Apple and EMI: No Strings Attached?

Apple’s deal with EMI for DRM-free music this morning should come as little surprise, as the discussions had been rumored for some time, and EMI has made it clear it has been considering the move. Last I looked Apple’s shares were up slightly on the news, while EMI’s shares are off heading into the U.K. market close.

So, beyond the obvious, that a struggling music merchandiser is looking for a miracle from Apple, which in turn stubbornly wants to prove to the EU that interoperability and DRM are the same thing — it gets the connection in by the second press release para — what are we to take from this? My quick read is that music vendors are getting part of what they’ve long wanted, which is tiered pricing on iTunes. While it’s not tied to music’s newness or vendor-deemed quality, the new $0.99 vs $1.29 split (for DRM-ed 128kbps vs DRM-free 256kbps encoding) is a difference. Apple, in turn, is getting a stick with which to beat other DRM-ed vendors, as well as way to fend off EU regulators who call it a closed garden.

That’s all good, even if the paranoiacs are already out in force. For example, one argument is that why would Apple leave the DRM-ed version on market given the mere $0.30 difference: What right-thinking person wants DRM? One theory making the Slashdot rounds is that Apple may be planning to insert highly personalized watermarks in the 256kbps stream, thus making it much easier to pin any people sharing non-DRM-ed music. I’m doubtful of this argument, although stranger things have happened in RIAA-land, and it is a little baffling that EMI/Apple are leaving two almost equivalently-priced music versions on the market.

Related posts:

  1. Apple Re-enacts Greatest Marketing Mistake Ever
  2. Apple Invokes the Reality Distortion Field
  3. The Shorter Steve Jobs on Digital Rights Management
  4. Apple Nutters and the iPhone
  5. More Fuel for the “Apple Buys Tivo” Fire

Comments

  1. Rory says:

    I think your thoughts reflect a bit of the “Paul Kedrosky is not your target market” effect. Even at a value of only a buck, most people wouldn’t consider a 30% increase to be “almost equivalent” pricing. I’m much more partial to Jason kottke’s take on it, which is that most people will still pick the cheapest option, DRMed or not, and EMI/Apple might not mind that at all: http://www.kottke.org/remainder/07/04/13136.html

  2. Tomas Sancio says:

    If you listen to music almost exclusively with your iPod and buy songs from the iTunes store, then it makes more sense to stick with the $0.99 songs. They take less valuable space (it’s impressive how quick you can fill a 30GB iPod) and unless your ear is well trained, you can’t tell the difference in quality. Nevermind that you can buy four songs for every three that don’t have DRM.

  3. paul says:

    The RIAA cartel may be pleased to have gotten tiered pricing but it’s not on their preferred terms. They wanted to be able to increase prices based on demand, with top-selling tracks bearing higher prices. And as anyone knows, it’s bad science to change two variables — in this case, the bitrate/quality and the lack of DRM — and try to make any sense of it.