“Amazon’s Tuesday launch of a DRM-free music store with some 2 million tracks represents the music industry’s clearest repudiation yet of the elaborate copy-protection schemes it once staked its future on. And though it may not be obvious at first, it’s Apple we have to thank,” David Kravets writes for Wired.
“Edgar Bronfman, Jr., the Warner Music Group chairman, told Goldman Sachs investors in New York last week he was considering removing DRM from Warner’s music downloads — this just months after suggesting Warner would never abandon DRM. He blamed Apple for the apparent change of heart. ‘We need some online competition’ for Apple’s iTunes Music Store, Bronfman said. He conceded the iPod is ‘the default device’ and iTunes the ‘download model,'” Kravets reports.
MacDailyNews Take: Steve Jobs toys with the Bronfman’s of the world like a cat with a mouse. Watching these fools play right into Jobs’ hands is entertaining.
Kravets continues, “The self-created headache for the industry is that the highly popular iPod and new iPhone only play music protected by Apple’s proprietary FairPlay DRM solution or music that isn’t protected at all. And Apple chairman Steve Jobs has repeatedly balked at licensing FairPlay for use on competing download services or devices. That meant music companies had to choose between using iTunes or going DRM-free. The industry stood by and allowed most of its music-download sales to come from Apple. Recognizing opportunities lost to Apple’s dominance, the music industry is moving toward throwing DRM overboard in a bid to open up new retail markets and promotional opportunities.”
“Even if DRM’s days are numbered, that doesn’t mean the music industry is abandoning technological weapons in combating piracy. Amazon confirmed Tuesday that some of its music downloads contain digital watermarks [which] allows companies to silently brand music files with identifying information, such as customer- and vendor-identification numbers, digitally woven into the fabric of the song. Those hidden patterns allow music companies to track the origins of music that show up on peer-to-peer sharing sites… watermarks can raise privacy and liability concerns, because a person could be charged for copyright violations if the music appears on file-sharing networks, even if the consumer did not put it there,” Kravets reports. “Of the two major labels participating in Amazon’s music-download service, Universal Music Group uses watermarks, and EMI — for now — doesn’t.”
Full article with more about what Steve Jobs has allowed Middlebronfman to think today here.
[Thanks to MacDailyNews Readers “RadDoc” and “Michael” for the heads up.]
MacDailyNews Take: As we wrote this morning, approximately 3.5 hours before this Wired article appeared online, “Users who like this Amazon store can thank Steve Jobs; it’s due to his call for DRM-free music that this even exists. It’s past time that the other music labels who are still clinging to DRM (cough, Middlebronfman, cough) face the music.”
And, as we just finished writing, “Amazon’s store was created by Steve Jobs. Because he wants more stores to sell iPod-compatible content (as long as Microsoft and their DRM is not involved), so he can sell more iPods. He did not want the responsibility of licensing FairPlay to a broad range of licensees, and upholding the integrity of the DRM as called for in contracts with the music cartles, so he did even better by calling for and precipitating the end of DRM itself… Steve Jobs doesn’t much care if you buy tunes at Amazon or iTunes, as long as you don’t buy something encoded with Microsoft DRM and as long as you play it on Apple hardware. It’d be nice if you used iTunes Store, but it’s not essential to Apple’s success.”
Steve Jobs toys with the Bronfman’s of the world like a cat with a fat overfed gerbil. That’s dead.
I don’t get this at all. If memory serves me right, it was iTunes that introduced the world to DRM free music with its limited selection of EMI music. This was done at a price of US $1.29 per individual track. The next thing you know, Universal is pitching a fit about iTunes domination, their indecent contract with Universal, and how Steve Jobs and iTunes have too much control over the nascent music download market. One of Universal’s biggest gripes was Apples refusal to bow to differential pricing. Now they (and other labels) have pretty much released all their music in a DRM free format at US$0.89 – $0.99 per track. Is it just me, or did the labels blow a golden opportunity to sell their music at a higher price through iTunes if they had agreed to sell DRM free for US $1.29. By establishing the defacto price of DRM free music at a higher price than the DRM crap, the labels could have still sold all the DRM free music they wanted through any download outlet for more money than they are getting now. Of course, they’re likely lowballing Apple to break it’s market share. I still think they had no vision, however.
“Watching these fools play right into Jobs’ hands is entertaining.”
Sure, right into Apple’s hands by eliminating Apple as a middleman in music sales, and selling music not locked to Apple’s devices.
Getting them to create a world which doesn’t need Apple to be involved anywhere in the process is pure brilliance on Steve’s behalf.
