May 31, 2007 4:00 AM PDT

Will music industry dance again to Apple's tune?

A correction was made to this story. Read below for details.

news analysis Apple has plunged into uncharted waters by stripping security software off some of its music.

Never before has Apple sold songs without attaching antipiracy software--the digital rights management systems that prevent file sharing and are hated by many music fans. If successful, Apple's bold gamble to do away with digital rights management, or DRM, could act as a whirlpool that sucks the rest of the music industry into DRM-free music, say analysts.

Apple on Wednesday began selling unprotected songs from record label EMI. Shoppers have the option to purchase either a 256kbps AAC-encoded DRM-free song for $1.29 via iTunes Plus, or the usual 128kbps AAC-encoded DRM version for 99 cents.

The move is important on many levels. For the first time, consumers can play music from Apple's iTunes on digital players other than the iPod. For Apple, offering DRM-free songs could hand the company some credibility in dealings with European regulators, who want the company to open up iTunes to third-party hardware makers.

For the record industry, it once again may find itself being herded into a direction of Apple's choosing. In this situation, the record companies can only benefit, said Greg Scholl, president and CEO of The Orchard, a New York-based music distribution and marketing company.

"The only way we're going to discover the right way to grow the market is by experimenting," Scholl said. "I think the price Apple is charging is still too high and will probably inhibit (sales). But right now there isn't enough data to know what the right pricing is or how to market digital music. At least Apple is trying something new."

It's important to note that the music being offered without copy protection by Apple and EMI represents only a fraction of the most popular music.

The majority of Apple's 5 million songs still feature Apple's FairPlay DRM scheme. EMI is the only one of the four top record labels to release unprotected music. The other four account for 70 percent of the world's music. While Apple said it expects half of its music to be available on the site without DRM, most of it likely would be the millions of songs iTunes offers from independent labels.

A low-key launch
Curiously, Apple didn't exactly ballyhoo the new service. The company on Wednesday placed an advertisement on iTunes' front door amid a handful of other promotions. Customers must also first upgrade to the latest edition of iTunes in order to obtain EMI's unprotected songs.

That DRM-free music wasn't promoted heavily worried Scholl.

"I would think that if you're a major label and you don't want something to work, the best plan would be to hide it," Scholl said.

Even the staunchest DRM proponent must recognize that copy-protection software is losing some momentum. Two weeks ago, Amazon.com--the fourth largest distributor of music online--announced that a new digital music store due to open soon would also feature unprotected music. Industry insiders told CNET News.com that they expected other top e-tailers to soon try out DRM-free music.

Even Microsoft is following Apple's lead. Immediately after CEO Steve Jobs issued his February letter calling for an end to DRM, Microsoft said the total abolition of such protections would be irresponsible since they are needed for subscription music and other new business models. But the company reversed itself in April and announced plans to offer DRM-free music from EMI and others.

What Apple has succeeded in doing is to raise questions about how the music industry is pursing its digital music strategy, said Susan Kevorkian, an IDC analyst.

Chief among the questions is why the record labels place copy protection on digital songs but not on CDs.

"CD specifications never included native content protection," Kevorkian said. "New CDs purchased today aren't protected either so there's been this inconsistency in the music industry's strategy. When you have an unprotected CD, you can rip songs to MP3s and do with them what you want. We think that by pursuing a more consistent digital strategy the potential is there to reach more consumers."

The record industry has said in the past that placing copy protections on CDs is expensive. The format was developed long before the digital age or the "consumer-oriented Internet" emerged, said one record executive who asked for anonymity because she was not authorized to speak for her company.

Regardless, Apple's DRM-free offering shows how easily the company can put the record industry on the defensive. What happens if DRM-free music on Apple becomes popular?

Kevorkian suggests the music industry start worrying less about fighting piracy and more about profiting from downloads.

"They can try new strategies around prices and marketing, particular to older buyers," Kevorkian said. "There are different paths to go down to drive music sales and those paths are better than what we've seen to date."

