Archive for the ‘iTunes’ Category

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Sony BMG Plans to Drop DRM

January 4, 2008

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In a move that would mark the end of a digital music era, Sony BMG Music Entertainment is finalizing plans to sell songs without the copyright protection software that has long restricted the use of music downloaded from the Internet, BusinessWeek.com has learned. Sony BMG, a joint venture of Sony (SNE) and Bertelsmann, will make at least part of its collection available without so-called digital rights management, or DRM, software some time in the first quarter, according to people familiar with the matter.

Sony BMG would become the last of the top four music labels to drop DRM, following Warner Music Group (WMG), which in late December said it would sell DRM-free songs through Amazon.com’s (AMZN) digital music store. EMI and Vivendi’s Universal Music Group announced their plans for DRM-free downloads earlier in 2007.

Getting Hip to the Internet
The impetus to lift copyright protection represents a sea change for the recording industry, which for the better part of a decade has used DRM to guard against what it considers illegal distribution and duplication of songs purchased online. In abandoning DRM on à la carte song purchases, the labels could create a raft of new, less restrictive ways of selling music over the Internet, such as through social networks like Facebook and News Corp.’s (NWS) MySpace. Partnerships with retailers such as Amazon could also help the music industry take a swipe at Apple (AAPL), which has come to dominate the legal download market through a one-size-fits-all pricing scheme record labels find restrictive.

Details of Sony BMG’s plans are expected to emerge in the coming weeks. Justin Timberlake, the popular recording artist signed to the Sony-owned Jive label, is participating in a Super Bowl promotion with Pepsi (PEP) that will kick off Feb. 3 and offer free distribution of 1 billion songs from major labels, including Sony BMG, through Amazon’s DRM-free download service, according to a person familiar with the matter. Sony has been experimenting with DRM-free songs for about six months. The company began giving away DRM-free promotional downloads for recording artists that sell less than 100,000 units, and at least one artist gained mainstream exposure through the effort. “A lot of these tests have led people to believe that maybe this works,” says a Sony BMG executive who asked not to be identified. A Sony BMG spokesman declined to comment. Amazon also declined to comment on its DRM-free deals, beyond what it has disclosed in press releases.

The move by Sony BMG is especially noteworthy, given the company’s checkered DRM past. In 2005, Sony BMG incited a consumer boycott and was the target of lawsuits after it embedded CDs with a form of DRM that was surreptitiously copied to and buried in users’ PCs (BusinessWeek.com, 11/29/05), leaving the machines vulnerable to viruses.

Abandoning an Outmoded Idea
Many, including music executives, consider the industry’s about-face long overdue. “This agreement is the first of many of these types we’ll be announcing in the coming weeks and months,” Warner Music Group Chief Executive Edgar Bronfman Jr. wrote in a Dec. 27 memo to employees explaining Warner’s breakthrough deal with Amazon. “Many have argued that we could and should have done this long ago.”

Labels used DRM software in an effort to prevent illegal sharing of songs on peer-to-peer networks, such as Gnutella. Instead, the restrictions served mainly to frustrate paying customers, forcing them to degrade the quality of music by first burning it to a CD before uploading it for play on the device of their choosing. Last year, consumers filed several class actions against the major record labels (BusinessWeek.com, 1/5/07) and, in a couple cases, against Apple, for restricting the devices and thereby controlling prices.

“DRM tends to punish the innocent more than the guilty,” says Rob Enderle, principal analyst at the Enderle Group, a technology research company. “It was hurting folks who were trying to follow the rules more than the folks who were pirating the music.”

Dancing to Apple’s Tune
Worse for the labels, the restrictions ultimately resulted in less control over the paid download industry. Because DRM tended to tie consumers to the store most compatible with their music device, the record labels unwittingly gave much of the power over music distribution to Apple, the manufacturer of the most popular digital music player, the iPod. Music industry executives say Apple has not wielded that power lightly. With control of an estimated 80% of the market for legally downloaded music, Apple pushed its preferred price of 99¢ per song over the opposition of several labels (BusinessWeek.com, 9/25/05), which preferred variable pricing that would allow some artists to sell at a premium.

