What iTunes Without DRM Really Means

By

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Steve Smirk

So, I might or might not be interviewed by On the Media soon regarding my thoughts about the Apple/EMI deal that will soon bring us DRM-free iTunes music downloads. It’ll basically depend on if they can find me a studio in Toronto or not — I’ll keep you posted. In collecting these thoughts, the following thing occurred to me: I have no idea if it’s a good thing or not. After giving it some more thought, it’s definitely good, bad and ugly…I mean, unclear. This is the most theoretical I’ve gotten in awhile, so definitely click through to see what it’s all about.

Anyway.

The EMI deal is good, because DRM sucks. Everyone knows it sucks, including the record and movie companies, and people crack the protection schemes all the time. There are multiple pieces of software you can download that will make a pre-EMI deal iTunes song into a piece of totally unrestricted media. This is an acknowledgment of that fact. This is particularly true for music, where DRM never existed on CDs until people started making Mp3s and posting them to web sites and then to Napster. Hell, a CD from China will play as well on my stereo as a CD from the U.S would. This is not the case with DVDs.

The EMI deal is bad, because Apple is making no gestures whatsoever toward lifting the restrictions it has on video content sold through iTunes. It infuriates me that I can download an episode of The Colbert Report, but the only way I can actually watch it on my TV is to plug my computer into my TV or to buy an AppleTV. I can’t burn a DVD and watch it in my normal home theater. Steve Jobs made it clear in his commentary against DRM a few weeks back that his views only applied to music. This is ludicrous. There is nothing different about video and audio, especially as it pertains to TV shows, which are paid by advertising before anyone even sees them. It’s no wonder that video downloads are more niche — even under iTunes’ previous model, I could buy a song and burn it to a CD. That’s not the case, and the EMI deal confirms that Apple is fine with video being a totally locked-up format.

The EMI deal is ugly or uncertain because we don’t know that people will pay extra money to have totally unrestricted music. The success of iTunes suggests that they probably won’t. How do we know this? CDs cost more than albums do on iTunes. And yet iTunes has experienced rapid growth (more than 2 billion songs sold and counting) while the record industry as a whole has been in decline. What can possibly explain this?

Well, we’re actually not sure. It might be that people just love the convenience of iTunes and are willing to accept the burden of DRM in order to enjoy their music NOW. On the other hand, maybe it truly is all about price. What’s fascinating about the EMI deal is that we now get to see this theory tested in the marketplace. If, as some analysts have posited, DRM is a roadblock to long-term growth in digital media downloads, people should really take to the DRM-free versions of the songs — they’re as convenient as regular iTunes, but they’re also free of restrictions. But guess what? Though Apple hasn’t said how much albums of DRM-free music will cost, we can guess it will be about $13, instead of $10, if the extrapolation from song price is accurate. That’s a lot closer to the cost of CDs, which are also free of DRM. Therefore, we can see whether it was convenience or cost that has driven the success of iTunes. If it’s convenience, the better-sounding, totally free of restrictions EMI songs should take off compared to the restricted songs. If it’s not, and if price is the actual issue, then the 99-cent song model will continue to rule the day.

Here’s the sad thing: The latter outcome would mean that the record industry and record stores faltered in the earlier part of this decade not because of MP3 downloads, but because they charged prices so high that people were looking for an escape from. Which means that they could have saved themselves a lot of grief by just selling new albums for $10 instead of $18.

But hey, that’s kind of how history happens.

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27 responses to “What iTunes Without DRM Really Means”

  1. Peter says:

    The EMI press release stated that full albums will continue to be sold at $9.99, and all tracks bought as “Buy Album” will be the higher quality, DRM free files.

    From the press release: “Complete albums from EMI Music artists purchased on the iTunes Store will automatically be sold at the higher sound quality and DRM-free, with no change in the price.”

    See the press release here: http://www.emigroup.com/Press/

  2. DeadParrot says:

    To quote from the EMI press release:

    “Complete albums from EMI Music artists purchased on the iTunes Store will automatically be sold at the higher sound quality and DRM-free, with no change in the price.”

    No guessing needed.

    So, the new improved albums will be sold for $10, not $13. And all this was widely reported on Monday. You should rewrite the last 1/3 of your essay to reflect this.

  3. Rune says:

    As the announcements were made, I read that

    “Albums will be in the new higher quality/DRM-less format but remain at the same price.” (Macrumors).

    I haven’t read this in the official press release though.

  4. 123 says:

    Its also worthy of note that the bitrate of the non-DRM songs was increased, so perhaps that will also have an effect on overall sales, and is also more in tune with CDs sold in stores.

  5. Steve says:

    Apple and EMI clearly stated that album prices for the non-DRM, higher quality tracks would be the same as the current, DRM’d versions – 9.99.

    I can’t believe you didn’t catch that before you wrote this rant!

  6. Piot says:

    “we can guess it will be about $13, instead of $10”

    Do some research!
    http://www.emigroup.com/Press/

  7. will says:

    pete….albums will still be $9.99 as was posted in the press release, which I hope you read before your interview

  8. mare says:

    I remember that either Apple or EMI said that whole albums where still going for $10… Which makes your whole diatribe kind of moot.

  9. Todd says:

    to pick a few nits, neither one of which undermine your argument too much:

    1) The EMI deal actually DOES address video. All EMI Music Videos will be DRM free. I haven’t read anything to suggest these versions would cost more either. Obviously, music videos aren’t in the same league as TV Shows or Movies, but I don’t think it’s a complete ignoring of video either.