 

Correction: This story misidentified the DRM-free format Apple is selling. The songs are on AAC.

See more CNET content tagged:
EMI Group Plc., music industry, digital-rights management, Apple Computer, digital music

46 comments

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Apple trying something new?
What about all the artists, labels, and distribution sites that have never distributed their music with DRM in the first place?

I suppose it didn't count when THEY did it, because it wasn't coming from the RIAA.

Perfect example: <a class="jive-link-external" href="http://werkshop.com" target="_newWindow">http://werkshop.com</a> (Nettwerk's online store). You can buy $0.88 MP3's without any sort of DRM, from pretty much any Nettwerk release. And they're technically outside the RIAA, but not as indie as some other labels out there - they have many hit commercial artists (Delerium, Sarah McLachlan, Barenaked Ladies, etc.)

They've even made a mission statement out of NOT suing their fans.

They are a model for the industry, if you ask me... screw EMI, and Apple. It's all a PR stunt if you ask me.
Posted by DraconumPB (229 comments )
Reply Link Flag
There are some delicious decaf coffees out there
I suggest you try one and calm down. The fact is that 99% of music is owned by big labels that demanded DRM from Apple to sell it on iTunes. I am not saying it is right or that I like it, just the way it is. Now evidently you think Apple is at fault for not regulating itself to a small segment of the music market. Frankly, you are stupid. I have never bought music from iTunes, all my music is pirated, but I don't begrudge Apple for what record companies made them do.
Posted by expatincebu (156 comments )
Link Flag
Agree with you...
on the PR stunt thing. Whats even more shamefull is the Royality crap they are pulling with streaming radio sites. I really tire of the spoon feed drool they give us and try to pawn off as real artists and you can tell right away that its not about what you want to listen too, its what the RIAA and its supporters want you to listen to so they can fatten their wallets.
Posted by Atari05 (45 comments )
Link Flag
Here's the catch, of course...
If you have mp3's in your itunes library that you acquired in other ways, apple flags those for upgrade also, forcing you to re-purchase the non-DRM music that you already have if they have new, non-DRM copies. I knew they would try that, nice rip-off job, Jobs...
Posted by mikebegert (15 comments )
Reply Link Flag
Not true
That's not true at all. iTunes only offers to upgrade songs you've
purchased from iTunes. And you're never "forced" to upgrade at all.
Sorry, but your FUD won't cut it here, Bill.
Posted by chabig83 (535 comments )
Link Flag
Utter nonsense. Stop the FUD.
You have be shilling for some other company. That is just
complete FUD. Anyone who is concerned can check it out for
themselves.

That's not how it works at all. The iTunes music store has a
record of your purchases and will let you upgrade those songs
you have purchased that are now available in the DRM-free,
higher-bitrate versions. IT DOES NOT SCAN YOUR LIBRARY!
Stop lying.

I've ripped hundreds of CDs into iTunes, but there is only one
song I bought from the iTMS that is now available DRM-free, and
that is the only one that iTunes tries to upgrade.

My only complaint with the upgrade option is that it is all-or-
nothing, where I can imagine wanting to upgrade only certain
songs. Still, I understand why they do it this way, since credit
card transaction fees would be a huge proportion of a bunch of
single upgrades.
Posted by Thrudheim (306 comments )
Link Flag
iTunes Plus also includes Music Videos
I just purchased a music video that had a + next to it and lo and behold, it has no protection. I even managed to transfer it to my phone.
Posted by JosephSukhbir (2 comments )
Reply Link Flag
Easy audit point for RIAA!
Quote from link below regarding Apple's DRM-less files:<br>
"...songs sold without DRM still have a user's full name and account e-mail embedded in them, which means that dropping that new DRM-free song on your favorite P2P network could come back to bite you."
<br>
<a href="http://arstechnica.com/news.ars/post/20070530-apple-hides-account-info-in-drm-free-music-too.html">http://arstechnica.com/news.ars/post/20070530-apple-hides-account-info-in-drm-free-music-too.html</a><br>
<br>
The RIAA will have a field-day simply scanning P2P networks and Torrent sites for DRM-less AAC files now and coming back and nailing the fool who uploaded it there! I'm sure Apple would quickly hand-over any other "confidential" account information when the RIAA knocks on their door!!
Posted by laxmanchip (21 comments )
Reply Link Flag
where are people's ethics?
I'm taken aback to hear so many people admit to pirating music on here. Then to hear people say that it's a bad idea for the music industry to want some control over how many people get copies of the music.