Apple CEO Steve Jobs also refused repeated requests from the recording industry and iPod competitors to license its DRM technology so that iTunes customers could easily put their music on other devices, without first burning it to a CD or otherwise altering the files. In a Feb. 6, 2007, letter titled “Thoughts on Music,” Jobs maintained that licensing its DRM technology to many providers would make it too difficult to keep its antipiracy code under wraps: “Licensing a DRM involves disclosing some of its secrets to many people in many companies, and history tells us that inevitably these secrets will leak.”

Jobs used the letter to pressure the music labels (BusinessWeek.com, 2/6/07) to abandon their own use of copyright protection technology. “In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players,” Jobs wrote. “This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat.” The public shaming helped Apple take the moral high ground at a time when it was under pressure from European regulators to open its DRM to let iTunes customers download their music to non-Apple devices. With his letter, Jobs pointed the finger at the labels for supporting DRM, silently suggesting the wrath of consumers and antitrust authorities should lie with them. Within two months, EMI, one of the smaller of the big four labels, offered to sell higher-quality, DRM-free tracks through iTunes for a 30¢ premium. By Oct. 17 the tracks were selling for 99¢.

A Play for an iTunes Competitor
DRM is by no means dead. Music subscription services such as RealNetwork’s (RNWK) Rhapsody and ad-supported services like Ruckus (BusinessWeek.com, 1/22/07) will continue to use DRM to ensure music stops playing when a subscription ends. But these services represent only a small segment of the market. “There won’t be any DRM of significance by the end of 2008,” says David Pakman, president and CEO of DRM-free music download service eMusic, the second-largest service after iTunes. “The only time you will see it used is for rental services.”

Rather than following EMI’s lead, other labels are hoping to create another Apple competitor in Amazon, which is willing to give the recording industry greater pricing flexibility. “That was a big part of it—countering Apple’s control in a positive way by creating more able competitors,” says Mike McGuire, a vice-president for research at Gartner (IT).

Narrowing Apple’s lead won’t be easy. Just ask Microsoft (MSFT), which has made meager headway with its Zune music player and online music store. Still, no service has yet been able to offer DRM-free music downloads from all four major labels. Amazon could yet become a contender.

With Tom Lowry and Spencer Ante in New York.
Holahan is a writer for BusinessWeek.com in New York.
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Personal Data Hidden in iTunes Tracks

June 4, 2007

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Fresh privacy fears have been sparked after it emerged that Apple has embedded personal information into music files bought from its iTunes online music store.

Technology Web sites examining iTunes products discovered that personal data, including the name and e-mail addresses of purchasers, are embedded into the AAC files that Apple uses to distribute music tracks.

The information is also included in tracks sold under Apple’s iTunes Plus system, launched this week, where users pay a premium for music that is free from the controversial digital rights management (DRM) software that is designed to safeguard against piracy.

The Electronic Frontier Foundation, an online consumer rights group, added that it had identified a large amount of additional unaccounted-for information in iTunes files.

It said it was possible that the data could be used to “watermark” tracks so that the original purchaser could be tracked down were a track to appear on a file-sharing network.

Ars Technica, among the first Web sites to unveil the hidden information, said: “Everyone should be aware that while DRM-free files may lift a lot of restrictions on our personal usage habits, it doesn’t mean that we can just start sharing the love, so to speak. Sharer beware.”

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iTunes and labels reinventing online music

May 11, 2007

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Apple is entering this year’s round of talks with major labels in the US over iTunes distribution rignts.

Talks over the Apple iTunes Store begun just weeks after EMI threw a curveball at the major labels with its decision to make its iTunes’ catalogue available for sale online free of digital rights management (DRM).

While last year’s meetings over the Apple iTunes Store and music labels saw Apple CEO Steve Jobs spurning record company demands for flexible pricing, Apple in the post-EMI-DRM decision may be more willing to negotiate.

Apple wants majors to emulate EMI and abandon DRM, at least in so far as iTunes Store sales for permanent collections. (DRM will continue to have a place in subscription-based and some mobile music services for the foreseeable future).

