Apple and EMI announced today that they would start selling higher-quality DRM-free music on iTunes at a price of $1.29 per track, 30 cents more than iTunes’s standard 99 cents price. This is an outgrowth of Steve Jobs’s Thoughts on Music (my post on that here). The press conference slides indicate that 84% of surveyed European consumers would like to be able to move their music files between devices and this will make that possible. This is an interesting expansion of the iTunes business model, and one that should further accelerate the death of the CD. The ease of use that people associate with music CDs is coming to iTunes.
This is not the first time that we have seen differently-priced licenses. In the Lexmark DMCA case, Lexmark was initially selling refillable cartridges at one price, and a second no-refills-allowed cartridge for $30 less. The cartridges were physically identical, but one came with more rights for more money. Customers, of course, figured that out, and the contracts were practically unenforceable. Faced with that failure, Lexmark added a lockout-chip to the cartridge in an effort to make the worthless paper contract more meaningful. (I describe this in more detail here.)
The new Apple and EMI offerings slice and dice the market. Before today, if you wanted to buy DRM-free music, you needed to buy CDs or online somewhere other than iTunes. Now users can now get DRM-free music from iTunes in two ways: the new way by paying an extra 30 cents for it, or the old way, buy the song for 99 cents and run it through some sort of DRM-stripping program. The fact that the legitimately DRM-free songs are of higher quality complicates matters, as there may be some people who would be delighted to strip the songs of DRM but who want the higher-quality songs.
iTunes has unbundled the album, and there is no doubt that part of the drop in CD sales reflects the fact that users are able to now buy the one or two songs per album that they really want. The new deal with EMI means that you can now buy DRM-free music through iTunes, and that should further accelerate the death of the CD. As to selling albums—bundles of music grouped together—that will depend on pricing, and iTunes is now offering a new way to buy the “rest” of the album.
How much are you willing to pay to have CD rights from iTunes?