iTunes Store becomes DRM Free

The first and most fundamental policy change is that, from today, the four major labels – that’s SonyBMG, Universal Music, EMI Music and Warner Music – along with thousands of independent labels will now be making their music available in a DRM (Digital Rights Management) free format.

Fundamentally this means that once a consumer buys a track from the iTunes store (which has sold over 6 billion songs to date), there is no limit to the personal uses to which it can be put - including burning it onto as many cds as the individual chooses, storing it on multiple computers, or copying it to numerous iPods. Apple have long argued with labels that DRM has been a substantial inhibitor to the continued growth of the download market. Now, it seems, in effect the labels have agreed, figuring that there is more money to be made by freeing up the use of downloaded music - and thereby hopefully deterring the illegal downloading of tracks.

In a second major development, beginning in April, differential pricing will be introduced into the iTunes store - with the effect that that some songs will cost €1.29 - that’s 30c more then the current price point of 99c - and others will cost as little as 69c - 30c less then the current per track price point.

Industry watchers see the two developments essentially as trade offs. Apple have faced increased regulatory pressure within both the EU & EFTA (Iceland, Liechtenstein, Norway & Switzerland) regarding the stranglehold that iTunes and iPods have on the digital music market. “In a sense they are the victims of their own success,” one leading Irish record industry figure told Hot Press. “There is no doubt that the relationship between the iPod and iTunes is to some degree a form of restrictive practice and they have been so successful in maintaining it that other formats have been finding it extremely difficult to get off the ground. Now at least they are offering a less rigid service, which will put the lid on at least some of the bureaucratic resistance that has been building.”

Differential pricing is a key strategy to anyone in the business of selling music and one which record labels have been hankering after within the digital download market leader, so there is a clear benefit for the record companies in the new arrangements. The feeling, meanwhile, is that getting labels to agree to a DRM free model will allow Apple to continue, at least in the short term, to keep the iPod & iTunes in their current interwoven set-up, thus maintaining their effective stranglehold on the digital music market.

The announcement came shortly after Apple had made a dramatic statement insisting that Chief Executive Steve Jobs was not suffering from any major health problems. The statement pointed out that the serious weight loss Jobs had suffered was as a result of a hormonal imbalance, and not of a more serious or life-threatening illness. It is also the last such Apple appearance at Macworld, shortly before the Jobs announcement, Apple had indicated that 2009 would be the last time they exhibited at hugely popular show.