EMI drops DRM in itunes....

[V. Barbarino]

EMI to Sell Music Without Anticopying Software

Online-Strategy Shift

Breaks With Industry

On Combating Piracy

By ETHAN SMITH and NICK WINGFIELD

April 1, 2007 11:42 p.m.; Page B5

In a major break with the music industry's longstanding antipiracy strategy, EMI Group PLC is set to announce today that it plans to sell significant amounts of its catalog without anticopying software, according to people familiar with the matter.

The London music company is to make its announcement at a London news conference featuring Apple Inc. Chief Executive Steve Jobs. EMI is to sell songs without the software -- known as digital rights management -- through Apple's iTunes Store and possibly through other online outlets.

DRM has been a contentious issue in online music sales. Record companies have insisted that digital retailers employ the software to prevent rampant copying. But because the DRM used by Apple is proprietary and doesn't work with services or devices made by competitors, it has had the additional consequence of locking owners of its popular iPod music players into buying the most popular mainstream music from the iTunes store, and not from its competitors.

Record companies have blamed this lock-in for limiting digital-music sales, which account for around 15% of all recorded-music sales in the U.S.

EMI's move comes after months of private discussions and public advocacy by Internet and technology-industry executives, including Mr. Jobs, aimed at encouraging the music industry to change its approach to licensing music for sale online. In February, Mr. Jobs took the unusual step of posting an 1,800-word essay on Apple's Web site urging major recording companies to consider dropping their insistence that music be sold over the Internet with DRM software.

Mr. Jobs contended that DRM software has been ineffective at solving digital piracy of music. That is in large part, he argued, because the vast majority of music is sold today on CDs, which generally don't contain copy protection, making them easily sharable over the Internet through file-sharing technologies. Although Mr. Jobs wasn't the first to suggest such a change for the music industry, his essay spurred a vigorous debate throughout the technology and entertainment industries. Also fueling the discussion recently has been a steepening drop in CD sales, which has forced the music industry to try to accelerate its digital future.

Privately, most labels rejected the idea out of hand, but EMI, the world's third-largest music company by sales after Universal Music Group and Sony BMG Music Entertainment, already was quietly exploring dropping DRM. EMI has struggled to overcome poor results and a laggard digital strategy, potentially contributing to its willingness to take a bold stance on DRM.

EMI temporarily shelved plans to drop DRM after various iTunes competitors declined to guarantee significant "risk insurance" payments designed to offset potential losses from the move. It is unclear whether Apple has guaranteed any such fee.

EMI's decision, if other major recording companies follow it, also may lessen increasing political pressure on Apple by consumer-rights organizations in several European countries, including Norway, that want Apple to make its digital music products, iTunes and the iPod, work with songs and hardware from other companies.

EMI competitors have been divided on the DRM debate. Warner Music Group Corp. has been opposed to the idea of removing DRM from its offerings, arguing that the technology will be increasingly important once digital sales eclipse CD sales. Vivendi SA's Universal Music Group and Sony BMG Music Entertainment, a joint venture of Sony Corp. and Bertelsmann AG, on the other hand, have conducted experiments. Neither company has moved as aggressively as EMI, though.

Write to Ethan Smith at ethan.smith@wsj.com and Nick Wingfield at nick.wingfield@wsj.com

[V. Barbarino]

Press release:

EMI Music launches DRM-free superior sound quality downloads across its entire digital repertoire

Apple's iTunes store to be the first online music store to sell EMI's new downloads

London, 2 April 2007 -- EMI Music today announced that it is launching new premium downloads for retail on a global basis, making all of its digital repertoire available at a much higher sound quality than existing downloads and free of digital rights management (DRM) restrictions.

The new higher quality DRM-free music will complement EMI's existing range of standard DRM-protected downloads already available. From today, EMI's retailers will be offered downloads of tracks and albums in the DRM-free audio format of their choice in a variety of bit rates up to CD quality. EMI is releasing the premium downloads in response to consumer demand for high fidelity digital music for use on home music systems, mobile phones and digital music players. EMI's new DRM-free products will enable full interoperability of digital music across all devices and platforms.

Eric Nicoli, CEO of EMI Group, said, "Our goal is to give consumers the best possible digital music experience. By providing DRM-free downloads, we aim to address the lack of interoperability which is frustrating for many music fans. We believe that offering consumers the opportunity to buy higher quality tracks and listen to them on the device or platform of their choice will boost sales of digital music.

"Apple have been a true pioneer in digital music, and we are delighted that they share our vision of an interoperable market that provides consumers with greater choice, quality, convenience and value for money."

