EMI Drops DRM for Music Sold Through iTunes

LONDON--EMI Group has announced a plan to sell its music through online retailers without copy protection technologies, a significant move that should give consumers greater freedom in the way they can listen to music purchased online.

Apple's iTunes Store will be the first to offer the new-format downloads, which the companies say will be of a higher sound quality--but also carry a higher price--than existing offerings. Each DRM-free song will cost about 20 percent more than current downloads.

Setting New Standard?

EMI Group Chairman Eric Nicoli was joined by Apple CEO Steve Jobs to make the announcement this morning at EMI's headquarters here. EMI becomes the first of the big music labels to announce such a move, which could create pressure on other labels to follow suit.

"EMI's entire digital music catalogue will be available DRM-free on iTunes in May," Jobs said at the press event, which was also broadcast on the Web.

Jobs called EMI's move "the next big step forward in the digital music revolution," and said it will enable consumers to play songs from iTunes on any digital music player that supports the open AAC (Advanced Audio Coding) audio format.

Jobs said he will now try to negotiate similar deals with the other three big music labels, and predicted that half of the 5 million songs available through iTunes will be available DRM-free by the end of the year.

Apple will continue to offer EMI's music with the DRM technology and at its current audio quality, for customers who don't want to pay extra, Jobs said. And EMI expects to sign similar deals with other online retailers, Nicoli said.

Opposition has been mounting steadily to the industry's use of DRM, which prevents consumers from copying music illegally, but also creates what many see as unfair restrictions on the way consumers can listen to songs they have legally purchased.

Most notably, Apple's proprietary DRM system prevents people who buy songs from its market-leading iTunes store from playing them easily on any music player other than an Apple iPod. That restriction has attracted criticism, particularly from regulators in Europe who say it unfairly limits customer choice.

That will now cease to be the case, Jobs said Monday, although consumers will have to pay extra for the added freedom.

Drop DRM, Raise Price

Apple will sell individual tracks from EMI artists at twice the sound quality of existing downloads, with DRM removed, at a price of $1.29. The iTunes store will continue to sell tracks with DRM at the existing sound quality for 99 cents.

The DRM-free music will be available at 256K bps (bits per second) AAC, compared to today's quality of 128K bps AAC, Jobs said.

"Our research tells us that consumers would pay a higher price for a digital music file which they could use on any player," EMI's Nicoli said.

If consumers buy whole albums, rather than individual songs, the price for the DRM-free version, including the improved audio quality, will be the same as that of the DRM version, Jobs said. The music industry has been encouraging more album sales, which have been declining alongside the rise of digital music.

Customers will be able to "upgrade" their existing music collection to the new format by paying the difference in price for each song. For a library of 1000 songs that should cost about $300.

EMI artists include Pink Floyd, Janet Jackson, Depeche Mode, Iron Maiden, Moby, Queen and The Beatles. Some speculated that EMI would announce Monday The Beatles' music would be on iTunes, but the group's music remains unavailable online, Nicoli said Monday. "We are working on that and we hope it happens soon," he said.

Apple Eager to Ditch DRM

In February Jobs called for an end to the use of DRM on music files in a letter posted on Apple's Web site. Jobs' open letter argued that consumers would benefit because any player would be able to play music from any online retailer.

Reaction to Jobs' call from the major music labels was mixed. Warner Music CEO Edgar Bronfman said the idea of DRM-free music was "without logic or merit."

"We've always argued that the best way to combat illegal traffic is to make legal content available at decent value and conveniently," Nicoli said on Monday.

EMI appeared more receptive to Jobs' call, however. The company had already experimented with offering DRM-free music a couple of months earlier when it offered MP3 files by Norah Jones and Relient K through Yahoo's music store.

Jobs called Monday's deal "an opportunity for everybody to win."

"They customers win because they get what they want," he said. "They get higher quality audio and the safety net of knowing they can take this track and, without having to burn it to a CD, they can have it be interoperable. And music companies make a little more money in return for offering more value."

Piracy Threat Overrated?

A switch to DRM-free music will be good news for consumers, said Bryan Wang, an analyst with InStat in Singapore. Speaking on Monday in anticipation of the announcement, he said that consumers don't necessarily understand DRM and just want to be able to play purchased music on all their devices.

Removing the DRM won't necessarily mean a big jump in piracy, he said. The illegal sharing of music tends to drop off as consumers enter adulthood and begin working, so sharing content among people over about 20 is not that common. "We don't expect the illegal transfer of music will be that common," he said.

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