Apple and EMI Offer DRM-Free Music via iTunes

On 4/4/07 14:32 PM, "gwaugh" <gwaughhumrro.org> wrote:

> What I don't understand is why the 128kb songs are still going to have DRM. I
> assume that it costs Apple no more to sell DRM-free songs than DRM songs.

Actually, if you think about it in terms of bandwidth, apple's cost is less
for 128k songs. However, that could also be a way to prod people towards the
newer files. Pay a little more, get a lot more, and no DRM.

>
> I also wonder why there is such a large price increase for the 256kb songs.

Um...its $.30 (US). That's less than a 30% price increase for 2x the
bitrate, and no DRM. You get a lot more for not a large increase in price.

> Does it really cost that much more to store and deliver the larger files?

Bandwidth is not only not cheap, the cost always goes up as your traffic
does.

> Or is somebody (Apple or EMI) making a bigger profit? Perhaps Apple is using
> larger per-song profits to persuade the music companies to offer their songs
> DRM-free.

That could be. However, does it really matter that much? A huge increase in
fidelity and no DRM. You pay more, you get more. Seems reasonable to me.

>
> Or is most of the price increase due to DRM freedom rather than larger files?
> Perhaps the additional cost is a piracy tax. That is, some people are going to
> illegally share DRM-free songs. The extra cost is mean to pay for some of this
> lost revenue. I *think* Canada has a blank CD tax for the same reason (the
> colected tax goes to the music companies).

People are sharing DRM free songs NOW, and *no one* is making money off it.
It's called "illegal filesharing". All this is doing is not penalizing you
for being honest. DRM as it applies to things like music and application/OS
software is one of the greatest continual failures of the computing era, and
it's time this was acknowledged. EMI and Apple are simply ahead of the pack
here.

--
John C. Welch Writer/Analyst
Bynkii.com Mac and other opinions
jwelchbynkii.com

On 4-Apr-2007, at 13:32, gwaugh wrote:
> What I don't understand is why the 128kb songs are still going to
> have DRM. I assume that it costs Apple no more to sell DRM-free
> songs than DRM songs.
>
> I also wonder why there is such a large price increase for the
> 256kb songs. Does it really cost that much more to store and
> deliver the larger files?

Why did CDs, which where MUCH cheaper to produce than LPs, cost twice
as much? There is a perceived double premier of non DRM and higher
quality, so a 30¢ bump in price is, quite probably, perceived as 'no
big deal' by most buyers.

--
MEGAHAL: within my penguin lies a torrid story of hate and love.

Whoa...

<http://www.marketwatch.com/news/story/apple-probe-shake-up-whole/story.aspx>

This situation of an EU antitrust investigation in online music
pricing promises to be highly confusing...

cheers... -Adam

On Apr 4, 2007, at 3:32 PM, gwaugh wrote:
> What I don't understand is why the 128kb songs are still going to
> have DRM. I assume that it costs Apple no more to sell DRM-free
> songs than DRM songs.

As anyone who studies economics can tell you, cost and price really
don't have all that much to do with each other. It's what people want
to pay for what is offered. This is especially true in situations
where suppliers are limited. That is, no one else will (or least
they're not suppose to) supply you with that 256kb Lizz Pharr single
for a cheaper price. Is it worth 30 cents for a better quality song
without DRM? People will vote for that with their wallets.

> I also wonder why there is such a large price increase for the
> 256kb songs. Does it really cost that much more to store and
> deliver the larger files?

I assume its several things: I'm sure the official reason is that
taking off DRM means that it is much easier to share a song. By
charging a higher price, EMC may be betting that it can make up the
profit from people doing illegal sharing.

What I really think: Remember that the recording industry and Apple
just negotiated a new license for the ITMS. As part of the
negotiations, the recording industry tried to get Apple to charge
more per song. Apple, because of its marketing position effectively
torpedoed the idea. Now, Apple may be offering the sweetener of a
higher price (and thus more profit for the EMI) in order to get rid
of DRM. The 256Kb vs. 128Kb data stream was merely used to help
justify the higher price to the end user.

Apple -- despite what you hear from the various blogs and pundants --
never liked DRM. Apple doesn't really own entertainment content and
to Apple managing DRM is just a big fat expensive pain. As Apple
points out, their profit comes from iPods and not iTunes. And, most
songs on iPods are from un-DRM'd CDs. Despite the billions of
downloads, iTunes is a drop in the music market bucket.

