Universal Music Group (UMG), the record company behind high-profile names like 50 Cent, Black Eyed Peas or Amy Whinehouse, announced that a significant portion of its music catalogue will be available without the pesky DRM protection.
UMG will offer the songs and the albums in the unprotected MP3 format at several online retailers, including RealNetworks, Wal-Mart, Amazon and even Google, but the big surprise is that Apple’s iTunes service, the largest online-music vendor in the US and third-largest offline or online vendor on the same market, will skip this “promotion”. Sites belonging to artists signed by UMG will also be a part of this campaign.
Since the tunes will be stripped off of their DRM software, they will be compatible wit almost any MP3-player and music-phone sold out there, including of course the iPod.
Universal is thus joining EMI in an attempt to move away from the era of locked-music, which has caused customers so many headaches. UMG’s move is significant because it is the world’s largest record company and the leader (in terms of sales) of the “four giants” (Sony BMG, EMI, UMG and Warner Music). DRM-free music is not a novelty and there are plenty of online retailers that offer music from independent artists in the MP3 format, but until recently the DRM-protected music was a must for Apple in order to keep its iTunes service up and running.
According to Steven P. Jobs, whose “Thoughts on Music” letter stirred the clear waters of the music industry this winter, iTunes was born with the DRM stigma because the “four giants” wanted to drive customers away from piracy. Apparently they failed.
On July 6, Universal axed its long term contract with Apple, despite sales estimated at around $200 million through the iTunes channel. UMG is holding approximately 30% of the world’s music market, with one-in-three tracks being released under its umbrella.
"Clearly the handwriting is on the wall for DRM-protected content," said Michael Gartenberg, an analyst with Jupiter Research. "We are seeing more of the players fall as they recognize that it's just a hassle for the consumer and doesn't really help the piracy problem."
Universal Music spokesman Peter LoFrumento said, however, that the company isn't selling DRM-free tracks on iTunes for now so it could use the Apple store as a control group for measuring the impact on pricing, piracy and sales.
So far, only EMI dared to venture into the vast wilderness of DRM-free songs, and results, according to the company, are rather encouraging, despite the higher price ($1.29), but also the higher bit-rate, of each song.
Universal Music CEO Doug Morris said in a statement that the test would "provide valuable insights into the implications of selling our music in an open format."
"Universal Music Group is committed to exploring new ways to expand the availability of our artists' music online, while offering consumers the most choice in how and where they purchase and enjoy our music," Morris said.
Mike McGuire, vice president of research at Gartner Inc., said referring to UMG’s latest move that "it seems like a bold-faced move to blunt Apple's influence."
The testing will begin August 21 and will end January 31, 2008.