"Selling digital music DRM-free is the right step forward for the music industry," said Steve Jobs, Apple's CEO. "EMI has been a great partner for iTunes and is once again leading the industry as the first major music company to offer its entire digital catalogue DRM-free."

Apple's iTunes Store (www.itunes.com) is the first online music store to receive EMI's new premium downloads. Apple has announced that iTunes will make individual AAC format tracks available from EMI artists at twice the sound quality of existing downloads, with their DRM removed, at a price of $1.29/€1.29/£0.99. iTunes will continue to offer consumers the ability to pay $0.99/€0.99/£0.79 for standard sound quality tracks with DRM still applied. 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. Consumers who have already purchased standard tracks or albums with DRM will be able to upgrade their digital music for $0.30/€0.30/£0.20 per track. All EMI music videos will also be available on the iTunes Store DRM-free with no change in price.

EMI is introducing a new wholesale price for premium single track downloads, while maintaining the existing wholesale price for complete albums. EMI expects that consumers will be able to purchase higher quality DRM-free downloads from a variety of digital music stores within the coming weeks, with each retailer choosing whether to sell downloads in AAC, WMA, MP3 or other unprotected formats of their choice. Music fans will be able to purchase higher quality DRM-free digital music for personal use, and listen to it on a wide range of digital music players and music-enabled phones.

EMI's move follows a series of experiments it conducted recently. Norah Jones's "Thinking About You", Relient K's "Must've Done Something Right", and Lily Allen's "Littlest Things" were all made available for sale in the MP3 format in trials held at the end of last year.

EMI Music will continue to employ DRM as appropriate to enable innovative digital models such as subscription services (where users pay a monthly fee for unlimited access to music), super-distribution (allowing fans to share music with their friends) and time-limited downloads (such as those offered by ad-supported services).

Nicoli added: "Protecting the intellectual property of EMI and our artists is as important as ever, and we will continue to work to fight piracy in all its forms and to educate consumers. We believe that fans will be excited by the flexibility that DRM-free formats provide, and will see this as an incentive to purchase more of our artists' music."

- ends -

[Guest endymion]

In the UK they have digital terrestrial radio, Last.FM, and the government wants DRM-free music.

In the US we have corporate FM and no digital radio, our government is killing Pandora, and our labels fight technological innovation to preserve DRM.

Americans pioneered the first century of the music industry but things sure are changing now.

[Guest coach]

I'm really surprised Apple is going along with this.

[Guest endymion]

I'm really surprised Apple is going along with this.

Why? Apple doesn't want DRM, the major labels force them to use it.

[Guest coach]

I'm really surprised Apple is going along with this.

Why? Apple doesn't want DRM, the major labels force them to use it.

DRM has been a contentious issue in online music sales. Record companies have insisted that digital retailers employ the software to prevent rampant copying. But because the DRM used by Apple is proprietary and doesn't work with services or devices made by competitors, it has had the additional consequence of locking owners of its popular iPod music players into buying the most popular mainstream music from the iTunes store, and not from its competitors.

Apple has always been about proprietarianism, one of the things I really do not like about them. It seems like dropping the DRM would open up the ability of people to use other services and/or hardware intermingled with Apple's products. Of course, I suppose they can just find other ways to make the products proprietary. I do realize that their proprietary methods can be circumvented, relatively easily for those who know how, but it still annoys me.

[Guest endymion]

There are three ways forward:

1) Proprietary DRM.

2) Licensed DRM, Apple shares its DRM with other companies.

3) No DRM at all, any company can compete.

Apple favors option #3, not option #1 as you assume.

Microsoft favors option #1 and Vista is the embodiment of that. If avoiding proprietary lock-in is your ideological goal then you've picked the wrong side.

[Guest coach]

Note that I was quoting the above story to support my opinion of the proprietary issue. It seems what Mac *says* it supports, and what it actually does support are still a little distinct. I use both Mac and PC for music manipulation. I still find it difficult to convert an m4u, or whatever the iTunes exclusive file name is, to anything useful. AIFF has recently become more easily converted, but I remember not too long ago when it was difficult to find a converter for it.

[Guest endymion]

You can't convert your AAC files to anything else because they are protected by DRM. My iTunes library is mostly full of .mp3 files that play anywhere.

The iTunes video format is H.264 MPEG, an open standard. Not proprietary.

[Guest endymion]

As a counterexample from the Microsoft way of doing things, consider HDCP.

According to Microsoft's description, the feature "makes sure that the PC's video outputs have the required protection or that they are turned off if such protection is not available."

