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Apple Moves to Unprotected Music, Tiered Prices

Apple will strip digital rights management (DRM) from the 10 million songs it offers through the iTunes Store by the end of the first quarter of 2009, with 8 million songs available without protection today. These songs will be encoded at the higher 256 Kbps rate in AAC format that Apple has been using for a subset of their catalog and has called iTunes Plus.

The company is also changing its mostly flat-rate pricing model of $0.99 per song, and allowing iPhone owners to purchase and download songs over 3G cellular data networks in addition to Wi-Fi.

Strip Down to Bare Music — Apple was the first company to sell large quantities of licensed and legally downloadable digital music – 6 billion songs is the latest count – and wrap their files in proprietary encryption. The history isn’t publicly known, but it’s believed that music labels required Apple to use DRM and periodically update it to protect against hacks.

DRM limits music, games, or videos to play only for specific users on recognized devices. Apple’s FairPlay DRM system (which allows music to play back via iTunes under Mac OS X, Windows, and on all iPod models and the iPhone) has never been licensed to other companies. DRM-free music can be played on any device or computer that supports the music format, which is almost always MP3 or AAC.

This also means that sophisticated hardware for playing music throughout a home, like the Sonos ecosystem (see “Audio Bliss: Sonos Digital Music System,” 2006-01-23) and the just-announced Linksys Wireless Home Audio system, can handle unprotected iTunes Store purchases just as well as music from other sources.

When Apple’s early lead in the digital downloads market eventually neared complete domination, music labels turned to firms like Amazon, Walmart, and Microsoft to offer DRM-free tracks as an alternative to Apple’s iTunes/iPod/iPhone lock-in. However, this approach didn’t do much to undercut Apple’s hold on the market, since Apple had become the number one music retailer in the United States. (See “Amazon MP3 Scores DRM-Free Music: What About Apple?“, 2007-09-25, for some background.)

It’s likely that the music industry’s demand for variable pricing was connected to Apple obtaining the right to sell music without protection. Currently, most iTunes songs are priced at $0.99; the new pricing model – which takes effect in April 2009 – will offer songs at $0.69, $0.99, and $1.29.

Apple VP Phil Schiller said during the Macworld Expo keynote that more songs would be priced at $0.69 than $1.29, but that’s a specious observation, as more popular and recent songs are likely to be priced at the highest tier. Some labels had wanted the ability to charge lower prices for some songs to increase sales as well.

The Ignominy of Paying a DRM-Free Tax — iTunes Plus upgrades for music you previously purchased at any price still cost $0.30 each while music video upgrades are $0.60 each. You cannot choose to upgrade specific songs or videos, but must upgrade your entire collection as noted in the iTunes Store’s account records.

Some have expressed irritation at this issue: Early buyers will have to pay an additional amount to acquire songs that might be the same price or cheaper and offered without protection. That is, a song purchased with DRM for $0.99 might now be offered without it for $0.69 for new purchasers, and you’ll pay $1.29 to obtain it.

I’m surprised Apple didn’t offer to eat the upgrade fees for all their users, even if it cost a few hundred million dollars to pay the labels or other rights-holders for the privilege, because of the enormous good will it would engender.

For those who prefer to avoid the DRM-free upgrade fee, you might consider a tool like NoteBurner ($39.95), available for Mac OS X and Windows. NoteBurner is a virtual CD burner and ripper, avoiding the tedium in creating tons of CDs to switch over your collection.

While at one point, an argument could be made that removing DRM from a song that you’d purchased could be a violation of certain aspects of the Digital Millennium Copyright Act, an odious piece of legislation, it’s hard to see how that’s the case now.

The same song can be purchased without DRM; Apple will no longer sell the song with DRM; we can assume Apple will likely attempt (as Walmart and Microsoft MSN Music have) to turn off its authorization servers at some point in the future; and you’re likely removing protection for personal use, because there’s little reason to strip DRM to then distribute the music. You bought the song, you just want to have better access to it – and so does Apple, sort of, since that’s why they’re converting their whole catalog to be DRM-free.

iTunes Purchases over 3G — Apple also said it would allow iPhone owners to purchase and download music over a 3G network in addition to the Wi-Fi access that was previously available. Songs will be identically priced when purchased via iTunes or through the iPhone over 3G. This stands in contrast to many cellular carriers that charge different prices for music depending on the delivery means.

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