Lang: EMI-Apple deal drives up online music price

Lang: EMI-Apple deal drives up online music price

By George Lang
The Oklahoman

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When EMI Group and Apple announced a joint press conference in London this week, industry watchers thought the two companies were unveiling a deal to release the Beatles' catalog on iTunes. After all, the Fab Four are one of the last major digital downloading holdouts (along with Led Zeppelin), and are either negotiating a monster deal, waiting for George and Giles Martin to re-master the catalog, or betting on a sudden return to vinyl that throws the digital music business into catastrophic freefall.

Instead, Apple and EMI announced an agreement in which the record label would begin making its non-Fab material available on iTunes without Digital Rights Management (DRM) software. Users who buy DRM-encoded tracks from iTunes are restricted to playing those songs on up to five authorized computers, or on iPods. Under the new deal, customers will be able to buy DRM-free EMI songs from artists such as LCD Soundsystem and Air that are recorded at a higher bit rate. The songs will sound better and can be copied without limits, but these tracks will cost $1.29, 30 cents more than iTunes' usual 99 cents.

This cost increase is problematic, since it jacks up the per-song price by a third and, presumably, will cause the full album price to go up by about $3 on average. This price increase could be justified as a means of recouping potential losses from copying and sharing, but it's more likely just a cash grab.

The strangest by-product of the deal is that it makes buying physical compact discs look like a good option again. Since the Sony BMG "rootkit” fiasco of 2005, in which the company encoded its CDs with data-mining software that stole information from computer users, none of the major music distributors encode CDs with DRM. Music consumers who want high-quality, DRM-free music would actually get a better deal buying music the old-fashioned way: on a CD at a retail store. That is so 1998, but it's true.

However, don't expect CD sales to bounce back, soon or ever. According to London's Financial Times, EMI itself reported a 20 percent drop in CD sales during the first seven weeks of 2007. And Enders Analysis, a British media research company, predicts that by 2009, CD sales will be roughly half of what they were at the format's 1997 peak.

This precipitous drop will hasten the record industry's inevitable draw-down of CD production. When CDs become relics of the early digital age, the main sources for music will be download services such as iTunes, eMusic and the Zune Marketplace — if it survives.

So ... $1.30 a song? Steve Jobs might have us over a DRM-free digital barrel.

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