Meanwhile DRM has turned into a bad case of heartburn for Apple.
Europe is demanding Apple share it's FairPlay DRM with rivals or else
face stiff penalties. As Apple points out, Apple is under contract to
keep FairPlay secure and to quickly patch securities holes. Sharing
the keys to FairPlay with competitors is not a way to keep corporate
secrets. Getting rid of DRM has no downside for Apple and tons of
advantages.

--
David Weintraub
davidweintraubworld.net
davidweintraub.name

On Apr 5, 2007, at 1:39 PM, Adam C. Engst wrote:
> <http://www.marketwatch.com/news/story/apple-probe-shake-up-whole/story.aspx>
>
> This situation of an EU antitrust investigation in online music
> pricing promises to be highly confusing...

Yes, but this has nothing to do with DRM.

Interestingly, these territorial limits are not only about music. I'm
just looking at a USB hub on Amazon FR, and they say it can only be
shipped to France or Monaco. On Amazon UK, I often see the same
thing, especially for software. Europe _should be_ a single market,
but is very far from actually being so.


Kirk

                       Author of: iPod & iTunes Garage
                      http://www.mcelhearn.com/ipod.html
                - - - - - -
              Read my blog: Kirkville -- http://www.mcelhearn.com
           Musings, Opinion and Miscellanea, on Macs, iPods and more

On Apr 5, 2007, at 4:39 AM, John Welch wrote:

> On 4/4/07 14:32 PM, "gwaugh" <gwaughhumrro.org> wrote:
>
>> What I don't understand is why the 128kb songs are still going to
>> have DRM. I
>> assume that it costs Apple no more to sell DRM-free songs than DRM
>> songs.
>
> Actually, if you think about it in terms of bandwidth, apple's cost
> is less
> for 128k songs. However, that could also be a way to prod people
> towards the
> newer files. Pay a little more, get a lot more, and no DRM.

Keeping the old 128kb DRM songs at the old price and issuing the
256kb DRM-free songs at a higher price makes Jobs' comment that "it's
not a price increase, it's a new product you can choose to buy, or
not" at least technically true. (It's less egregious than what
General Motors did at the beginning of Nixon's price controls:
change the exterior form factor and the model number and
significantly increase the price of a line of railroad locomotives.)

Meanwhile, keeping the album prices the same, for the "New!
Improved!" music while raising the single price *might* move sales a
little toward the albums over the singles, which the wonderfully
benevolent music industry has been wanting to do.

   --John

On Apr 5, 2007, at 7:39 AM, Google Kreme wrote:
> Why did CDs, which where MUCH cheaper to produce than LPs, cost twice
> as much?

It was the record companies thinking of themselves as invincible
monopolies throwing their weight around. Remember singles? Well, the
industry didn't like them because they had a lower profit margin than
albums, so they got rid of them and pushed albums. Then, they bought
up all the independents and raised their prices. Good ol' American
greed.

There's an excellent editorial in the New York Times today about how
the record industry destroyed themselves. They wanted to kill the
single, and instead, they killed the album. They wanted to raise
their prices to make even more money, and instead they drove away
their customers. The article is at:
<http://www.nytimes.com/2007/04/05/opinion/05sachsnunziato.html/partner/rssnyt/>.

--
David Weintraub
davidweintraubworld.net
davidweintraub.name

On 04/04/07, gwaugh <gwaughhumrro.org> wrote:

> Or is most of the price increase due to DRM freedom rather than larger files? Perhaps the additional cost is a piracy tax. That is, some people are going to illegally share DRM-free songs. The extra cost is mean to pay for some of this lost revenue. I *think* Canada has a blank CD tax for the same reason (the colected tax goes to the music companies).

That could be the case. Most (all?) of Western Europe countries have a
similar tax, on blank audio tapes, video tapes, CDs, DVDs, even
sometimes hard drives. (Yes, even when you buy a hard drive for your
enterprise accounting server or DVDs for backing it up, you pay the
tax, there's no distinction made.) The DVD tax in France is so
ludicrous that people in the know buy them in bulk in Germany (and
obviously don't declare it) where the tax is much lower. Some people
living near the border have good eBay business, buying across the
border and shipping in France.

If the price increase is meant (partially) to compensate for lost
sales, then one is likely to pay a music tax thrice: at download, for
the hard drive it's stored in, for the DVD it's backuped on. Me, I'll
continue to buy audio CDs... (Besides, even AAC 256 kb/s is no match
for lossless on a good hifi system and good ears.)

-Thomas

David,

I'll try to be civilized in the way that I put this, but try to see past
all the various ways my comments could be interpreted.


