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DRM-free music: EMI calls the tune and Apple takes the credit

Dangerous times for the record labels

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So these new, higher quality tracks are going to appear on a P2P network at some stage. OK, whoever offers them can be prosecuted, but it will still happen. Are the tracks watermarked? Can EMI people tell if they have arrived out there in piracy land? There are some fairly sophisticated ways of tracking music, with or without a watermark, so EMI will have a handle on how many copies of its high quality music are up for grabs at any point in time, and to some extent it can harass those offering it illegally to the point where enough people continue buying the music, rather than get it illegally. Probably.

But if that’s all true and a buying habit is retained by enough people out there without DRM, then the other record labels just have to follow suit, partly so they can rid themselves of the costs associated with DRM and partly because of the hike that EMI might generate in short term, catch up and replacement revenues.

Naturally EMI chose to start this new idea with Apple, because of Apple’s CEO Steve Jobs making such a song and dance about it being stupid for record labels to issue music without DRM protection and then for Apple to be forced to use it. But EMI will be signing up with all of its existing outlets for online music pretty much as soon as they ask.

Apple's iTunes will use AAC formatted tracks, and complete albums from EMI artists purchased on the iTunes will automatically be sold at the higher sound quality DRM-free, with no price hike. So that is also an attempt to shift more albums, something that every record label has been trying to do for some time on iTunes.

Part of the huge losses that the record labels bemoan isn’t just piracy related. In physical formats consumers have almost had to buy albums, when often they only want a single track. iTunes and all online music sales which allow individual tracks, have killed all of that, and now people are back to buying singles.

EMI will also offer an upgrade to the DRM free version from an existing track for 30 cents in the US, 30 Euro cents in Europe and 20 pence in the UK. EMI music videos will also be available on iTunes without DRM with no change in price.

EMI will also offer WMA and MP3 formatted tracks and potentially other unprotected formats as each online music store approaches it. EMI says that it still believes in DRM when it is used to enable subscription services (where consumers can have access to unlimited music for a monthly payment) and for P2P delivered music that deliberately uses super-distribution as a form of promotion. Also it will continue to use DRM on time-limited downloads such as those offered by ad-supported services.

Apple said it would continue to offer its entire catalog of five million songs in the same versions as today in 128 kbps AAC encoding with DRM at the existing price of 99 cents per song.

EMI also cut a far less far reaching deal with Nokia to co-market and mobile music. Nokia will feature EMI at its flagship stores and websites, but it sounds a far cry from the full catalog.

Meanwhile music service provider Playlouder also said last week it had licensed the EMI catalog, but these will be the heavily DRMed versions of the EMI tracks, because this is a music subscription service that encourages music sharing. Playlouder has already signed Sony BMG and a string of independents to its service.

Copyright © 2007, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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