is good, no inflated album price is good, any rise in quality is good, as miniscule as it is. But none of this is good enough, and is anyone really not guessing “$1,29 for all tracks in 2008”?

    Bad Beaver had this to say on Apr 02, 2007 Posts: 371
  • @Beaver,

    Thing is, Apple can’t just start offering their own proprietary lossless encoding, since that would only bolster the complaints of the “open-iTunes” coalition. Despite what anyone here or anywhere thinks, they’re going to have to cling to the industry standard, which may mean lower quality compared to our precious uncompressed goodies. As for the price, I’m very sure this is the result of a compromise for the lack of digital shackles.

    The prices of albums staying the same, however, is a very very sweet deal, despite seeming trivial to others. Slightly better encoding with no restrictions and same price? Well golly I’s a iTunes-buyin’ mofo.

    Kaiser Machead had this to say on Apr 02, 2007 Posts: 10
  • Sure they could, DRM-free ALAC can be converted to *anything* you wish. That’s about 5 clicks with iTunes.

    Bad Beaver had this to say on Apr 02, 2007 Posts: 371
  • Bad Beaver,
    One of the many complaints about the iTunes store is that it used an iPod-only format.

    By selling the open-standard AAC format, Apple avoids that criticism. Using ALAC would have just added more fuel to the “vendor lock-in” fire, even if the argument is BS.

    Sure, ALAC can be easily converted, but so could FairPlay tracks and that didn’t keep people from bitching constantly about them.

    With AAC, consumers get their way (an open format with no DRM) and Jobs gets his way (no more DRM; no more bitching EU regulators).

    ... and as Kaiser Machead mentions, DRM-free albums are STILL ONLY $9.99!  I think that’s a pretty fair deal.

    vb_baysider had this to say on Apr 02, 2007 Posts: 243
  • The biggest draw, of course, is the lack of DRM.

    According to Apple apologists, this was never a deterant as Apple’s DRM was totally and completely invisible and was not in any way harmful to consumers.  Plus, no one actually buys songs from iTunes from what I’m told.  And it certainly belies the previous arguments about the technical unfeasability of selling both DRM and DRM-free music.

    Second, I’m glad to see Steve Jobs being true to his word (albeit at a higher price).  I’m happy to be wrong about my skepticism of his motivations.  Let’s hope the other labels follow suit.

    I have to say, I didn’t expect the new pricing scheme.  Will that have a counter-balancing effect to those who would otherwise prefer the DRM-free music or who have boycotted iTMS because of it?

    Beeblebrox had this to say on Apr 02, 2007 Posts: 2220
  • This is cool. And does guarantee my next MP3 player won’t be an iPod, even though I could already circumvent DRM. But now it’s just got easy.

    I assume the 30 cents must go a fair whack of the way to Apple to cover the lost iPod sales.

    Which is cool, coz now Apple will have to build decent iPods, with things like user replaceable batteries, tougher screens, bonus features and so on.

    Chris Howard had this to say on Apr 02, 2007 Posts: 1209
  • DRM free music… wow Apple has removed the Only reason why I refused to continue to use iTunes.  Putting all the specifics aside, it’s a nice business move.

    Karl Oscar Weber had this to say on Apr 03, 2007 Posts: 18
  • I think it’s important to keep in mind that this is only one of the five major labels doing this.  iTunes is by no means DRM-free.

    It’s a HUGE step in the right direction, but we’re not there yet.

    Beeblebrox had this to say on Apr 03, 2007 Posts: 2220
  • Ok, can somebody tell me, how any iPod owner is really better off with DRM-free music?  I mean, how the f*** can you tell the difference until you want to do something vaguely illegal with the tracks you bought?  And I don’t want to hear the “But I have 37 computers (one in each room) and I want to play my music everywhere…” sort of excuse…  Even then there is only the minor inconvenience of ripping a playlist…

    The iPod has apparently been driving iTunes sales - not the other way around.  And, according to Apple (who have done studies - I know, I participated in one with a zillion questions about music purchases) 99.999999% of the music on our iPods is actually ripped from CD’s we own (true enough in my case).  So DRM really is a quick wank in the toilet block sort of issue - unless, again, you are determined to do something naughty with the tracks you purchase from iTunes…

    So it will be very interesting to see how many people pay the 30% premium for DRM-free music.  I mean, really, for 99.999999% of the music on iTunes, will the extra bit-rate be any more noticeable than the absence of DRM?

    Perhaps it is just a big case of “let’s call your bluff!”.  I mean, what will the Euro parliament be able to complain about if music is offered DRM-free and NOBODY BUYS IT.

