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Digital Music Unchained and Unleashed

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A trickle of freedom came down from above to the world of the iPod and its brethren yesterday as Apple CEO Steve Jobs and his cohorts at the EMI Group announced that they would soon begin offering their titles free of the copying restrictions formerly imposed by the label.

London-based EMI, the world's fourth largest record label, has now teamed up with Apple, the world's leading seller of both digital music and players, to offer their entire catalog of music without the cumbersome limitations that used to come along with its digital rights management (DRM) software.

The move was cheered not only by digital music buyers everywhere but by industry analysts, who believe it was the crucial first step in unchaining digital music from its copying anchor.

Consumers have long chafed at the restrictions placed on them by the need for record labels to prevent the illegal copying of digital music.

Those restrictions, imposed by the major labels, mean that companies like Apple have had to embed software "locks" (digital rights management) in their tunes that limit their use.

For instance, before yesterday's announcement, all music purchased from the iTunes store carried with it Apple's DRM software Fairplay. Fair or not, it limited buyers as to the types and numbers of different devices that the songs could be transferred to.

In this case, songs purchased with Fairplay added can be transferred to an unlimited number of iPods and up to five computers. This means that users with different or unauthorized devices are essentially barred from using the tunes they purchase for them.

But with the new DRM-free music from the EMI catalog, those limitations have been eliminated, even if still only on a small scale.

"We are going to give iTunes customers a choice--the current versions of our songs for the same 99 cent price, or new DRM-free versions of the same songs with even higher audio quality and the security of interoperability for just 30 cents more," said Jobs. "We think that our customers are going to love this, and we expect to offer more than half of the songs on iTunes in DRM-free versions by the end of the year."

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The announcement marked a culmination of sorts.

It was just last February that Jobs published his four-page manifesto on the state of the digital music business, "Thoughts on Music."

In it he argued that the industry had only three choices. It could continue to operate as did, with a mix of different DRM software and devices. It could standardize or license the DRM software. Or it could eliminate DRM entirely, which Jobs clearly favored.

"Imagine a world," Jobs wrote, "where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell any music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it."

And no wonder. Jobs, in short, argued that digital music downloads should really be no different than compact discs, which can be freely and universally used.

And that was Jobs's master stroke. Because while eliminating DRM would open up the iPod to increased competition, making digital music universally usable opens up a much bigger market for increased sales from the iTunes store as the differences between CDs and downloads diminishes.

And that could be huge for Apple, since DRM has kept the iTunes store from reaching its full potential. In fact, according to Jobs's own research, only 3% of the music on the average iPod is purchased from the iTunes store. That's only 30 of the over 1,000 songs that can be downloaded onto the average device.

That means that nearly 97% of the music on any iPod is derived from an unprotected format like CDs. In fact, in 2006 only about two billion songs were sold by the DRM-protected online industry, while over 20 billion songs were sold on CD, a universal format.

That, of course, is a huge market gap that could easily be exploited if only DRM were eliminated entirely. And Jobs knows it. It's an outcome that could spell even further declines in CD sales.

Of course, Jobs isn't remotely out of the woods yet. The EU is still complaining about various iTunes issues, and the other major labels still have to be brought on board. But with this announcement Apple is one step closer to leading the industry down a freer and more profitable path.

Either way, one thing is certain. The Mac doesn't have to do all of the heavy lifting at Apple anymore. Apple is about so much more than computers.

Wishing you happiness, health, and wealth,

 

Steve Christ, Editor


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