iTunes DRM-free price cut: Apple bitten by Universal?

Stan Beer
Wednesday, 17 October 2007 07:51

Opinion and Analysis

When Universal Music Group announced in August that it would be offering DRM-free music downloads in the US for 99c at competitor sites to iTunes eyebrows shot up. Apple had already done a deal with EMI to offer DRM-free music on iTunes for $1.29. Could Apple simply ignore the Universal move because of the iTunes market dominance? We now have our answer. Are we seeing the first chinks in the iTunes armour?

Apple has now dropped the price of its DRM-free music to 99c, the same price as its lower quality and restricted Fairplay DRM music. This could present a problem for Apple because most iTunes users would choose to download higher quality unrestricted music if given a choice. However, to date the only DRM-free music available on iTunes is from the smallest of the four major recording companies EMI and some independent labels.

So what's the problem? The problem is that a significantly wider choice of DRM-free music is available from the world's largest recording company at sites other than iTunes, such as Amazon, Rhapsody, Wal-Mart and Best Buy. Because this non-iTunes music is DRM-free there should be no problem getting it on to iPods.

Right now Universal is only running a five month trial of its DRM-free service and sceptics doubt that it will have any long term impact on sales through the iTunes juggernaut. Yet Apple has responded like a company which is at least concerned if not worried.

For Universal, which has been watching Apple like hawk, the latest move by iTunes must be encouraging. Universal boss Doug Morris has implemented a multi-pronged anti-iTunes strategy and is said to be holding talks with both Sony BMG and Warner Bros on bundling music with non-iPod portable music players.

The immense popularity of the iPod is likely to see it unaffected by any such bundling deals. However, if these three major players ever decided to get together on offering DRM-free music through sites other than iTunes, a serious challenge to the dominance of iTunes could eventuate.

If such a thing does eventuate, those who hate the record companies could hardly complain. After all, nearly every buyer would like to see the demise DRM music, including the Apple faithful, wouldn't they?