Pay More for DRM-Free Music at iTunes

Earlier we wrote about why people will pay for free music. Apple's Steve Jobs wrote that he would happily remove all the DRM locks from iTunes if the record companies would let him. Now one company is. EMI and Apple reached a deal to allow totally restriction-free songs for sale. The kicker is that the songs will cost 30 cents more that the locked-down DRM versions. At ZDNet, they think the success of this move rests on three factors: will this bring in more customers, will the new customers stop file trading, and is the extra $0.30 per track worth it to the record companies? I think the first question is a good one but the last two miss the point completely. The problem here is the way the issue is framed: the record companies have long been more concerned with stopping file trading and suing "pirates" than actually making money. File trading is here to stay. The nature of the Internet makes it a technological inevitability. You cannot sue a whole technology out of existence. Whether or not EMI (or any of the other major companies) allows DRM-free tracks to be sold, the minute one person buys a CD the whole entire system of locks and encryption and watermarks and whatever else has been completely broken. So what do you do? You figure out why people are using Napster or whatever to download songs, and then you compete with it by offering a better value. No one was even willing to try selling song downloads until Jobs convinced them to, and iTunes has been able to sell billions of tracks. I'm not sure the higher price is such a good idea. I agree that DRM reduces the value of the song downloads. But you have to look at the bigger picture: iTunes is still competing against free mp3s on peer to peer networks. I think Apple picked the $.99 price point for logical psychological reasons - it's much easier to justify spending the money if it's not even a dollar. In any event, this is a good move and I think both iTunes and EMI will see real benefits from this.

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