EMI & DRM-Free Music Downloads

EMI

Apple and EMI today announced the launch of DRM-free downloads from the iTunes Music Store. The DRM-free downloads will have twice the quality of regular store downloads, but will retail for 30 cents more per song. Albums will remain the same cost as before.

My guess is that the $1.29 downloads will be more popular than downloads with DRM, but not as popular (or profitable) as cheaper downloads. I think they will find plenty of people willing to pay an extra 30 cents for portability, but they would make up in volume what they’re losing in price (I am sure their profit margins for digital sales are very large. Especially when you are not strapping a product with DRM.)

I am looking forward to finally cashing in my iTunes Gift Certificates on non-DRM music. I hate having to authorize and re-authorize my computer to play my music.

However, EMI is now entering into competition with DRM-free websites such as allofmp3.com, which doesn’t pay any royalties to anyone and charges around twenty cents per song. EMI is getting killed right now on price per song, but they have better visibility and press than the Russian site.

I will be interested to see if EMI continues to sue illegal sharers and downloaders with the same tenacity they are now. I believe they are still anti-piracy; by selling DRM-free music they’re inviting piracy, but not on purpose.

The best possible outcome for EMI, I believe, would be to offer music on iTunes for $1.29/song and offer the same music on eMusic for 50 cents/song. This way they capture the naive-user market and can compete on price for the more sophisticated music downloaders.

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