In plain English, this means that Vista machines won't be able to play next-generation, high-definition DVDs in their full, high-resolution glory unless they're equipped with monitors that support a new DRM scheme called High-Bandwidth Digital Copy Protection, or HDCP.

That'll mean that PC owners wanting to upgrade to Vista will also have to spend hundreds of dollars to buy HDCP-compliant monitors, according to the flak being fired at Microsoft in the recent online postings.

-The Register

When you buy Vista you're paying Microsoft to put locks in your way that limit your ability to do things. That's what Vista is at heart, and nothing else. It's XP plus a bunch of DRM stopping you from doing things you're not allowed to do.

At the same time, Apple is going on the record opposing DRM and following through on it by selling EMI tracks through iTunes without DRM. They're putting their money where their mouth is. Jobs wrote the essay against DRM four months ago, said "European labels like EMI and Universal, let's try it, Apple would embrace selling your music without DRM", and four months later it comes true. What they say they support and what they really do are consistent.

[Guest coach]

Yeah, I'm hoping to skip Vista.

[Guest endymion]

Yeah, I'm hoping to skip Vista.

Good idea, skip straight to Leopard.

[Guest coach]

Please. I used to only mildly dislike and find humor in Macs. Until I started using them. I've had so much trouble with Macs, I can hardly stand to sit down in front of ours. I cannot stand the interface, nor the design. (For example, no matter how many times I tell Finder to always open in Details view, it continues to revert to Column view.) The physical hardware (keyboards, mice, etc) annoy the heck out of me. And their customer support is a miasmi of pompous 12-year olds. Plus, there is no way that I would ever be associated with the kind of elitism that they project. If all of that wasn't enough to turn me off, the latest commercials with the PC vs Mac are so astoundingly filled with half-truths and reality-twisting that I would not buy one just on the basis of that.

[Guest endymion]

Go Apple. From a Wired article:

Steve Jobs' new partnership with EMI to sell music without copy protection is a lesson in how to wield power in the digital age.

Carefully and strategically, Jobs set up the pieces to create a new business model for online music -- one without copy protection -- and now we're starting to see the dominos fall.

The first to topple is EMI, the smallest and weakest of the big four record labels. With EMI on board, the other record labels must act. Either they join the DRM-free party, or hold out like dinosaurs from a bygone, locked-down age.

A key move that brought them to the table was his February open letter critiquing DRM copy-protection systems -- the first time to my knowledge that Jobs has expressed his thinking in such detail.

At the time, Jobs' letter seemed to be in response to several European governments that were making threats to break the lock between iTunes and the iPod. Now the open letter looks like a lever to weaken the position of the record labels at the negotiating table.

Jobs wrote:

"Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store."

With the letter, Jobs planted the idea that DRM is the wrong way to run an online music business. Since its publication two months ago, the letter has created a broad consensus that the current copy-protected system isn't working, and puts considerable pressure on the labels to drop DRM. When Jobs published the letter, he likely already had EMI in his back pocket, and now the other labels are on the defensive.

The open letter also allowed Jobs to take a leadership position on the copy protection issue. Thanks to the letter, Monday's deal looks like it was his idea, not EMI's. If Jobs' hadn't published the letter, or published it now after the fact, people would assume EMI came to Apple with idea -- now it appears the other way around.

Only Jobs has the power and the cojones to make such a move.

[Guest pod]

As far as hardware and such, you know you can buy just about any aftermarket keyboard, display, mouse, etc and it will work on a Mac.

One thing I've never liked of Apple's is their in-house input devices. The keyboards and mice never are up to par. But it never really bothered me since you can go out and get whatever you want. Most Mac folk I know run out and get a two-button mouse.

Hell, if you're feeling real adventurous, you can even make OS X look and do things your way, rather than Apple's way. That takes time though.

[V. Barbarino]

Better sound quality or not, no fing way would I spend 30 cents more per song for DRM free. Just burn it and the DRM disappears for FREEEEEE!

[Guest coach]

Better sound quality or not, no fing way would I spend 30 cents more per song for DRM free. Just burn it and the DRM disappears for FREEEEEE!

True. It does seem like a cheesy money-making move. Maybe there are a few people left who don't know how to make the DRM go away, but I'm guessing most of them don't have an iPod in the Ozarks shack, anyway.

As far as sound quality, this is a good point, and another deception by Apple. They never really tell you that the music you are getting from iTunes is of low quality. Better quality is just a matter of storage space, of course, and we all know how cheap storage has gotten these days. So charging an additional 30% just for CD quality sound seems a little over the top. Now, if they could provide good vinyl quality, that might be something to pay for.

