Why the majors should go DRM-free with iTunes

Major labels are happy now to sell DRM-free music through retailers such as Amazon and 7Digital, but Apple remains locked out, with three of the four majors denying it permission to sell tracks DRM-free through its iTunes Plus service – even though it’s the largest US music retailer. But this may soon change.

9to5Mac claims Sony Music will make moves to license its tracks for sale through iTunes Plus in the coming “weeks or months”, with some speculating a potential announcement at Macworld San Francisco.

The background sees Amazon and MySpace Music moving inexorably toward a European launch and 7Digital continuing to profit from its leadership position in selling DRM-free music in MP3 format from majors in the UK.

Weighing all this up we anticipate Sony could begin licensing its music through iTunes Plus before Christmas, but that’s assuming the report’s correct.

It’s all about the battle for Europe’s music industry. Majors have been playing hardball with Apple, with most refusing to license their music for sale DRM-free through iTunes, while favouring alternate services.

That alternative digital music ecosystem is evolving fast. It now offers a host of solutions, from ads-supported services – We7 – to a la carte services including 7Digital, Amazon, MySpace Music; even Nokia’s music-value-devouring ‘Comes With Music’ plan or Universal’s own UK-only Lost Tunes store.

This fast evolution means labels could face accusations of monopolistic handling of digital music licensing. By depriving Apple of the same distribution rights they offer others, the majors could be accused of using their market power to affect market development.

And if the labels seem to be unified in such action they could face investigation on accusations of anti-competitive collusion.

Europe’s competition commission appears much more active and far more independent in its actions than its US equivalent, the DOJ.

In order to avoid lengthy and expensive European regulatory investigations we anticipate the majors will move to license their music to Apple’s iTunes Plus service soon after Amazon launches its MP3 store in Europe, a move originally expected this year.

The irony is that music industry insiders see Apple’s refusal to license its FairPlay DRM as a secret ingredient that has helped the company sell iPods and “lock” consumers into the Apple music system – but labels insisted on DRM in the first place.

Of course, in the early days of digital music, Apple’s iTunes and iPod combo was never expected to be so succesful, which is why labels chose to use the company as a test bed for best practice in digital music.

The only reason they agreed to work with Apple on iTunes was as a result of the Mac’s relatively small market share, and also insisted DRM be in place to prevent piracy on the platform, hence the evolution of FairPlay.

We’ll know in the next few days if the 9to5Mac report is correct.

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