Jobs isn’t expecting the world to turn upside down. When the EMI decision to release music in high quality format free of DRM was announced, Jobs said he hoped to offer half of all songs sold in iTunes DRM-free by the end of the year.

Jupiter Research analyst Mark Mulligan – an expert in the digital music field – observed: “Jobs suggested at the EMI launch that he expected approximately half of catalogue to be available DRM free by year end. That’s a conservative estimate that essentially covers EMI and the Indies. Jobs is hoping that he’s under-promising with a view to over-delivering – a tactic at which he is adept.”

The analyst believes it may be time to move away from set single price models in iTunes. Variable pricing has served its purpose, he said, adding, “both Apple and the labels would benefit from a more flexible approach to pricing.

Bringing a consumer electronics pricing mentality to selling music only works so far. Not all music is worth the same. Just as Apple wouldn’t want to be forced to sell a generation one iPod for the same price as a video iPod, the music industry doesn’t want to sell 70’s album tracks for the same price as a top 20 single.”

Mulligan believes the new framework in which DRM-free tracks cost 20p more than the previously available versions has “opened the doors to variable pricing”, and has also given Apple a bargaining position for its latest chats with the labels.

Apple has been accused of locking iTunes and iPod customers into iots ecosystem, as songs sold through iTunes can only be played on an iPod. (Or burnt to a CD and ripped back to a computer DRM-free).

The move to abandon DRM for permanent sales through iTunes – or at least offer DRM-free tracks as a higher-priced product – would also free Apple from threats that it will be forced to license its own DRM system, FairPlay.

According to analyst Mulligan, labels also want to be able to offer a wider variety of product bundles through iTunes, such as combined video and music bundles.

“The digital download model doesn’t need to limit itself to trying to replicate the CD in digital form. Just as the 99 cents uniform price point has served its purpose well, so has the digital track. Now the market is more than ready to accommodate product and format experimentation.”

in: Macworld

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Ticketmaster gives the gift of music

May 8, 2007

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Ticketmaster, the world’s leading ticketing company is expanding the music libraries of concert fans throughout North America by providing fans with complimentary music with every concert ticket purchased online at Ticketmaster.com. The special offer is an extension of Ticketmaster’s focus on rewarding fans with great opportunities to discover new music and connect with new and favorite acts.

With every concert ticket purchased online at Ticketmaster.com, Ticketmaster is providing a complimentary ten-song digital music sampler showcasing a variety of emerging and established artists. In addition, with the purchase of every ticket to any summer concert scheduled to take place between Memorial Day (May 28) and Labor Day (Sept 3) Ticketmaster.com ticket buyers may download one complimentary song of their choice from the iTunes Store.

“Ticketmaster’s concert program gets digital and live music directly to the fans, enabling them to experience new and undiscovered music,” said Sean Moriarty, President and CEO of Ticketmaster. “We are dedicated to providing Ticketmaster buyers with rewarding opportunities across all categories of live entertainment and these special music offers are a great way to kick off the summer concert season.”

Furthering Ticketmaster’s focus on building rewarding act-to-fan relationships, the ticketing company recently announced investments in echomusic, an online fan club and brand management company, and iLike, a social site for music discovery.

Ticketmaster has integrated its event alert functionality into iLike.com, serving one million registered users and processing more than 200 million monthly track plays. And for echomusic, Ticketmaster is developing fan club ticketing programs available to echo’s roster of more than 300 personality and corporate clients.

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Will Zune follow iTunes?

April 6, 2007

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Microsoft may be inking a deal with EMI to sell DRM-free digital music, much like iTunes has annouced earlier this week, according to recent rumours.

Zune’s marketing director Jason Reindorp has said “we’ve been saying for a while that we are aware that consumers want to have unprotected content.”

Zune, Microsoft’s answer to the iPod-iTunes digital music solution, has 11% to 12% market share among hard disk-based media players. The problem is that hard drive-based devices only account for a quarter to a third of all media players sold (the rest using flash memory) so Microsoft actually has only a small percentage of a small percentage of the market.

Reindorp admited that droping DRM “does open things up a little bit. It potentially makes the competition more of a device-to-device or service-to-service basis, and will force the various services to really innovate”, which is in Microsoft’s direct interest.

