Major music cartels demand concessions from Apple before inking DRM-free iTunes Store music deals

For months now, there have been rumblings that Apple and the major music cartels are very close to a deal to offer DRM-free music via iTunes Store.

HypeBot reports, “Months later their is still no deal. Sources tell Hypebot that each label is looking for a different concession before they allow iTunes to drop DRM:”

• Warner Music Group wants variable pricing on the track level including some hit product above $.99 cents.

• Sony BMG wants to work with iTunes using the agency model. As it is with Rhapsody, Amazon and others, Sony BMG is the actual seller of tracks and iTunes woulc be the agent delivering them. Sony BMG’s concern is that competition will drive track prices lower and the agency model allows them to maintain complete control.

• Universal wants watermarking on the individual track purchase level. Apparently other download stores have agreed or are close to agreeing to do the same. How it will effect consumers remains unclear.

Full article here.

[Attribution: AppleInsider via All About Jazz. Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]


  1. Watermarking would presumably embed identifying information into the audio stream of the AAC file itself. Which would of course slightly degrade the audio quality, and require some fancy processing on the server side to embed the customer’s unique identifying data within the track upon download.

    I’m still blown away by the way Sony’s request is worded there. Where are all the “monopoly” bloodhounds, who are so quick to go after Apple’s iTunes “monopoly”? Will they also be outraged by Sony’s clearly monopolistic demands?

  2. The hostage here isn’t Apple, it’s you and me, the customers.

    Once again, the labels think they are in control. How sadly mistaken they are… and I used to work for one long ago…

  3. Apple needs to “just say NO.”

    Apple’s DRM is not hurting Apple, based on sales of iPods and increasing rate of song sales on the iTunes Store. It is clear that most iTunes Store customers do not care about the DRM, because the DRM is mostly seamless and invisible. And iPod customers will still buy iPods, whether they get their music from the iTunes Store, Amazon, CDs, or “other” sources.

    And even if iTunes Store sales would be a small percentage higher without DRM, most of that increase will be from non-iPod users trying the iTunes Store for the first time because their non-iPods are now compatible with music from the iTunes Store (as long as they can play unprotected AAC – most can even the Zune). Non-iPod resellers will probably give away iTunes Store gift cards as sales incentives. That does not help Apple. Apple wants to sell more iPods, not more songs on the iTunes Store. If Amazon sells more DRM-free songs, that’s great for Apple, because Amazon is also selling more iPods used to play those songs.

    Apple has music label executives believing it desperately wants to sell DRM-free music. In actuality, nothing could be better for Apple than maintaining the status quo. If the music label executives were thinking clearly (instead of being manipulated), they would insist that Apple only sell DRM-free music. That would cut the iTunes-Store-to-iPod exclusivity, which is a major advantage for Apple selling both iPods and songs. But they are apparently stupid, so they will keep trying to play this game; they don’t see that Apple is not even playing the same game.

    The bottom line – there is no downside for Apple. Apple has put itself in a position where it cannot lose.

  4. @ Zeke: My thoughts exactly.

    @ ken1w

    Dang… I’d not thought of it that way. Apple really *is* in the catbird seat here.

    In a related thought, perhaps “sources” within Apple helped leak this story in the first place? It sure doesn’t make the record labels look good, with Sony in particular coming off as the worst.

    As an aspiring musician myself, I sincerely hope these anachronistic middle men fade into historical obscurity as soon as possible. Nobody needs them anymore. It just sickens me to buy a $10 CD, knowing that maybe 50 cents of that goes to the actual artist. In fact, depending on how the original music contracts were drawn up, some musicians see absolutely nothing from online sales – since it’s not covered in the contract, the labels pocket 100% of it.

    The sooner fans can financially reward musicians directly, the better.

  5. I agree with those that say keep the DRM, because really, who cares? I’m not aware of some huge groundswell of people wanting to play AAC tracks on also-ran devices.

    The only time I’ve noticed the DRM has been when I’ve gotten a new Mac, and even then, it’s an inconvenience of a few seconds.


  6. I think Apple needs to sell music like they sell apps.

    If an artist were to put their “own” music on iTunes and sell it for $1 (for easy math) $0.30 would go to apple and $0.70 would go strait to them.

    Can you say bye bye to the big record labels!

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