Universal Music Will Sell Songs Without Copy Protection but not through Apple’s iTunes store.
Why?
They’re flexing their muscles, to prove that they don’t have to play ball with Apple. As was reported in every newspaper currently in print, Universal recently declined to sign a long-term (translation: 2 year) iTunes contract with Apple, and instead went month to month.
The offer of Universal’s music under the new terms is being framed as a test, to run into January, allowing executives to study consumer demand and any effect on online piracy.
Don’t be an idiot. The test is to see whether there’s enough demand that they can draw people away from iTunes.
And if they can draw people away from iTunes, they can negotiate their contracts with the other wannabees in the digital music world, who are dying to get a piece of the pie and who will agree to anything Universal asks for.
Like higher prices.
Notice that they have already set the bar at $0.99. They’re not offering a discount over what you’d pay at iTunes (well, DRM-Free music sells for $1.29,
What’s the bit rate going to be? Will it be as high as iTunes? What happens if you lose the song and want to re-download it?
Answer: it depends.
The format will be MP3, and songs will sell for 99¢ each, with the bitrate to be determined by the stores in question. According to Universal, Amazon, RealNetworks, and retailers such as Best Buy and Wal-Mart will have first crack at selling the music. RealNetwork’s Rhapsody service will offer 256kbps tracks, the company said in a separate statement.
So the price is standardized $0.99 but the quality is not. Here’s hoping that each store picks a bitrate and applies it to their entire catalog.
This isn’t about Universal embracing DRM-free music. This is about Universal trying to figure out a way to get more money from you. Will it do much to stop piracy? No one really expects it will. Privately, Hollywood admits DRM isn’t about piracy. It’s about stopping you from using the content that you’ve paid for in ways that they want to charge you for.
The RIAA and the labels it represents are no different. They want to charge you for the CD, then they want to charge you for using a song off that CD as a ringtone, then they want to charge you again if you want to make a mixed CD for a friend, then they would like to charge you again if you put the CD on your iPod. And if you and your spouse/partner/whatnot both have iPods, they want you to buy two copies.
They tried doing that with DRM. It failed. So now they’d like to charge you $3 for a popular song, knowing that you will use it in several different ways.
So is this good news or not?
It’s somewhat good news. I wish they would include iTunes as one option and let the market decide what it wants, but I’m glad they are doing something.
But make no mistake: if this “test” is successful, hit singles will not sell for $0.99. My guess is that the target price in the minds of Universal Execs for a current hit is at least $2.
See Price as Signal, a 2005 piece by Joel on Software:
<
blockquote cite=”href=”http://www.joelonsoftware.com/items/2005/11/18.html”> Now, the reason the music recording industry wants different prices has nothing to do with making a premium on the best songs. What they really want is a system they can manipulate to send signals about what songs are worth, and thus what songs you should buy. I assure you that when really bad songs come out, as long as they’re new and the recording industry wants to promote those songs, they’ll charge the full $2.49 or whatever it is to send a fake signal that the songs are better than they really are. It’s the same reason we’ve had to put up with crappy radio for the last few decades: the music industry promotes what they want to promote, whether it’s good or bad, and the main reason they want to promote something is because that’s a bargaining chip they can use in their negotiations with artists.
Here’s the dream world for the EMI Group, Sony/BMG, etc.: there are two prices for songs on iTunes, say, $2.49 and $0.99. All the new releases come out at $2.49. Some classic rock (Sweet Home Alabama) is at $2.49. Unwanted, old, crap, like, say, Brandy (You’re A Fine Girl) — the crap we only know because it was pushed on us in the 70s by paid-off disk jockeys — would be deliberately priced at $0.99 to send a clear message that $0.99 = crap.
And now when a musician gets uppity, all the recording industry has to do is threaten to release their next single straight into the $0.99 category, which will kill it dead no matter how good it is. And suddenly the music industry has a lot more leverage over their artists in negotiations: the kind of leverage they are used to having. Their favorite kind of leverage. The “we won’t promote your music if you don’t let us put rootkits on your CDs” kind of leverage.
That’s some of the most insightful analysis I’ve seen of the entire situation. The article may be almost two years old, but the only thing that changed is that the record industry thought that they were going to get their way a lot sooner than they did. The article begins by referencing a report by Forbes:
EMI Group boss Alain Levy said at press conference today that he believed Jobs would introduce multiple price points for iTunes music within the next year.
The only thing that happened within the next year was that Levy left EMI with a golden parachute worth £7 million ($13.64 million). The poor record companies are suffering so badly with the effects of piracy that they can hardly manage to pay their failed leadership enough to go away.