"Today, EMI is taking the next big step forward in the digital music revolution. This is something that will become very popular" said Apple's CEO, Steve Jobs. He was referring, of course, to the fact that Apple and EMI are going to start selling DRM-free music (no copy protection) through the iTunes Music Store. The tracks are going to be higher quality and cost $1.29 (as opposed to $.99 for their lower-quality DRM-encumbered counterparts).

Wow! A recorded music company is going to start selling a digital music product that an average 11 year-old can create by herself and share with her friends. Is this news? Did EMI miss the part where 95+ percent of music found online is already free and already higher quality than you can buy from Apple? Is there any song you might want that you can't find as a free download in under 15 seconds? Hey everybody! It's April 2007 -- this ship has sailed!

It's hard to believe how much industry press coverage (and commentary) this topic is enjoying this week. Many writers and analysts were so focused on this singular issue that they had to add an unrelated story about anti-trust in the EU just to keep it alive. I'm wondering what all the fuss is about?

Depending on whom you ask, you will hear two sooths being said. 1) iPod sales will go up. 2) iPod sales will go down. Mr. Jobs must believe the former or you can be sure Apple would not be involved. Remember, even though they dropped the word "computer" from their name, they are in the hardware business.

You must also remember that iPods already play unprotected .mp3 files. It's the other hardware in the world that can't play Apple DRM-encoded files. This concept is called interoperability and it is always a favorite subject of armchair quarterbacks. Many tout it as the ultimate goal; others (like Mr. Jobs) are more interested in their own ecosystems than creating or working with industry standards. Both camps have excellent arguments; so far Apple is wining.

Will EMI's DRM-free tracks impact iPod sales? Not unless every other major recorded music company follows suit. And then, only in so far as it will add a little competition to Apple's stranglehold on the personal music player business. There will be some other players introduced and Apple will have to add features and benefits to their products to maintain their lead. I'm not worried. Steve Jobs is the world leader in making me personally buy stuff I don't need with money I don't want to spend. If you could look in the box in my closet marked "iPod graveyard," you would understand.

Your next question has to be, "Will this help or hurt the recorded music sales?" The cheeky answer is the punch-line to the old chicken soup gag, "…it may not help, but it couldn't hurt." Can recorded music sales get much worse? The simple answer is, yes they can -- and they will. Like I said, this is not news. If you want high quality .mp3 files of a song, search the title online or rip it from a friend's CD. If you want a real doom and gloom scenario, take the number of households with broadband connections, the fact that computer and hard drive prices are in a freefall and the popularity of social networks and plot them against the highest quintile of music consumers. The resulting business forecast will make you very, very sad.

Is there any reason you should care about this announcement? I don't think so. It's going to be really hard to predict if someone has a choice between purchasing the same song with DRM and without DRM why they wouldn't drop the additional 30 cents and have the convenience of moving it easily from device to device. Will consumers understand the value proposition of DRM-free? Bottom line -- it's nice to have, but I don't see it impacting the idea that people with more time than money pirate songs and people with more money than time pay for convenience. The price points are just too close to each other. And, for album purchases there is no difference at all.

Kudos to EMI for trying something new. I would love to care about this issue and I would love for EMI's sales data to prove that this mattered at all. Not for a short-term bump, but as an important change in the value chain of the music business. I don't have high hopes.

What the industry really needs is legal ways for consumers to use (and pay for) music that is owned by others in their UGC and uploaded videos. We need a fully automated version of the Harry Fox Agency (for mechanical rights), check boxes on iTunes and other online music stores that let us pay for other rights (like sync rights, source licenses for public performance, parody and master rights) that most people don't even know to ask about. We need education for music consumers about the value chain and we need it simplified. There are dozens of rights associated with each piece of music and there can be dozens of rights holders to negotiate with. Most people can't articulate these rights, how can we blame them for not paying. There's no easy way.

DRM free does not mean free to use. It means free of copy protection and usage tracking. The biggest result of this announcement may be that people believe that for another 30 cents they actually own the music. Talk about the law of unintended consequences!

Comments

[pdq]

There are dozens of rights associated with each piece of music and there can be dozens of rights holders to negotiate with. Most people can't articulate these rights, how can we blame them for not paying.

Right on. Like, DVDs are far too complicated for me to understand. How they turn all those teeny-tiny little ones-and-zeros into pictures is beyond me. Therefore, I feel entirely justified in making copies and giving them (or better yet, selling them...yeeaahhh...) to my friends or strangers.

And you know what? Cars are waaaay too complicated, too. I mean, some of my friends are all "whoa, dude, you shouldn't have stolen that guy's car" and I'm like, well, I would have paid him, but is he like the only one who should get the money? I mean, he didn't invent that car, or even build it, so I say, screw it- transportation should be free, man....

[InRussetShadows]

Apple is making a wager that people are basically honest -- to wit, that if a track is widely available, legal, and without DRM, that there will be no excuses left not to buy it. You may think that people won't change their piracy habits now, but one by one, Apple is taking away the rationalizations FOR piracy. "I can't get song ZZZ legally." Itunes store. "I can't get the song cheaply." 99 cents. "I can't get the song without that *&^&! DRM." Enter EMI/Apple. You see? Because the customer has nothing left to complain about except for price, Apple has kicked open the door to hard-and-fast prosecution of people who do pass around gobs of unpurchased music. (And Apple does know what you've bought from them. I think other online retailers do, too.) Some people (many?) out there now have a reason to be scared. The endgame is in sight.

[Doug Adams]

Is there any song you might want that you can't find as a free download in under 15 seconds?

Are you advocating piracy?

[Michael Fischer]

I fully accept the author's basic concept, that people with money will buy music, people without much won't. But this is as it has been since the first cheap recording devices 40 years ago. The reason music labels are losing money is pretty simple ... they are releasing fewer new titles, and the ones they release have passed through some kind of beancounters voodoo rather than a search for new talent. If you release 20% fewer titles, as the American industry did in 1994, you shouldn't be surprised if you have a 15% fall in income. In the UK in 1994 there was neither a drop in titles released nor in income. Go figure.

[Lewis O'Neil]

"Did EMI miss the part where 95+ percent of music found online is already free and already higher quality than you can buy from Apple?" You're wrong. Most music files available from peer to peer networks is in crappy 128Mbps MP3 format with much of it having incomplete or just dead wrong meta data in the ID3 tags. The crappy and inconsistent quality of peer to peer downloads has always been one of the primary reasons to buy songs from iTunes. If your time is valuable then it would be stupid to spend it correcting messed up ID3 tags or hunting for another copy. Not only have all iTunes songs always had all the correct ID3 tags they also have had the album artwork for a while and now they'll soon be available at a much better sound quality--256Mbps AAC format. AAC (the audio layer of MPEG-4) has always produced better quality sound at the same bit rate than MP3 (layer 3 of MPEG-1). These new 256Mbps AAC files from iTunes will be much higher quality than the average file you find via the peer to peer networks.

[Lantz]

Wow, if I didn't know better it sound like you're promoting piracy. I've been encouraging my 4 early 20+ year old children to buy their music legally online since iTunes Music Store opened and we got our 1st gen iPod. We have 6 ipods amongst us and I just gave my children each a $50 iTMS gift card for our family's gift giving day. This IS news and ALL the media should be promoting this as a very GOOD thing. Get the word out!