Is it ethical for someone who doesn't own any right to the music to be able to send out copies to anyone savvy enough to download a Torrent software and file? In the days of bootlegging hand-made goods, a pirate was marked when caught in the illegal act of bootlegging, why shouldn't the same happen to people dumb enough to post something they registered for? Now, if someone registered for it and someone else took it without their consent and posted it, I can see it as unfair. This once again shines light on how wrong it is for someone to STEAL anything. You not only hurt yourself (with karma or what you will) but you involve a person who went through the legalities and HAD TO PAY FOR IT.

I believe we pay for possessions not because we like it but because the money compensates a good percentage of the people involved in making our goods.

You wouldn't go into a furniture store and ask the maker to TORRENT the goods he makes. I can see how a world of this would run, you'd have couches built half-heartedly with no matching parts, beds ridden with viruses and broken parts.

You're paying to insure quality and a future for commercial enterprise. Every company started as one casual group that struggled to make profit. Don't begrudge the monsters we all created and continue to create. Man is creator and consumer.
Posted by guitartistic (1 comment )
Link Flag
DRM-free AACs are still AACs
Perhaps once the DRM issue has gone by the wayside, we can talk about what an aurally sub-par codec AAC is - even with the net 256-kbps bit rate, the DRM-free AAC files sound muted and flat.
Posted by wcuthber (2 comments )
Reply Link Flag
AAC codec... etc.
People will buy more music when its at least as good as CD 44/16. I cant even listen to anything less. Im glad to see Apple moving in the right direction and offering a higher bit rate. It should be more about quality and not quanity
Posted by Grady Jarrell (1 comment )
Link Flag
Get the fact straight, it's EMI's bold move, not Apple
It's amazed how people distort this piece of news. It's a bold move of EMI, not Apple. EMI approached Apple to offer DRM-free files, not the other way around!
Posted by Pixelslave (101 comments )
Reply Link Flag
RE: Get the fact straight, it's EMI's bold move, not Apple
My congratulations. You must be proud to have been in on the
discussions from day one so that you know who made the initial
move. Let us do give credit where credit is due. Both companies
took a bold step here. Apple for taking a stance that music
should be DRM free and EMI for deciding that it was worth a try.

Now if people will actually take advantage of this and actually
purchase DRM free music instead of pirating it EMI just might
find the deal to be very profitable. If they do then the rest of the
industry will have to follow suit.
Posted by protagonistic (1868 comments )
Link Flag
Actually, it's both
Yes, it's a bold move by EMI to be the first big label to go DRM-
free. They deserve credit, no doubt.

To be clear on the history, however, one need only go back to
the press conference where the deal was annonced. There, EMI's
CEO was asked a question about the origins of the decision:

"Q: It's a pretty radical step, Eric. How did you reach the decision
to do it? Was it Steve Jobs' letter that convinced you? Was it the
internal surveys you've done? What was the moment in which
you said, 'Damn it, we're gonna go DRM-free?' And will the extra
sales be enough to compensate for the declining physical sales?

"A: We've always known Steve's view on the subject, long before
his open letter. "

Jobs, as it has been reported elsewhere, has long pushed the big
labels to go DRM-free. He told them from the very beginning
that DRM systems would always be broken.

The full transcript of the interview can be read here:

<a class="jive-link-external" href="http://www.appleinsider.com/articles/07/04/02/" target="_newWindow">http://www.appleinsider.com/articles/07/04/02/</a>
jobs_talks_new_itunes_functions_drm_and_video_ipod_storage_t
ranscript.html
Posted by Thrudheim (306 comments )
Link Flag
Go Apple!!!
Go Apple force those greedy suckers to do what's right. DRM Free!!!!

