EMI spells no-more-DRM

RECORD label EMI has broken from the rest of the industry and announced plans to start selling music free of software copy-protection measures through Apple’s iTunes music download service.

Analysts are already calling the announcement the beginning of the end for current copy-protection measures. Called Digital Rights Management (DRM) software, copy-protection is seen by many as an unnecessary inconvenience to consumers.

Others say DRM is anti-competitive. The DRM used on Apple’s iTunes does not work with other services, and does not work with devices other than the Apple iPod – locking customers into the iPod hardware platform.

The EMI/Apple announcement comes as European Union competition regulators said they were broadening an investigation of the iTunes service to determine whether its rights management policies were anti-competitive.

The EMI-Apple service will let customers pay a premium US.30 cents (A.37 cents) more for a copy of songs without copy-protection.

The deal, announced this week by EMI chief executive Eric Nicoli and Apple chief Steve Jobs would cover the entire EMI catalogue – except The Beatles. The Beatles back-catalogue has yet to be released to download sites in any form, although Mr Nicoli said the company was “working on it.”

But while The Beatles’ tracks won’t be on offer in the new format, all other EMI artists – from Coldplay, the Rolling Stones and Norah Jones – will be.

Mr Jobs had recently called on the record industry to change its policies on copy protection. He has said it did not make sense for the industry to sell music through CDs (which accounts for 90 per cent of global sales) without copy-protection, and then to add DRM to the sales online.

Apple said the DRM-free tracks from EMI would be offered at higher quality 256kbps AAC encoding. The current versions available today use 128kbps encoding.

IN addition to the greater convenience of the DRM-free versions, the companies said they believed customers would be prepared to pay a 30 cent premium for better quality downloads.

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Anti-competitive: EU attacks iTunes

APPLE and the world’s five major record labels have been formally accused by European regulators of anti-competitive behaviour stemming from distribution practices of the iTunes music download service.

The European Commission confirmed yesterday it had sent a statement of objection to the companies over agreements between the record companies and Apple that restricts where and how users can access the iTunes site.

The EC says the companies are artificially restricting users from one European country from accessing the iTunes service in another, restricting cross-border transactions.

It says the record labels – Vivendi's Universal Music Group, Sony BMG, EMI and Warner Music – were forcing Apple to restrict users to only accessing the iTunes site in their own country, thus restricting choice and forcing prices up.

The Commission says the agreements between Apple and the record companies violates EC Treaty rules prohibiting restrictive business practices.

“The Statement of Objections alleges that distribution agreements between Apple and major record companies contain territorial sales restrictions which violate Article 81 of the EC Treaty,” the EC said in a statement.

“iTunes verifies consumers' country of residence through their credit card details. For example, in order to buy a music download from the iTunes' Belgian on-line store a consumer must use a credit card issued by a bank with an address in Belgium.”

The iTunes services charges different amounts for songs in different European countries.

The Statement of Objections does not allege that Apple is in a dominant market position and is not about Apple's use of its proprietary Digital Rights Management (DRM) to control usage rights for downloads from the iTunes on-line store.