iTunes Sets Up DRM-Free Zone

DRM-free music hit iTunes Wednesday with the launch of Apple's (Nasdaq: AAPL) new iTunes Plus. Fans of artists including Coldplay, The Rolling Stones, Norah Jones and Joss Stone can download high-fidelity singles and albums that will play on iPods or just about any other portable media player.

"Our customers are very excited about the freedom and amazing sound quality of iTunes Plus," said Steve Jobs, Apple's CEO. "We expect more than half of the songs on iTunes will be offered in iTunes Plus versions by the end of this year."

Free at Last

The tracks available through iTunes Plus, unbound by restrictions known as digital rights management controls, cost users a premium US$1.29 -- 30 cents more than a normal iTunes song. Downloaded tracks from EMI will be sold without the limitations consumers have come to expect from the iTunes Music Store. No DRM means songs can be played on virtually any digital audio device or computer. Users can also upgrade previously purchased tracks and albums from EMI to the DRM-free version for a surcharge of 30 cents per song, or $3 for most albums.

The additional 30 cents for the DRM-free tunes also purchases tracks at a high-quality 256kbps AAC encoding, as opposed to the 128kpbs AAC encoding for buyers get with the 99 cent songs. The audio quality on the more expensive tracks is "virtually indistinguishable from the original recordings," according to Apple. Along with EMI's entire catalog of songs, iTunes Plus also includes EMI music videos.

One Down, Three to Go

With more than 2.5 billion songs, 50 million TV shows and more than 2 million movies sold, iTunes is the world's most popular online music, TV and movie store. In general, industry watchers have applauded Apple's and EMI's deal to bring DRM-free music to the iTunes Store and its catalog of more than 5 million songs, 350 television shows and over 500 movies.

The deal was a must for both Apple's Jobs and EMI, according to James McQuivey, an analyst at Forrester Research.

"The DRM-free catalog represents ground that EMI and Apple gave each other, because they both needed it," he told MacNewsWorld. "Apple needed to show some movement towards DRM-free music since Steve Jobs made such a big splash with his comments earlier this year. EMI needed something to goose revenues a bit because it's struggling financially."

Both sides made concessions, McQuivey explained, with Apple giving on its long-cherished 99 cent music strategy and EMI letting Apple take all the credit for removing DRM, even though the recording company has been experimenting with that since 2006.

However, he added, "the evidence that consumers will pay more for that is a bit shaky -- that's why Apple is positioning the extra price as a quality issue. Consumers get twice the sampling rate for only 30 cents more. It's not clear whether this will work, but is the best shot they have."

Label Shoppers?

Wednesday's launch of the EMI catalog is a good start, said IDC analyst Susan Kevorkian, but consumers may have issues when shopping for music based on record company and not artist or track name.

"Launching with a single major [recording studio] on board is a place to start, but there is still a lot of work to be done, in terms of getting the other three majors on board, because consumers aren't accustomed to shopping for music based on the labels offering it," she told MacNewsWorld. "They are accustomed to shopping for it based on song information.

"So it can be confusing, frustrating or just not interesting to shop for DRM-free music via iTunes and not be able to find what you want, unless you fully understand that it is only one label that is being represented and are committed to finding DRM-free tracks," she added.

For Apple, the DRM-free tracks are a win because it allows the company to demonstrate to the European Union, in particular, that it is willing to have a more open approach to its iTunes Store and iPod strategy, Kevorkian pointed out.

"It's also a way to offer music to consumers that is more flexible to use than the DRM-protected tracks that were previously the only offering of iTunes," she concluded.