Robert
Posted by Heebee Jeebies (632 comments )
Reply Link Flag
Should consumers pay premium DRM-free?
This feels like an issue for the industry to work out rather than putting it on consumers. A price premium to regain the flexibility we once had is a bit annoying, and it looks like I'm not alone...

<a class="jive-link-external" href="http://www.buzzdash.com/?page=buzzbite&#38;BB_id=19196" target="_newWindow">http://www.buzzdash.com/?page=buzzbite&#38;BB_id=19196</a>
Posted by anywhereman (20 comments )
Reply Link Flag
Its all about raising price
The movement away from DRM is really all about raising the price of a track. Notice that now iTunes makes the higher price, DRM track the default selection when there is a choice. Check out the Ad-Supported Music Central blog:
<a class="jive-link-external" href="http://ad-supported-music.blogspot.com/" target="_newWindow">http://ad-supported-music.blogspot.com/</a>
Posted by Marc Cohen (3 comments )
Reply Link Flag
Don't you think it's WORTH more?
Wouldn't you say a non-DRM file is worth more than a DRM'd song? Or, that a DRM'd song is worth less than a DRM-free song?

If it's not worth more to you, you still have a choice!

Personally, I'd pay $2, or even more, for a non-DRM song! Usually, I buy the whole freekin' CD! I've never downloaded anything from iTunes, mainly because of the DRM.

It's not clear that Apple is making more money of these... We don't know how much more EMI is charging Apple. Hopefully EMI and Apple will make tons of money on this experiment, and the other labels will be forced to join in!
Posted by DougDbug (62 comments )
Link Flag
Didn't raise the price.
The old product (128 w/ DRM) is still available for the same price.

The new product (256 w/o DRM) is available for 30 cents more.

Or you can buy the new product as an entire album for the same price as the old product.
Posted by open-mind (1027 comments )
Link Flag
DRM Free Music
Apple is profiting by not protecting music. Itunes should just remove the DRM off all of the music. I bet they would have more buisness if they did. Microsoft should wipe the floor with Apple and come out with a music service that does not have DRM.
Posted by Joeyp770 (1 comment )
Reply Link Flag
But I can only play DRM free on Ipod? Won't work on Zune?
Unless I convert the AAC to mp3. I could have done that by burning it to CD.

I have a feeling keeping it in AAC and not offering MP3 will hinder sales.
Posted by bobby_brady (765 comments )
Reply Link Flag
WRONG...Zune WILL play Itunes Plus AAC
Check the specs...Zune will play the Itunes Plus format.
Posted by woods1966 (1 comment )
Link Flag
Always the critics...
The iTunes Music Store has sold literally billions of individual
songs and albums yet is a complete failure in the opinion of the
pseudo-audiophiles and pseudo-marketing experts who claim
to know how it SHOULD be done.

I'm laughing my arse off reading the drivel contained in this
story thread. I especially chuckle at the ones who solemnly
swear not to buy anything unless and until the world conforms
to their wishes.

Keep it up. This really funny stuff!
Posted by lkrupp (1608 comments )
Reply Link Flag
destroying whats left/pete anderson/littledog records
just another step in deconstructing the music bz. when this is left up 2 the amateurs...u think music is bad now just wait....they should never have allowed subscribers....if u have a library card &#38; can give away anything u like 2 whom ever u choose what is left ....they just keep carving into the retail sales dominion....apple has enough $...&#38; emi has already done enough damage 2 the bz. w/the music they sign &#38; promote...if u don't allow people 2 subscribe &#38; they have 2 purchase from urr site only..while only hearing 30 seconds of a few tunes....then u can control the price point.(supply &#38; demand)..the only people posting or trading urr material r people who have stolen from u...these peolpe r morons &#38; should b not allowed near the arts...
Posted by pete anderson (4 comments )
Reply Link Flag
wow
People who can not spell properly should not call anyone a moron.