    Now if you had a Zune that deleted all your music unless you connected it to a Windows Vista machine every 27 minutes…

    sydneystephen had this to say on Apr 03, 2007 Posts: 124
  • sydneystephen,

    This goes way beyond iPod ownership. DRM compatibility is being forced into our DVDs, televisions, stereo/home theater recievers, computers… everywhere media is consumed or moved from one peripheral to another to be consumed. (ie - DVD player->surround reciever->video monitor & speakers)

    The problem with that is that older technology (for instance my current stereo) that *doesn’t* support DRM will not be allowed to play new media as DRM becomes more prevalent. We are being forced to upgrade our home entertainment centers because the media companies are requiring all peripherals to support DRM in order to close the “analog hole”.

    I have perfectly good Bose speakers from the 80’s… but they don’t have DRM circuitry. They’re just plain old analog magnets and cones. If the media companies had their way, even speakers would have DRM circuitry built in (requiring all new ethernet cable-like wiring).

    My reciever has analog inputs—no HDMI, just S-video, composite, etc. These inputs don’t support DRM. If the media companies had their way, I wouldn’t be able to use my current home theater set up.

    Luckily we’re not completely there yet—but almost. Much of the new digital content requires HDMI. If you or I have home theater equipment that doesn’t have HDMI, and uses plain old analog video or analog audio, we’re screwed.

    New technology is creating a world where analog is no longer welcome because media corporations demand piracy checks along the whole line of operation—from the DVD all the way to the monitor and speakers. So far the hardware manufacturers (DVD players, receivers, etc) aren’t totally bowing to the media giants—we still have analog options, be we’re getting there. Expect an HDMI-only future in not too long.

    This move by EMI might be a watershed moment. If the content companies finally admit that adding layers and layers of DRM does nothing to prevent piracy, but only further burdens the honest consumer, the future of media is certainly a brighter one…

    And we won’t have to spend $5000 upgrading out home entertainment centers just to watch a freakin’ movie.

    That’s the big picture.

    Aside from that, I *have* had issues with tracks that I’ve moved between computers. I always get the “You only have 1 authorization left on this track” warning message or such. I have a couple computers and I’ve had to reformat the occasional hard drive (or upgrade to a larger one). If I forget to de-authorize the machine before reinstalling the OS, you lose an authorization on an iTunes track.

    I purchased the music legally. Why the hell should I have to keep track of the number of authorizations? DRM treats me like a pirate when I am an honest consumer. It’s onerous and unnecessary because it doesn’t stop the actual pirates.

    vb_baysider had this to say on Apr 03, 2007 Posts: 243
  • According to Apple apologists, this was never a deterrant as Apple’s DRM was totally and completely invisible and was not in any way harmful to consumers.

    This is a straw man argument—that’s not what “Apple apologists” have said.

    They have said that the record companies REQUIRED Apple to have DRM under their contracts. I can’t speak for all the others, but I’ve always maintained that I didn’t like DRM, but that it was up to the records labels to let it go.

    Plus, no one actually buys songs from iTunes from what I’m told.

    Again, that’s not what has been said. Clearly, a lot of people buy songs from iTunes… However, purchased tracks only accounts for less than 5% of the songs in the average iTunes library, according to consumer studies.

    Also, iTunes is NOT the only place people can get tracks for an iPod, as many have noted before but you always seem to ignore.

    Your claim has been that the iPod “locks you in” to iTunes Store, when that’s not true. You can legally obtain tracks from CDs and music stores that sell non-DRM MP3s.

    You can also sync non-iPods with iTunes (just not DRM protected tracks) since the iTunes software supports a number of non-iPod music playes (including models from Rio, iRiver, etc).

    You’ve continually claimed that DRM was the mechanism that Apple desired for this “lock-in” when that has not been the case. iTunes has built in sync support for non-iPod players, and the iPod can play music from other sources than the iTune Music Store. The vendor “lock-in” doesn’t exist the way it has been portrayed by you.

    You like to twist words and claim that people have been saying something different from what was actually said, but a few simple searches of the site show that you are wrongly portraying the debates points of others to make yourself look right when you’ve been wrong.

    vb_baysider had this to say on Apr 03, 2007 Posts: 243
  • This is a straw man argument—that’s not what “Apple apologists” have said.

    ORLY?

    Ok, can somebody tell me, how any iPod owner is really better off with DRM-free music?  I mean, how the f*** can you tell the difference until you want to do something vaguely illegal with the tracks you bought?,  And I don’t want to hear the “But I have 37 computers (one in each room) and I want to play my music everywhere…” sort of excuse… Even then there is only the minor inconvenience of ripping a playlist…

    Beeblebrox had this to say on Apr 03, 2007 Posts: 2220
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