[Guest endymion]

Saleen, when you burn it from a lossy CD-quality AAC file to a WAV on your CD and then rip it back into your computer into a DRM-free MP3, you just added a lot of noise to your music. You added a second lossy encoding step that compounds the noise from the first lossy encoding. You saved $.30 but you now have a much noisier file than if you had bought the higher-than-CD-quality AAC file with no DRM. It's a much noisier file than if you bought a CD and ripped it to an MP3 because then there's only one lossy encoding step.

Just about every Mac before the Mighty Mouse sucked. I really truly hated that hockey puck on the original iMac. The bluetooth wireless Mighty Mouse is really awesome though. Coolest mouse I've ever used, and I've used a lot of them. Fast and high-res enough to play Quake with it. I use that and the Apple bluetooth keyboard, with my Mac sitting way across the room so that I don't spill a beer in it.

And the trackpads on the Mac laptops are just flat-out better than any other trackpad. If you haven't used multi-touch scrolling and tapping with your own hand then you don't really 'get it' yet. Same UI but even beyond that on the iPhone's touch screen.

And show me a web cam for a PC that's as cool as the one built into the lid of my Mac?

Now that the major labels are beginning to drop their DRM FUD, one of the ripple effects will be that small independent labels will be looking for music vending machines independent of iTunes that they can use to sell music on their own web sites. Yay for me...

[Guest pod]

That's why I said keyboards and mice. A webcam is a webcam is a webcam. Any Hwang-Jei whatever concern in Taiwan can kick one out these days. Apple just went the extra step and wedged the chip from one of those in the bezel so it would look nice. Talk to me when someone wedges a full HD webcam into the bezel .

[Guest coach]

Now that the major labels are beginning to drop their DRM FUD, one of the ripple effects will be that small independent labels will be looking for music vending machines independent of iTunes that they can use to sell music on their own web sites. Yay for me...

This was already happening. Not that getting rid of DRM is bad, but the movement was already well under way by others.

As far as built-in camera? Woo. One version of the the Tosh laptop I bought had one. I didn't want it, but I could have gotten it, if I had.

[Guest endymion]

Talk to me when someone wedges a full HD webcam into the bezel .

Nobody wants an HD camera a foot from their nose all day looking at them. The web cam, I can handle.

The trackpad on the laptops recently became much bigger. It's about three inches wide on my 12" Powerbook and my wife's 15" Powerbook, but on my new 15" MacBook Pro it's huge, like four inches. I think maybe to accomodate two-finger multi-touch gestures more easily.

When I use an old PC now it seems totally prehistoric to have to go and hunt for the web browser's scroller with the mouse and click on it before I can scroll up and down or side to side. A scroll wheel helps a little but multi-touch scrolling on the trackpad also works side-to-side as well as up-and-down, or diagonally. Saves huge amounts of time in Photoshop. And you can use it to zoom in and out in Google Earth. So neato...

Coach thinks that we sound elitist for realizing what advancements these things are. I'm not being elitist I just think that some of these things that Macs can do are badass and I wonder how many PC people would switch if they had any idea how cool little everyday things like multi-touch scrolling really are.

[Guest pod]

Often, Apple isn't the first to market with a device or concept. They just tend to make it pretty and a little more user friendly. Usually. Was the iPod the first DAP? Not by a long shot. The defunct Diamond company had the Rio in 1998. Eiger had the MPMan slightly before then, too. Both shipped with 32 MB on board, enough for like six songs. The interface and software sucked. Creative tried with their line, but things really didn't take off until the iPod, which made things quite a bit easier. It would be easier still if it wasn't for DRM.

[Guest endymion]

Dropping DRM will absolutely enable new innovation. DRM also diverts R&D efforts that would otherwise be wasted on bulding locks into things.

Microsoft spend five years building Vista and all they ended up with was XP locked down with DRM and essentially no other new innovation. Apple would strongly prefer to devote its R&D efforts to things that improve the lives of users instead.

[Guest pod]

OK, here's a scenario for you. What if Apple said "screw it", and just had no DRM? I know ITMS would fall apart, but what if?

[V. Barbarino]

My uncle had a $7000 Nagamechi (sp) home sound system, it sounded no better than the bose wave radio. I listen to my tunes at the gym or on my computer speaks in my office, while in the car, I do burn mp3 cd's, but 80% of the time I have on the radio. So 30 cents is crap! Do the math, if you bought 100 tracks at 99 cent you'd only get 76 at the higher price...

If you dropped a grand on itunes over a long period of time, you'd have 1000 songs vs 760!