Want to Copy iTunes Music? Go Ahead, Apple Says
Want to Copy iTunes Music? Go Ahead, Apple Says
Philip W. Schiller, Apple's senior vice president of worldwide product
marketing, at the Macworld Expo in San Francisco on Tuesday.
SAN FRANCISCO — In moves that will help shape the online future of the music business, Apple
said Tuesday that it would remove anticopying restrictions on all of
the songs in its popular iTunes Store and allow record companies to set
a range of prices for them.
Today's Business with Jeff Sommer and Brad StoneBeginning this week, three of
the four major music labels — Sony Music Entertainment, Universal Music
Group and Warner Music Group — will begin selling music through iTunes
without digital rights management software, or D.R.M., which controls
the copying and use of digital files. The fourth, EMI, was already
doing so.
In return, Apple, whose dominance in online music sales
gives it powerful leverage, agreed to a longstanding demand of the
music labels and said it would move away from its insistence on pricing
all individual song downloads on iTunes at 99 cents.
Instead,
the majority of songs will drop to 69 cents beginning in April, while
the biggest hits and newest songs will go for $1.29. Others that are
moderately popular will remain at 99 cents.
The music companies
are hoping that their eagerly awaited compromise with Apple will give a
lift to digital downloads. They will be able to make more money on
their best-selling songs and increase the appeal of older ones.
And
with the copying restrictions removed, people will be able to freely
shift the songs they buy on iTunes among computers, phones and other
digital devices.
Technologically sophisticated fans of digital
music complain that D.R.M. imposes unfair restrictions on what they can
do with the tracks they have bought. For example, the protected files
from iTunes do not work on portable players made by companies other
than Apple.
“I think the writing was on the wall, both for Apple
and the labels, that basically consumers were not going to put up with
D.R.M. anymore,” said Tim Bajarin, an analyst with Creative Strategies,
a market research company.
Music industry watchers widely
applauded the move and said it could help digital music sales, which
have shown signs of slowing down just five years after Apple introduced
iTunes.
In particular, lower prices for some songs could spur
consumers “to buy deeper into the catalog, and expand their
relationship with digital music,” said Russ Crupnick, an analyst with
the NPD Group.
The music industry could use a lift. Sales of CDs
fell 20 percent last year from 2007. About 2.4 billion songs were
bought on iTunes in the last year, aided by Apple’s expansion into
international markets. But that was not nearly enough to make up for
losses in traditional retail stores.
Industry pundits have long
pointed to D.R.M. as one culprit for the music companies’ woes, saying
it alienated some customers while doing little to slow piracy on
file-sharing networks.
Apple has been campaigning against D.R.M. at least since February 2007, when the chief executive, Steven P. Jobs,
wrote an open letter criticizing the software. Apple reached a deal
with EMI that year to offer music without the copying restrictions.
But it could never reach the same agreement with EMI’s larger rivals. Sony, Warner and Universal allowed other online music services, like Amazon’s
MP3 Store, to sell unprotected music, but they withheld it from Apple.
Their goal, industry analysts say, was to try to strengthen online
rivals to iTunes, which they viewed as having a dangerous level of
control over their business.
“Apple definitely wanted to remove
D.R.M. from music, but the record labels would not allow them to
renegotiate their licensing agreements, because they wanted to help
competitors succeed against Apple in the market,” said Bill Rosenblatt,
president of GiantSteps Media Technology Strategies, a consulting firm.
Apple,
for its part, appeared to resist variable pricing, fearing it would
amount to a price increase for the most popular tracks on iTunes, which
constitute the bulk of sales on the service. It has also said the
consistent 99-cent price made things simpler for buyers.
It is not clear what broke the impasse, but the deteriorating economy may have put pressure on music companies.
“For the major labels, it was clearly time for them to accelerate
becoming digital music companies in a macroeconomic environment that is
downright frightening,” said Greg Scholl, chief executive of The
Orchard, a digital distributor of music from independent labels.
The
compromise gives the recording industry new leverage over their online
music sales, Mr. Scholl added. They can start to sell new tracks at the
higher price, then gradually drop prices to keep sales moving. Labels
could also experiment with bundled packages of songs and even special
editions at higher prices.
Harry Wang, director of mobile product
research at the consulting company Parks Associates, said, “They aren’t
going to get a huge amount of money from this new arrangement, but in
an ailing music industry, anything that can provide more money will be
better than the status quo.”
Apple said customers would be able
to pay a one-time fee to strip copying restrictions from music they
have already bought on iTunes, at 30 cents a song or 30 percent of the
album price. ITunes customers can achieve the same effect by burning
all of their music to a CD and then reimporting the music into the
iTunes software, although this reduces sound quality somewhat.
The company also said that its popular iPhone would be able to download songs from iTunes over wireless data networks like AT&T’s. Previously, iPhone owners had to either attach the phone to a computer or connect to a local Wi-Fi network.
Apple
reported the changes in iTunes at its keynote presentation at the
annual Macworld conference in San Francisco, given by Philip W.
Schiller, Apple’s senior vice president for worldwide marketing.
Mr. Jobs was not at the event, after disclosing this week that he had a
treatable hormone problem that had resulted in significant weight loss
over the last year.
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