Universal Music To Test DRM-Free Sales, But Perhaps For The Wrong Reasons

from the nose-cut-spite-face dept

Fri, Aug 10th 2007 10:44am — Carlo Longino

Following the lead of rival record label EMI, Universal Music says it will later this month begin selling DRM-free music downloads through a variety of sites -- but not through Apple's iTunes Music Store. Apple and Universal have a long-running spat which culminated in Universal's refusal last month to to renew its iTunes Music Store contract. While its music is still sold through the store, Universal could yank it at any time. Universal's decision not to give Apple the unprotected tracks seems like little more than an attempt to reduce its influence in the music market -- which is a little ironic, considering that it was the record labels' insistence on using DRM that made Apple so powerful in the space. Making the unprotected tracks available through other retailers is about the only way that Universal can fight back, but it's hard to see the benefit in not selling the product through iTMS, given its popularity. The problem for Universal is that few people pay attention to what label artists' records are on, so they're not going to go, "Oh, 50 Cent is on Universal, so I should go to Amazon to buy his unprotected MP3s." If they're an iTMS user, they're generally just going to look and see if the 50 Cent songs they want are available there, then download them. In that case, they're going to purchase the cheaper, DRM-encumbered track, since it's what's available, and Universal misses out on the chance to sell them a higher-priced unrestricted track. The core of the label's disagreement with Apple is pricing -- but their attempt to strike some sort of blow against the company will, in all likelihood, only end up hurting themselves.

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Filed Under: entertainment, itunes, music, record labels
Companies: apple, emi, universal music

13 Comments

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CT Greybeard, 10 Aug 2007 @ 10:52am

Interesting ... I just read that Realnetworks will be offering the songs at the regular member price of 89 cents. If they have a beef with iTMS on pricing then why don't they with Real?
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Marc Cohen, 10 Aug 2007 @ 10:54am

Bring out the buggy whips
In his famous article "Marketing Myopia" Professor Ted Leavitt described the buggy whip industry and observed that no amount of product improvement could prevent the evaporation of the industry. The record industry is on its way to becoming a new buggy whip industry. Eliminating DRM is the kind of ineffective product improvement Leavitt described. The industry needs to reinvent itself is a free, ad-supported medium. Check out the Ad-Supported Music Central blog:http://ad-supported-music.blogspot.com/
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Dan, 10 Aug 2007 @ 10:55am

It is a shame that the DMCA law is exploited in order to make the industry more money. DMCA was created to protect copyrights, not to prevent fair use. It really is a shame that in order for us to legally do what we want with the music that we purchase, we have to pay more. Fair use should not have a price, as it is protected by copyright law, but that is what this does, make it so you need to pay a premium to practice fair use. I am all for DRM free music, however I fail to see why it should cost more.
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Anonymous Coward, 10 Aug 2007 @ 11:25am

Personally
First I look on iTunes.

I don't like the other digital music resellers. So I go and find it the next easiest way, P2P network. Or have friends burn me a CD.
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W.B. McNamara (profile), 10 Aug 2007 @ 11:36am

Doesn't really make sense to me, either...
The best explanation that I can come up with is that the plan looks something like this:
1. Undertake very short test of DRM-free online music distribution.
a. Intentionally exclude the largest online music distributor, because we’re in a bit of a snit right now.
b. Wait six months, then express disappointment with relatively small sales.
c. Conclude that results indicate that only a small segment of consumers see DRM as a significantly motivating factor when purchasing music for download.
d. Come up with bizarre and unwieldy “some music is sometimes available without DRM” scheme.
2. ???
3. Profit!
The plan seems oddly familiar for some reason, but I just can't place it...
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- South Park Fan, 10 Aug 2007 @ 12:53pm
  
  Re: Doesn't really make sense to me, either...
  That would be the business plan of the underpants gnomes from South Park(episode 30- "Gnomes"):
  1. Collect Underpants
  2. ?
  3. Profit
  
  Nice comparison, it should be an equally profitable business model for Universal as it was for the gnomes- a cave full of underpants with no way to make a profit.
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Joel Coehoorn, 10 Aug 2007 @ 11:39am

They say they're doing it on a trial basis only, to see how it affects piracy. While most of the article assume that everything will be fine and they'll extend it, I wouldn't be surprised if Universal makes up it's own piracy metric and then comes back in January saying, "See, we told you so."
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Ted Wood, 10 Aug 2007 @ 12:08pm

DRM is not Apple's reason for success
I'm not sure why people repeat the misinformation that DRM made Apple the powerhouse it is today. I know I didn't buy hundreds of dollars worth of iTunes because of the DRM, but I am buying more than it's begun to disappear. iTunes is successful because of the seamless integration and ease of use. That's the bottom line, plain and simple.

I think Universal is just biting off the hand that feeds it. They're the childish playground bully and Apple is not even being phased by their silly behavior.
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Brandon Watts, 10 Aug 2007 @ 1:03pm

Despite whatever bad feelings Universal may have towards Apple, a bad business decision is a bad business decision, and this is a perfect example of that.

By alienating Apple, they're missing out on one of their largest audiences, and I'm sure that after a few months of working with this approach they're at least going to be tempted to try and make nice with Apple once they see their results.

Brandon Watts
Criteo Evangelist
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dave, 10 Aug 2007 @ 1:28pm

not about piracy
This is Universal trying to get people to switch to other services, so consumers pay their desired "variable pricing" somewhere else, or it helps force Apple to accept variable pricing. This announcement/trial will have zero effect on piracy.
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Anonymous Coward, 10 Aug 2007 @ 2:23pm

well i'm going to get my DRM free tracks, universal or not, from bittorrent. end of story. :P
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Anonymous Coward, 10 Aug 2007 @ 5:39pm

Which might be the point ... because afterwards Universal can say that people just don't want DRM-free music. I'm sure Universal is quite well aware that iTMS is going to outsell any other etailer.
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Abhishek, 12 Aug 2007 @ 10:04pm

Universal deal wont hurt Apple
I dont think this deal will hurt Apple in any big way. Apple makes most of its revenue via iPod sales. Read my analysis here http://abhishek.tiwari.com/2007/08/13/should-apple-fear-the-universal-google-and-gbox-tag-team / Abhishek
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