EMI Drops DRM For New Premium Line-Up, Higher Price; Apple First

It’s official – EMI Music just became the first major record label to drop digital rights management on its digital downloads – but many consumers must pay more. EMI is launching a new line of “premium” downloads at twice the current audio quality that will come without usage restrictions. From May, and initially at Apple’s iTunes Store, tracks from the label’s entire catalogue will be available in 256kbps AAC format at $1.29 (EUR1.29/GBP0.99) each. Tracks at the existing lower-quality 128kbps format will, however, remain for sale with DRM and at their current $0.99 (EUR0.99/GBP0.79) price. The announcement was made during this morning’s joint press conference at EMI’s London HQ.
EMI CEO Eric Nicoli said the move comes after January retail tests showed sales 10-to-1 in favor of the higher-quality format, “reaffirming our belief that sound fidelity is, for many, an important factor”. “All our research tells us [consumers] would be prepared to pay a higher price for a file they can play on any music player. Interoperability is the key to unlocking the music business. We have the consumer at the center of our strategy; it’s clear from our research that many consumers find it frustrating they don’t have interoperability. It’s also clear that some care about quality. By combining these two, we think it’s a very positive step.”
Apple CEO Steve Jobs repeated that interoperability and quality were the two key issues. “While 128kbps AAC is the best audio quality offered by any mainstream music store, audio users can tell the the difference between it and the original source material. It is time to consider delivering even higher audio quality than is currently available.” Asked if removing the restriction that Apple Store purchases must be played on an iPod would hurt iPod sales, Jobs said he was confident customers would continue appreciate the device’s ease of use.
iTunes: The new EMI line-up will sit alongside the existing line-up on Apple Store, which will automatically invite consumers to choose which version to download. iTunes Store users will also be able to upgrade all the EMI tracks currently in their library to the new versions for $0.30 per song. “We think customers will really appreciate this,” Jobs said, although this is the standard per-track price gap between old and new formats, not a special offer. Suggesting a wholehearted effort to safeguard the future of albums, whole albums will automatically be sold at the new, DRM-free bitrate for the existing price.
Retail: EMI’s new line-up will not be limited to iTunes. Other retailers would also be given the opportunity to sell tracks in AAC, WMA, MP3 or other formats “in the coming weeks”, Nicoli stressing it is retailers and not labels which set end prices (figures mentioned here are iTunes-specific). EMI press release: “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.” DRM is also being removed from music video downloads, Nicoli said, with no price change. DRM must remain on tracks sold via subscription and ad-supported stores, however.
Future: Nicoli: “We expect sales to grow as a result of this. We remain optimistic that digital growth will outstrip physical decline – it hasn’t happened yet, don’t ask me to predict when that will happen because I can’t, but we remain optimistic. Digital downloads remains in its infancy – the opportunity is massive.” In an indication that Jobs’ February memo to the industry was the real deal, the Apple CEO said: “EMI has taken the first bold step in the music industry. Starting today, Apple will reach out to all the other labels [including independents] to give them the same opportunity.” “Well over half of the five million tracks on iTunes today will also be available in high-quality offerings by the end of the calendar year” – suggesting either confidence or specific knowledge about similar future announcements. Both said they hoped to be able to carry The Beatles’ catalogue – Jobs adding “we’re working on it.”
Update: Streaming audio|MP3| Slides (pdf)
Steve Jobs To Music DRM: Drop Dead