David Weintraub wrote:
> On Apr 5, 2007, at 7:39 AM, Google Kreme wrote:
>> Why did CDs, which where MUCH cheaper to produce than LPs, cost twice
>> as much?
>
> It was the record companies thinking of themselves as invincible
> monopolies throwing their weight around. Remember singles.....
> Good ol' American greed.

It is useful to bring the spotlight onto the past to show how protection
killed the protector.

It would be even more useful to have been able to predict this: even in
stages, as it progressed; rather than hoping to be able to see
accurately into the distant future. Redirection strategies would have
helped the music industries merge with actual needs and wishes of the
musicians and their audiences.

I believe that de Bono's DATT and 6 Hats helps: when constantly
reviewed and developed over time. My own favourite is Mind Mapping, but
I still use de Bono to check out concepts formally.

How do TidBits readers go about seeing into the future to save
themselves from this kind of fate? Many Asian cultures are good at this
exercise.

George
Horseshoe Bay

>Now, Apple may be offering the sweetener of a
>higher price (and thus more profit for the EMI) in order to get rid
>of DRM. The 256Kb vs. 128Kb data stream was merely used to help
>justify the higher price to the end user.

Mayor Bloomberg has been fairly consistent in his negotiations with
the city's unions: no raises without "productivity
increases."Essentially, that means longer work days, or work weeks.

That doesn't mean that the raises are kept proportional to the
"productivity increases." Rather, the unions cannot get dollars
without offering more "work." Other issues can be negotiated and
haggled and traded, but the Benjamins only come for the minutes.

I think that that might parallel the situation here. Apple was not
going to increase the cost of songs to customers without giving them
something in exchange. The stripping of DRM might count, but for
those of us who haven't had problems with the limits that Apple's DRM
imposes wouldn't get anything out of the deal. For a higher quality
recording? Well, maybe that is worth something. Perhaps not actually
worth a 30% price increase, but at least something. So, the labels
get more money, but only if the customer get SOMETHING for the price
difference.

It is interesting to me that the iTunes import options for AAC are
"High (128)" and "Spoken Podcast." Apple has clearly marked 128kbps
AAC as the standard for high quality. To go up to 256, you've got to
choose "custom." Frankly, I've been happy with the 128, and seen no
need to go to 256. But, Apple is positioning 256 as a mainstream
standard, rather than a truly marginal one. Frankly, I don't see a
good reason to spend 30% more to get a quality that I never chose to
use for the thousands of songs I ripped from my CDs.

And so, I am not compelled. I really wonder what sales figures will
show about how popular each is once both are available.

--
=Alex Hoffman
Leadership Policy & Politics
Teachers College, Columbia University

Google Kreme wrote:
> On 4-Apr-2007, at 13:32, gwaugh wrote:
>> What I don't understand is why the 128kb songs are still going to
>> have DRM. I assume that it costs Apple no more to sell DRM-free
>> songs than DRM songs.
>>
>> I also wonder why there is such a large price increase for the
>> 256kb songs. Does it really cost that much more to store and
>> deliver the larger files?
>
> Why did CDs, which where MUCH cheaper to produce than LPs, cost twice
> as much? There is a perceived double premier of non DRM and higher
> quality, so a 30¢ bump in price is, quite probably, perceived as 'no
> big deal' by most buyers.

CDs were perceived as a much better "deal" than LPs. For the casual
listener:
They were much easier to take care of. Very much.
The players were much easier to deal with. No needles, stacking,
scratching, etc...
The entire setup took much less room.
And over time you could take it with you without making a tape of
dubious quality.

Thomas Perrier wrote:
> On 04/04/07, gwaugh <gwaughhumrro.org> wrote:
>
>> Or is most of the price increase due to DRM freedom rather than larger
>> files? Perhaps the additional cost is a piracy tax. That is, some
>> people are going to illegally share DRM-free songs. The extra cost is
>> mean to pay for some of this lost revenue. I *think* Canada has a
>> blank CD tax for the same reason (the colected tax goes to the music
>> companies).
>
> That could be the case. Most (all?) of Western Europe countries have a
> similar tax, on blank audio tapes, video tapes, CDs, DVDs, even
> sometimes hard drives. (Yes, even when you buy a hard drive for your
> enterprise accounting server or DVDs for backing it up, you pay the
> tax, there's no distinction made.) The DVD tax in France is so
> ludicrous that people in the know buy them in bulk in Germany (and
> obviously don't declare it) where the tax is much lower. Some people
> living near the border have good eBay business, buying across the
> border and shipping in France.

