By now you’ve all heard that EMI has finally agreed to allow Apple to sell DRM-free downloads through the iTunes service. While the agreement has been widely publicized, the details of the negotiations behind the scenes are generally not known. To hear EMI CEO Eric Nicoli tell it, you would almost think that Apple has been preventing EMI from selling DRM-free music.

As Nicoli told the LA Times yesterday:

We’ve always argued that the best way to combat illegal traffic is to make legal content available at decent value and conveniently. And we take the views that we have to trust the consumer.

Really? EMI has always argued that? Because, if that was the case, you would think that EMI might have already signed up to distribute its catalog through eMusic — a service that offers decent value, conveniently, and trusts the consumer.

Revisionist history aside, it’s hard to be skeptical about a deal that seems to get so many things right. While there’s still room for improvement, it’s highly unlikely that we’ll see any of the major labels commit to the perfect digital music service overnight. As incremental improvements go, EMI has (very likely grudgingly) taken a big step in the right direction.

Here are the things I find most noteworthy about this deal:

• By offering consumers the choice of digital downloads in a DRM-free format, EMI is essentially offering consumers the same level of freedom they have when they purchase a physical CD. It’s an acknowledgment that consumers of digital music products deserve the same flexibility and fair use rights that consumers of physical CDs deserve.
• The new downloads are being marketed as “premium” versions with improved audio quality. iTunes DRM-free downloads will be encoded at 256 kbs, twice the bitrate of current iTunes downloads. Previously I’d predicted that once the DRM battle was won, the next battle would be over audio quality. It looks like, iTunes at least, is using the move away from DRM as an opportunity to provide consumers with higher quality audio. It should be noted that the new “premium” songs are only available in an AAC format (not mp3 as widely reported). It seems unlikely that we’ll see the option to purchase music in a lossless format any time soon.
• While I think that iTunes pricing is still too high, the new pricing structure acknowledges that DRM is a limitation and unrestricted music is worth more to consumers. While this would seem to be common sense, it’s also a major breakthrough in thinking for the music industry. Personally I think it would have been more reasonable if this weeks announcement was accompanied by a 30 cent price drop in the restricted songs instead of a 30 cent increase for unrestricted songs.
• Allowing customers to upgrade to the new higher quality files by paying the difference in price, instead of forcing them to buy the songs over again, has to be a music industry first. The major labels have made a fortune on remasters and enhanced re-releases. This was something I speculated about a while back. The general feeling at the time was that iTunes would require users to re-purchase songs at full price. While this isn’t the free upgrade I had hoped for, it’s a reasonable substitute, especially considering the new songs are encoded at twice the bitrate.

So is this the end of DRM as a means of protecting digital music? It’s hard to say. There are still quite a few questions that we don’t have answers to.

Will the other major labels follow EMI’s lead, and if so, when? Will cost conscious consumers pay more for DRM-free music? Is this an exclusive deal for Apple, or will other music services begin selling EMI’s catalog in a DRM-free format?

While I have my suspicions about the answers to most of these questions I don’t know anything for sure. What I do know is that, for the first time ever, it actually seems like a major label might be on the right track with this digital music thing.

I honestly never thought I’d see the day.

Technorati Tags: EMI, Apple, iTunes, DRM

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