EMI declined to comment on the speculation, though it reiterated that iTunes was just one of a number of digital music stores from which it anticipated selling DRM-free tracks “in the coming weeks”.

An EMI spokesman said: “Negotiations with other platforms, such as Zune, are ongoing.”

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EU to target Apple’s iTunes site

April 4, 2007

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British newspaper Financial Times reported that Apple and several big music companies are facing a European Commission antitrust probe after Brussels issued formal charges alleging that the deals underpinning the sale of music through the hugely popular iTunes platform violated competition rules.

In a surprise development, the Brussels regulator last week sent a confidential statement of objections to Apple and “major record companies”. These are understood to include Universal, Warner, EMI and Sony BMG.

The European Commission’s main concern is that iTunes’ set-up in the European market prohibits users in one country from downloading music from a website intended to serve another. Its move was triggered by a 2004 complaint from Which?, the UK consumer organisation, criticising the fact that the UK version of iTunes was more expensive than the version in other European markets.

A spokesman for Neelie Kroes, EU competition commissioner, said Apple’s agreements restricted “music sales in the sense that consumers can only buy music from the iTunes store in their country of residence” and that consumers were therefore limited “in their choice of where to buy music and, consequently, what music is available and at what price”. He said: “The Commission alleges that these agreements violate the [EU] treaty’s rules prohibiting restrictive business practices.” Brussels stressed that its allegations had nothing to do with the lack of interoperability between the iTunes format and rival players.

Apple spokesman Steve Dowling said the company wanted to operate a single store for all of Europe, but music labels and publishers said there were limits to the rights that could they could grant to Apple.

“We don’t believe Apple did anything to violate EU law,” he said. “We will continue to work with the EU to resolve this matter.”

The groups will now be given the chance to defend themselves both in writing and during a hearing in Brussels. People familiar with the case expect the groups to argue that copyrights are currently awarded and administered on a national basis, making it difficult for national iTunes websites to sell songs across borders.

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First reactions to EMI’s DRM-free policy

April 3, 2007

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Some say it was bound to happen others praise EMI’s bold decision to drop DRM but everybody agrees this is a huge step for digital music!

The deal between EMI and Apple that was announced yesterday to sell digital music without copy protection is already shaking the world of music. Today, both the Digital Freedom Campaign (DFC) and Consumer Electronics Association (CEA) President and CEO Gary Shapiro issued press releases supporting and applauding the decision.

“CEA applauds Apple and EMI Music for recognizing what consumers really want out of their digital music experience – high resolution recordings worthy of both home and on-the-go listening, along with the freedom to move music among devices,” said Shapiro. “This is the future of digital entertainment.”

“Traditional MP3 files are compressed for space purposes, a process which strips frequencies and important details from each recording. For consumers, this announcement means there is no longer a need to sacrifice quality sound simply for convenience. We think music fans are going to like what they hear.”

Shapiro continued, “CEA encourages other content companies and digital music services to follow the lead of Apple and EMI Music. Companies such as these, which listen as well as respond to customer needs, are well-positioned to succeed in the digital age.”

Jake Ward, a spokesperson for DFC, said “EMI’s decision to make its music catalogue available to its customers without mandatory digital rights management (DRM) software is a significant sign of progress and reflects what a new generation of consumers demands.” He added that “while the digital age allows consumers unprecedented access to content, the inclusion of DRM complicates the consumer experience and hinders innovation and progress.”

“EMI has set a new standard for the industry that focuses on the customer’s wishes. We hope other content companies will follow EMI’s lead.”

The Digital Freedom Campaign, which is a national effort to defend the rights of artists and consumers to use new digital technologies, includes organizations such as CEA itself, Public Knowledge, Electronic Frontier Foundation (EFF), Media Access Project, Computer and Communications Industry Association (CCIA), Be The Media, New America Foundation, National Video Resources and FreeNetworks.org, as well as more than 150 artists and labels and has worked to oppose measures designed to place crippling restrictions or impose excessive fees on technologies that allow individuals to lawfully enjoy and create lawfully music, video and other content.