Absurd, “recognizing lost opportunities”? If your competing service isn’t way better than iTMS, why have it? They are actually competing against themselves without benefit! Giving a new startup like Amazon cheaper prices than Apple so Amazon makes the sale then transfers the song back into itunes where you coulda bought it in the first place is . . . pointless. Also, Amazon’s interface is a chore. I have found massive amounts of new media simply because iTMS streamlines music, podcasts, movies, TV shows, and movies into one cohesive interface. iTMS helps you find new media, and a growing portion of the public doesn’t listen to the radio, or watch TV, yet somehow finds the best new stuff consistently. Amazon is simply doing what they basically could have done in 2003, but in 2007, a dated attempt at digital media sales, no ‘A’ for effort.
Apple and Amazon should thank us consumers for having money and interest to spend it….
What’s going to happen is that they’ll realize that these “other” online sellers, including the labels themselves, still can’t sell but a mere fraction of what Apple does at the ITMS, even when they are selling with no DRM. So, what happens then? They allow Apple to sell their catalog with no DRM, and everyone wins.
“Recognizing opportunities lost to Apple’s dominance,”
Translation, lacking the leverage to bleed consumers dry by forcing ridiculous prices upon them through multiple outlets.
What it should say is, they should be tahnkful they are getting any money at all considering the only alternative before was watching all of the cash go away via file sharing.
“Kravets continues, ‘The self-created headache for the industry is that the highly popular iPod and new iPhone only play music protected by Apple’s proprietary FairPlay DRM solution or music that isn’t protected at all.'”
The wording of that statement is a little snipish, don’t you think?
You could say the same thing about zunes. Zunes only play content in the Microsoft’s proprietary format or music that isn’t protected at all. What a clown!
The down side to all of this is the risk of Amazon.com and others going along with variable pricing and non-DRM. If other non-DRM stores gain significant sales, Steve Jobs loses his leverage, and labels will then feel free to pull music sales from iTunes unless Steve goes along with their variable, charge-you-more, pricing schemes.
In the end, Steve may have no choice but to go along with the ride, but this may take 3-5 years to take place, and by that time, the growth and transition of this industry will be won and done with Redmond having zero strategy and no place to hide with their close Zune xBox DRM system – niching themselves into complete non-existence.
So what’s the REAL story? Easy, lowball prices against iTunes, get rid of Apple, then jack everyone with high prices!! NO company exec would ever stand up to the music/movie industry like Steve Jobs has done on behalf of the consumer. Amazon is simply a patsy folks, you can like their downloads all you want, because like crack, the first hit is free, the rest . . .
will cost you the world.
If EMI is contributing $0.89-$0.99 songs to Amazon and wants $1.29 for songs on iTMS, doesn’t this seem to be:
1- A sure way to get less revenue for themselves, and
2- Undercutting Apple
I’m pretty sure EMI is getting an earful from Apple execs right about now.
Other than that, I think this is good news, and Apple might be able to negotiate similar deals with Universal and, gulp, Warner. Those $1.25 tracks should go down to $0.99, and the funeral of DRM will be broadcast live around the world.
I’m not so “SURE”….
1. Apple can compete with any of these offerings because it is the only one that offers the 3 integrated links: the store, the jukebox software, the device…..
2. Apple really only cares about the “device”, the other two it gives away or operates at small or breakeven margins to enhance the experience of owning the deivce…..
do you really think that having non-DRM’ed music content, the consumer is now actually going to chose ZUNE or anything else over the ipod?
not a chance…..
does Apple really care where the content comes from as long as it’s device can play it? not so much…..in the device battle and the intergrated value-add battle, Apple is way ahead and probably has already won that game…
By the way, Amazon MP3 store is limited to US customers.
Purchasing a couple of songs from Amazon’s new service really makes me appreciate the iTunes interface.
Exactly what I’d been saying… Apple wins either way. Whatever slim iTunes profit they’ll lose to Amazon will be re-captured via increased iPod sales. The real loser is Microsoft and the WMA format.
How do the Guinness Beer guys say it?…. “Genius!”
Apple makes very little from iTunes. As has been said many times before, iTunes primarily exists to sell iPods. Regardless of where people download their DRM-free music from, at least 70% of those downloads will wind up on an iPod. Given this, why not just buy from iTunes and get the quick and easy integration as well as the larger music selection?
If the labels try to keep iTunes’s music at the lower bitrate, but offer higher resolutions on Amazon–or whatever the site–most people will just put that higher-bit song on the iPod anyway.
A quick story to illustrate what Apple understands so well that the Bronfmans of the world don’t: Trojan condoms have about 70% of the American condom market (about the same as iTunes/iPod). At this point, Trojan does not have to advertise its own brand of condoms: all it has to do is air a public-service announcement promoting safe sex. Because it has such a large share of the market, anything advertising safe sex will result in more condoms being bought, 70% of them automatically being Trojan condoms.
