LONDON/NEW YORK (Reuters) - EMI is to make its music available online without a key anti-piracy measure, becoming the first major music group to take the risk in a bid to grow digital sales.
Digital Rights Management or DRM was introduced to contain piracy by preventing users from making multiple copies, but its critics say it restricts consumers and therefore hinders the growth of legal downloading.
With all music companies struggling from a drop in the sale of physical albums, EMI, home to Robbie Williams, Coldplay and Pink Floyd, announced its first deal with Apple Inc. and the iTunes online music store.
Under the deal, iTunes will offer a higher price of $1.29, 1.29 euros or 99 pence for every track of EMI’s catalog available online in a higher-quality format without DRM. EMI albums sold on iTunes will automatically be sold without the software and at the higher sound quality for the same price.
The new higher quality DRM-free music will be in addition to EMI’s existing range of standard DRM-protected downloads, which will still be available, EMI said at a press conference in central London with Apple Chief Executive Steve Jobs.
“We believe that offering consumers the opportunity to buy higher quality tracks and listen to them on the device or platform of their choice will boost sales of digital music,” said EMI Chief Executive Eric Nicoli.
The industry is likely to watch closely.
Warner Music Group has said it sees no logic to dropping DRM but is still testing music without it, while Vivendi’s Universal Music has said it, too, is still testing tracks without DRM.
Earlier this year, Jobs called on the world’s four major record companies, including EMI, to start selling songs online without DRM copy-protection software.
Jobs argued that there appeared to be no benefit for the record companies in selling more than 90 percent of their music without DRM on compact discs, while selling the remaining small percentage of music online encumbered with DRM.
”Selling digital music DRM-free is the right step forward for the music industry,“ Jobs said on Monday. ”We expect to offer more than half of the songs on iTunes in DRM-free versions by the end of the year.
EMI said retailers would be offered downloads of tracks and albums in the DRM-free audio format from today. Apple said the EMI Music catalog would be available from May.
Consumers who have already bought standard tracks or albums with DRM will be able to upgrade for 30 cents (dollars and euros) and 20 pence per track. EMI music videos will be available via iTunes DRM-free with no change in price.
“Since you’re not lifting your DRM on everything, you’ll have a mixed library, which will also be a challenge,” said Shannon Cross, a U.S.-based analyst with Soleil Cross Research who follows Apple. “It’s a first step in a very long process.”
Executives at several rival record companies said they had expected EMI to drop DRM but questioned whether EMI had done sufficient market research to justify the move.
“It’s problematic,” said one executive. “EMI haven’t tested it enough, so they don’t know what the market reaction is going to be”
“The issues are will (unprotected) MP3s help expand the market, and how will it affect piracy? We just don’t know,” the executive said.
EMI’s biggest market test was with Norah Jones’s single “Thinking About You” in January, while Sony BMG tested the market with Jessica Simpson’s “A Public Affair” last summer.
There was no formal announcement regarding a Beatles deal, as some followers anticipated when EMI announced on Sunday that it would hold a press conference with Apple.
“We are working on it,” Nicol said, without giving a time frame.
EMI has acted as the distributor for the Beatles since the early 1960s, but the Fab Four’s music holding company Apple Corps Ltd. has been a high-profile hold-out from Internet music services like Apple’s iTunes.
EMI’s shares closed up 0.3 percent at 228-1/4 pence, and shares in Apple Inc were up 0.8 percent at $93.63 at 1615 GMT.
Additional reporting by Eric Auchard, Duncan Martell and Michael Kahn in San Francisco, Kenneth Li in New York and Gavin Haycock in London