    2) When they announced the deal, they did say the new songs would cost more by the track, but that the “wholesale” price of albums would remain the same. Obviously, Apple could still raise the price on DRM-free albums by a buck or three, but there’s at least some hope that complete albums will still cost $9.99.

    Ultimately, it sure seems like the EMI announcement is much ado about nothing. Like, yeah, sure…fewer restrictions and higher fidelity are a good thing. No complaints there. It just doesn’t seem to me like it will change things a whole lot.

    It doesn’t seem to me like there’s been a massive popular outcry about the restrictions or audio quality of current songs. Plenty of super-geeky bloggers have complained about not being able to put their iTunes tracks onto their Linux-based, DIY portable Tivos. And the odd audiophile cluck-clucks about lossy encoding, but it just seems like most people don’t care at all.

    The ONLY time I’ve ever run into the usage restriction is when I wanted to post tracks to my blog. Other than that, I’ve downloaded from iTunes, transferred to my iPod painlessly, and not batted an eyelash. I don’t have 5 computers. I don’t burn a whole lot of CDs.

    I’m not at all suggesting that people NEVER run into the DRM restrictions. Just that the vast majority don’t. How many people actually have music blogs?

    Bottom line: bigger, better features that are obviously pro-consumer are great things. I’m not at all opposed. It just seems like everything things this will be earth-shattering. I really doubt it.

  10. Todd says:

    to pick a few nits, neither one of which undermine your argument too much:

    1) The EMI deal actually DOES address video. All EMI Music Videos will be DRM free. I haven’t read anything to suggest these versions would cost more either. Obviously, music videos aren’t in the same league as TV Shows or Movies, but I don’t think it’s a complete ignoring of video either.

    2) When they announced the deal, they did say the new songs would cost more by the track, but that the “wholesale” price of albums would remain the same. Obviously, Apple could still raise the price on DRM-free albums by a buck or three, but there’s at least some hope that complete albums will still cost $9.99.

    Ultimately, it sure seems like the EMI announcement is much ado about nothing. Like, yeah, sure…fewer restrictions and higher fidelity are a good thing. No complaints there. It just doesn’t seem to me like it will change things a whole lot.

    It doesn’t seem to me like there’s been a massive popular outcry about the restrictions or audio quality of current songs. Plenty of super-geeky bloggers have complained about not being able to put their iTunes tracks onto their Linux-based, DIY portable Tivos. And the odd audiophile cluck-clucks about lossy encoding, but it just seems like most people don’t care at all.

    The ONLY time I’ve ever run into the usage restriction is when I wanted to post tracks to my blog. Other than that, I’ve downloaded from iTunes, transferred to my iPod painlessly, and not batted an eyelash. I don’t have 5 computers. I don’t burn a whole lot of CDs.

    I’m not at all suggesting that people NEVER run into the DRM restrictions. Just that the vast majority don’t. How many people actually have music blogs?

    Bottom line: bigger, better features that are obviously pro-consumer are great things. I’m not at all opposed. It just seems like everything things this will be earth-shattering. I really doubt it.

  11. Jeff says:

    Uhm, suddenly removing DRM from all iTunes Store content would be suicide. Any sudden moves like that would result in movie studios and TV show providers pulling all their content immediately.

    Not that the end goal shouldn’t be to remove all DRM – it does truly suck, and needs to go. However, Apple cannot just “free the content” without alienating all their media partners.

    This is shakey territory. A new distribution model is being worked out and needs participation from the big players. What Apple is doing now — gradually increasing non-DRM content — is smart, because if it’s successful for EMI, it will demonstrate to media content companies that they don’t need their DRM security blanket. They’ll realise, hey, maybe DRM-free means greater value and that will lead to greater profit, not less profit. Until content companies truly believe it is in their interest to distribute DRM-free content, they will be very aggressive about keeping it.

    You getting infuriated about not being able to watch Colbert on a whole host of interoperable devices makes you sound like a spoiled brat. Yes, interoperability is the end goal, but it’s not possible right now, it won’t magically happen, and a lot of things need to change before we can get there.

    Note that Apple is moving in the right direction in terms of interoperability. They didn’t create their own “Apple Video” format – they use a “standard” called MPEG4 for their video and audio. Don’t you give them credit for that?

    I’m also quite sure Steve Jobs would take it as a personal offence if someone suggested they couldn’t be successful without a “lock-in”. I’m sure his ego would object to the notion that they are successful for any reason other than their products are the “best”. (I’m not saying he’s right, but it looks like he really believes that.)

    Whatever. You seem to have a hate-on for what they are doing, and I think that’s just plain wrong. Now’s the time to backup and support what is happening, for the good of all of us. Complaining too much about impection is going to hamper any progress.

  12. Neon Dojo says:

    I think one thing you are forgetting about iTunes and its success is the a-la-carte model. If you only like one song on the album, you only need to pay $1.20 for a CD quality DRM free song, rather than the whole CD and rip one song off of it.

  13. Pete Mortensen says:

    Yeah, I was posting at 2 a.m. There’s a lesson there, I think. The overall viewpoint holds when looking at individual song purchases.

  14. Matt says:

    I posted a blog on my band’s site about all this when Steve Jobs posted his dissertation on how he felt that DRM free music on iTunes was the way to go. To read it, go to the site below and voice your opinion.

    http://blog.myspace.com/index….