Universal’s DRM-free must be universal

Universal’s announcement of its LostTunes service yesterday captured international attention, but some of its key positive points may also need to be extended across the wider digital music industry.

The company is clearly aiming its new online music store at the iTunes audience – just look at the declaration on the site in which it declares its wares to be, “double the quality of iTunes”.

We believe Universal hopes to reduce Apple’s marketshare in terms of song sales by a few points, but we also don’t believe the major label has any interest in eradicating the iPod-driven musical cash cow.

LostTunes’ music catalogue features real rarities taken from the Universal Music catalogue. We had a look around in there, and there are some extremely compelling items. Tracks are sold in the DRM-free MP3 format, so they’ll work with every device or platform. In addition to that, tracks are sold at 320kbps, which is (as we mentioned) “double the quality of iTunes”.

There’s some key take-aways here – Universal is clearly not prepared to license distribution of these tracks to other music services (and almost certainly not Apple’s). Universal is plainly prepared to use high-quality song compression and DRM-free sales as strategic elements to its plan…

Indeed, we know Universal is looking to offer its catalogue DRM-free to services such as Amazon MP3 in the US, and is likely to extend this to other services in Europe.

However, at present Universal’s plan seems to be based on one principle – to reduce iTunes marketshare in order to help the labels achieve a stronger bargaining position with Apple. At least, that’s how it looks…

What’s annoying is that Universal now clearly accepts that provision of DRM-free, high-quality music downloads is a winning proposition for online sales – but isn’t yet prepared to offer its full catalogue in this way to those music fans who’d rather buy music than steal it on a service-agnostic basis. After all, those who won’t pay for music can always find it – even rarities – online on BitTorrent.

So when will legitimate music consumers receive the same rights as music pirates? What’s also annoying here is that by obviously believing it has a viable business in the form of LostTunes, the company also shows it is prepared to use format and DRM as tools to affect market development – a move we’re not sure the world’s largest label should be taking.

JupiterResearch analyst, Mark Mulligan, had some interesting observations: “Every time another label makes more catalogue available DRM-free you wonder just how long we can continue to have any premium a la carte downloads sold with DRM.”

He adds, “Apple, of course, is well over due a couple of big announcements, but will DRM free across all catalogue be one of them (and by implication the same for other retailers)? One hopes so.”

We completely concur with his last statement: “The major record labels cannot continue to treat DRM-free as a tactical experiment and must recognize it as the strategic necessity it really is.”

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