In the US there are "music" versions of many kinds of blank media.
Especially CDs and Tapes. The intent was that these would be bought to
use for recording music and there was a fee built into the price to
which is divided up according to some schedule by the 2 main licensing
agencies. The word got on fairly quickly and most folks understand the
only difference between this media and the "computer/data" media was in
the packaging. I'm guessing stores like Best Buy have to carry it to get
the CD deals they have but most folks ignore it. Sales are trivial.

--On 4/11/2007 4:20 AM -0700 David Ross wrote:
> In the US there are "music" versions of many kinds of blank media.
> Especially CDs and Tapes. The intent was that these would be bought to
> use for recording music and there was a fee built into the price to
> which is divided up according to some schedule by the 2 main licensing
> agencies. The word got on fairly quickly and most folks understand the
> only difference between this media and the "computer/data" media was in
> the packaging.

This is not entirely true.

Stereo component CD burners (or CD burners built-in to a stereo system) can
detect the difference between the two and will only operate with "music"
blanks. This is because such burners will always be writing music and
never writing non-music computer data.

Now, these make up a vanishingly small proportion of the CD burners out
there, and the "tax" on the media makes them less desirable than they would
otherwise be, but they do exist and require the "music" blanks.

Dave

At 4:20 AM -0700 4/11/07, David Ross wrote:
>In the US there are "music" versions of many kinds of blank media.
>Especially CDs and Tapes. The intent was that these would be bought to
>use for recording music and there was a fee built into the price to
>which is divided up according to some schedule by the 2 main licensing
>agencies. The word got on fairly quickly and most folks understand the
>only difference between this media and the "computer/data" media was in
>the packaging. I'm guessing stores like Best Buy have to carry it to get
>the CD deals they have but most folks ignore it. Sales are trivial.

Maybe in your neck of the woods. From my perspective, (hardly
objective and just a very small anecdotal sample, to be sure) I
reckon I see about half and half.

I work primarily around classical musicians with limited technical
savvy.* I get many requests for help in assembling audio CDs compiled
from multiple sources, digitizing analog audio, and editing existing
material to assemble a CD of excerpts. As long as I have the time I'm
normally happy to help out, but we don't provide our patrons with
blank CDRs; they are asked to acquire their own. As often as not,
they bring the "music" discs. I try and spread the true gospel, but I
feel like it's an uphill battle.

 *With a fairly active electronic music program here, there are some
very notable exceptions to that-- the kind of people who build their
own custom MIDI controllers and write their own software in order to
use them. But those guys don't ask me for help, which is another way
in which my own sample is skewed: it self-selects for those who don't
know what they're doing.

What seems especially odd to me though is that, based upon my own
experience here, the average music student is no more likely to be
technically literate than the average professor. Sure, the incoming
kids know how to use Yahoo mail and IM and Facebook, but I get just
as many blank stares from the 18-year-old freshman as I do from the
60+-year-old Julliard graduates when I say things like "you should
use an IMAP client instead of webmail" or "you can FTP those files
into your campus provided network storage space and then you won't
have to carry around those floppies."

But again, my sample is very heavy with people (students and faculty)
who spend a lot of their time inside of practice rooms alone with
Bach, Brahms, or Beethoven. My observations may not count outside of
my own bubble.

--
Greg Sigman, Senior Library Associate
Ohio University Music/Dance Library
sigmanohio.edu

On 4/11/07, David Ross <drdavidrossconsultant.com> wrote:
> Google Kreme wrote:
> > On 4-Apr-2007, at 13:32, gwaugh wrote:
> >> What I don't understand is why the 128kb songs are still going to
> >> have DRM. I assume that it costs Apple no more to sell DRM-free
> >> songs than DRM songs.
> >>
> >> I also wonder why there is such a large price increase for the
> >> 256kb songs. Does it really cost that much more to store and
> >> deliver the larger files?
> >
> > Why did CDs, which where MUCH cheaper to produce than LPs, cost twice
> > as much? There is a perceived double premier of non DRM and higher
> > quality, so a 30¢ bump in price is, quite probably, perceived as 'no
> > big deal' by most buyers.
>
> CDs were perceived as a much better "deal" than LPs. For the casual
> listener:

Yes, that was my point. CDs cost much less to produce and were priced
higher because of a PERCEIVED value, much like the new DRM-less tracks
are priced higher due to a PERCEIVED value. The increased bitrate is
simply a tool to aid in the perception of value and for most iTunes
Music Store users, not a real increase in value.

--
<http://2blog.kreme.com/>