This has to be one of the biggest 'Game Theory' dilemmas faced by music industry excecutives who've been dragged into a world they hoped they'd not have to address for many more years.
So one of the record labels (and the one most often criticized for being head-in-the-sand) has taken the brave and long-overdue step to drop DRM on their downloads ...
The arguments were always there that this could not happen - however, it is slightly refreshing to see that EMI has stuck a first flag in the ground on this and seemingly swallowed it's pride in the war between Apple and the record companies over DRM.
This is by no means solving the problems for the record industry and the lacklustre response from the market shows that the record labels still have a long battle. EMI shares are hardly up on the news today and at 229p are still way down from c315p last July. In contrast, Apple is trading at almost $94 from around $50 last July.
There are a few unknowns thrown up by this EMI / Apple deal which be interesting to watch closely :
The consumer was also already confused by what on earth DRM actually meant - and when it was sort-of-buried in the background of iTunes no-one really worried as long as it downloaded and played on their iPod as if by magic. Raising DRM or Non-DRM file brings back the horrible three-letter acronym into the home domain and will no doubt scare off some people tentatively thinking about now buying online. Some good comments from Resnikoff on this.
Sure, some kids will always take some pride in getting something for free, but the ease of use of iTunes relative to other services (especially Limewire or others where experience can be very patchy) surely must mean that for a large proportion of the music buying public this is easier than constantly pestering friends to forward their tracks over to you every time???
Of course, for the ubiquitous iPod playback of DRM files was no big problem anyway, but if we do start to see more Wifi-connected etc players emerge from other manufacturers that you might want to blast your music out of this is the start of something in the right direction at least ...
Hundreds of comments on this from all angles ... amongst the more interesting we picked up included Rafat Ali - EMI Drops DRM for New Premium Line-up.
"EMI will make its entire digital catalogue available as high-quality, DRM-free downloads. The move enables consumers to play EMI's digital music on all portable media players, mobiles and home entertainment devices without restriction. Apple's iTunes Music store is to be the first online music store to provide EMI's music in DRM-free format. The music will be available in high-quality non-DRM version for USD1.29 or standard quality version USD0.99 with DRM. In addition EMI music videos will be available from iTunes Store DRM-free with no change in price. Albums of EMI artists purchased through iTunes will automatically be sold DRM-free, high-quality for the same price as existing albums. The DRM-free, high quality music is billed as a premium product.
EMI will make the recordings available for all music stores at the same wholesale price. Each store will be able to choose the encoding format (AAC, WMA, MP3 etc) for the music. EMI Music will still continue to use DRM for services such as subscription-based music, super-distribution and ad supported. DRM has been shown to frustrate consumers when music purchased through one service does not work on the consumer's mobile device. EMI CEO Eric Nicoli stated that EMI believes the high-quality tracks playable on any platform will boost sales.
When questioned about keeping DRM on standard quality music in the press conference for the announcement, both Apple CEO Steve Jobs and EMI CEO Eric Nicoli stated that the two versions provide consumers with choice, consumers that want higher quality, DRM-free music have one product while consumers that are not worried about DRM or quality but are price sensitive have another product. EMI CEO Eric Nicoli sees the DRM-free music as an important commercial step in EMI's turn around.
Downloads of EMI's individual tracks will have a price differential between high quality. DRM-free and standard quality, no such differential exists for the albums. This should been seen in the context of digital music selling relatively few albums compared to individual tracks. The lack of price differential is seen as a method to boost album sales along with Apple's recently announced top-up measure. Apple is not the only music service that is going to benefit from the removal of DRM. Currently, eMusic is limited to independent labels willing to provide their music DRM-free. EMI's move will allow eMusic to significantly grow their music catalogue by allowing them to offer a major label's music and consequently attract a wider audience of consumers to their service.
The multi-format availability of the music is likely to see music stores progress to a format that is playable on the greatest number of devices, eliminating the chance for consumers to pick the wrong format for their device. MP3 and AAC remain the leading candidates as both are supported by a wide range of portable media players, home entertainment devices and mobiles, far more than other encoding formats such as WMA (Windows Media Audio) or ATARC (Sony's audio encoding format). The move could also see a shift to the mainstream of open source, royalty-free audio encoding formats, such as Ogg Vorbis and FLAC."
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