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Sunday, August 12, 2007

Universal Tests DRM-Free Music, Not on iTunes

Universal Tests DRM-Free Music, Not on iTunes

In a new test that will run through the end of January 2008, Universal Music Group is offering DRM-free music tracks through several online music outlets, including, most notably, RealNetworks' Rhapsody music service, which has some 2.7 million subscribers who can purchase tracks on Rhapsody for 10 cents less than iTunes' rates.


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Is it the end of the digital rights management (DRM) world as we know it? On Friday, Universal announced plans to peddle thousands of DRM-free albums and tracks through various online music outlets.
Between August 21 and the end of January 2008, participants including Google, Wal-Mart, Best Buy, RealNetworks, Transworld, Passalong Networks,, and Puretracks will offer Universal downloads to consumers in the DRM-free format of their choice in a variety of bitrates. For the most part, the DRM free downloads will be offered at standard wholesale prices.

The unrestricted offerings include albums and songs from many of the company's top-selling artists, such as 50 Cent, Amy Winehouse, The Pussycat Dolls, The Police, and Johnny Cash. Unrestricted MP3 files are compatible with every portable digital music player on the market.

Nitty Gritty Details

One of the major participants in the trial is RealNetworks. Its Rhapsody service leads the market for subscriptions, with 2.7 million members. "Real is committed to giving consumers more control over where and how they enjoy the music they buy online," said Rob Glaser, chairman and CEO of RealNetworks. "We think online music is moving to a DRM-free model for music purchases."

DRM-free music from Universal will be available for the same price on Rhapsody as protected files -- 89 cents per song for Rhapsody subscribers and 99 cents for nonsubscribers. That trumps iTunes prices by 10 cents for Rhapsody subscribers.

Richard Doherty, a DRM analyst at Envisioneering Group, said he is not surprised by the latest twist in the copy-protection saga.

"In the media business, it's risky to be first, great to be second, and embarrassing to be last," he quipped. "Universal isn't the pioneer that EMI was, but this move will be well received by music listeners around the world and should help the company's bottom line over time."

Apple Loses Out

RealNetworks has been an advocate of interoperability and the need to let consumers purchase music downloads that can be played on any MP3 player. Earlier this year, Real called on the recording industry to address these compatibility problems and help grow the market for legal music downloads by allowing digital music retailers to sell their music without DRM.

But, then again, so did Apple. Why, then, did Universal choose to ink a DRM-free deal with several other companies instead of with its longstanding iPod-making partner? Apple CEO Steve Jobs himself has said that the average iPod holds a mere 25 purchased songs. "Rhapsody has taken in more money than the average iTunes sale," Doherty confirmed. "So this is obviously very good for the Rhapsody business model. It also helps Rhapsody pull away from Yahoo Music and other subscription models."

Despite EMI and Universal moving ahead with DRM-free experiments, getting Sony and Warner Music on board with DRM-free tracks might not be an immediate given. But industry watchers agree that unrestricted music seems to be where the industry is headed.

"The trick here is to get the nail biters and the laggards to pay for digital downloads," said Doherty. "Many have resorted to free music sources instead of paying because they don't want the error messages telling them they have to activate another music player to listen to the track."

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