Regardless of where people download their DRM-free music from, 70% of the people downloading them will buy iPods on which to play that music. Apple wins either way.
Why did the stock price hit a new high today? The way the markets react to Apple, Steve Jobs can sit on the crapper crooked and the stock tanks. I think the markets see this as a positive for Apple — Amazon’s mp3 sales, not Steve on the crapper.
I just looked at pricing on both stores. It’s interesting to note that the pricing is not consistent on the Amazon store per song or even on iTunes. Nor are the prices the same between iTunes and Amazon
Take for example Dirty Vegas – Dirty Vegas
The Album price on Amazon is $8.99
The Album price on iTunes Plus (DRM FREE) is $9.99 and $11.99 non plus. Yes thats correct. DRM costs more.
Individual Song prices on Amazon $0.89 except Days Go By $1.94
Individual Prices on iTunes Plus $1.29 except Days go By which is tagged as Album Only
Individual Prices on iTunes (DRMed) $0.99 except Days go By which is tagged Album Only
What gives? Since Days go By was the only hit, both stores pretty much force you to buy the entire thing to get the discount on the hit or the song at all. Amazon comes in the winner clearly on pricing. But not with out feeling kinda gouged in the process.
@Toasty!:
I’d like to point out that albums tend to be more and more variably priced on iTunes these days. For instance, Pink Floyd’s Dark SIde of the Moon is $7.99 on iTunes Plus, even though EMI could charge as much as $9.99 for those nine songs, while Disturbed’s Ten Thousand Fists is $11.99 for fourteen DRM’d songs… well, and a Digital Booklet.
My only complaint is that all my independent-label music still isn’t on iTunes Plus, although realistically my personal devotion to some of the artists may drive me to re-buy the music on CDs anyway.
… Pardon me. I just re-read your comparison.
In regards to DRM costing more: that’s actually the case? In that case, I’m going to applaud Apple for it, because that’s encouraging sales of DRM-free music.
As for the song’s price: obviously, the label is trying to gouge you for the hit. This is not an uncommon practice, especially for soundtrack albums, I’ve noticed. Somewhat sad, but then we can’t expect the labels to get it right the first time.
@ Jeremy Avalon
Yes that is the case. Go take a look. I was quite surprised myself. I haven’t been able to find another album with the same price inconsistency so it could be mistake on the site.
I usually enjoy MDN biased opinion. On stuff like this, the arrogance is more like a Ballmer fan club. Poor taste MDN. Enjoy DRM free. But it was a big gamble that paid off. Had another music player entered the market with some competitive edge, this story and the Apple stock would have had a sad ending. I enjoy that it worked. Unfortunately, the same can’t be said for movies…and that my friends is a problem.
What about the cheaper prices at Amazon?
Is there some conspiracy against Apple? I’d prefer to buy from iTunes, but if the prices at Amazon continue being cheaper, then what chance does iTunes have?
I went to the Amazon online music store, I got the download manager and I downloaded a song. And I am decidedly underwhelmed — the selection is poor compared to ITMS, the search functions are weak, the download process is clunky and, after the download, I have to convert the mp3 into an AAC file (to save space and processor cycles). For ten cents a song, I think I will stick with ITMS.
One other thing: I think it is hysterically funny to watch Universal cut off its nose to spite its face. It could sell DRM-free music on iTunes (where it would actually sell) for $1.29 a song, but instead opts to sell it (well, at least place it) on Amazon for less than a dollar. These guys are morons. I am glad I don’t own stock in their company (and very happy that I do own shares of AAPL).
In the end, this is likely to end as it always has: With another closed music store. But even if it doesn’t, Apple will still be the winner.
I believe that this is excellent for Apple. They make at most a small profit on iTunes, if at all. Their interest is in selling iPods with the big fat margins. Apple’s own research showed that on average only a few percent of the music on iPods is from iTunes.
Apple’s strategy to me seems to be the destruction of the physical media itself. The more there is a shift from physical to on line meda, the better it is for iPods. Much less hassle free to get it on your iPod, and no need to buy the entire CD.
Wether the purchaded music in iTunes comes from the Apple Store itself or from Amazon for example, Apple couldn’t care less I believe. They want the iPod universe to expand, and more purchase versatility as well as a stronger shift from physical to on-line media accomplishes this quite nicely.
It’s a win-win for Apple with the DRM-free purchase models.
And very bad news – really bad – for M$’s Zune. They hoped to clone the Apple Fairplay model and throw all their resources at it – even at big losses – just to kill of Apple. But they need DRM fot that. On hardware and software itself they have no chance. Therefore to me Jobs plea for DRM-free music was a brilliant stategic move, and primarily aimed at M$.
Amazon is Apple’s friend here.
And I also happen to like Amazon, but that’s beside the point.
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MW Home, as in Apple really hit home here…