Further, the music business is broken. Bands on indie labels are just about the only ones creating quality music. The major label do nothing but put out prefabricated crap.

This will not kill them off, even though they deserve it. What Apple should do is start promoting quality music and spotlight it.
Posted by MSSlayer (1074 comments )
Link Flag
What they still don't seem to comprehend - 16 bit sucks
ONE DOLLAR FOR A LOSSY FORMAT???? Not only that, but its low quality all around, under 300 kbs, and with severe morphing of high range sounds as well as lows. You can download free concerts in 24 bit flac file (sometimes monky audio) from archive.org already, and you want to charge me what for a degraded copy of some pop studio recording... where do you get your weed man. Atleast give us 16bit apple lossless files, cd quality or bust. Oh and incase your having trouble playing those 24 bit files on your computer, just stop trying to use that new version of winamp and get yourself a foobar player, then go under options and tell it to keep lossless files at orriginal depth. Don't buy anything untill they raise the quality of product to atleast 70's standards.DRM killed the sacd, it killed the dvda and its going to kill bluray and hddvd. Don't bother spending anything on these products, its like investing in betamax.
Posted by beefygoblin (3 comments )
Reply Link Flag
CD's are a "lossy format"
By definition.

70's standards were vinyl disk and power amps, with big speakers.
Posted by CitizenX (522 comments )
Link Flag
DRM Removed But "Watermark" Added
Per story in same issue of c|net news. The supposedly DRM free
new service places your name in the music file. So instead of DRM
hassles Apple/EMI have a way to see who "shared" the music. Hope
your song doesn't get away from you since your ID in the music
could be spread to thousands of people if it gets used on a P2P
website.
Posted by osxxp (6 comments )
Reply Link Flag
Industy wants is fighting to keep the Green Card whip
Industy wants to keep control of the Green Card.

Industry has come out against the current immigration bill, because this bill takes away the Green Card whip that industry has wielded, for decades,like a sword of damacles on their immigrant employees.

Currently an employer must start and complete the Green Card application for an employee wanting to stay in the United States. If the employee changed jobs before completion, the employee would risk losing the green card.

The Immigration reform bill would put control of the Green Card application in the hands of the people, and award green cards on the basis of merit (not employer loyalty). Merit such as learning English, learning a skill... things that almost all U.S. citizens agree an immigrant should possess.

Industry is very afraid of the current bill, this bill would remove the whip that industry has wielded for years against an employee changing jobs. That inability to strike, walk-off-the-job, change-jobs, look for a better job, is what makes foreign labor so attractive to industry in the United States.

I urge everyone to write their senators and tell them NOT allow any amendment that puts the shackles back on people immigrating to this country. People should be free to choose their employer, and not be indentured to their employer in order to become citizens. There are ammendments being proposed by a group of SPECIAL-INTEREST only senators, that would keep the shackles on.

I urge you to write you Senator (or future senator if you are working on become a citizen) and tell them that you oppose any such ammendment. Keep control of your future here, and help others to keep control over theirs.
Posted by reggy6654 (5 comments )
Reply Link Flag
Great
I think this would be great - however I realize this comes with responsibility on the part of the consumer. Do I get my music and give it to my friends? Heck no. I like the freedom of moving my music around. Just recently the wife had me move 350 of her music CDs onto our house server so she could listen to her music anywhere in the home - from her laptop, iPod, or from the xbox 360 media center - now with the addition of this DRM free music - I can move those tracks onto our house network. I love it! I give thanks to the music industry for opening up a little. I realize they are entitled to their money - but as a consumer - I am entitled to play it anywhere.

Now if I can do the same with my movies, I would be thrilled. I could care less if they embed my name in it, my email address, and my whatever else they can think of - I want it for myself - watch movies on my own laptop, it would be nice to turn on the TV and scroll my movie library and play a movie I OWN that I put onto my home network. People who rip off the music / movie industry should be ashamed.
Posted by GreenSmudge (4 comments )
Reply Link Flag
 

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