Jobs' EMI deal is a win for music industry, fans

Plugged In

April 05, 2007|By Mike Himowitz | Mike Himowitz,Sun Columnist

When Steve Jobs, Apple's CEO-for-life, shocked the music industry in February by calling for an end to sales of copy-protected music, the cynics smiled. And I was among them.

Here was a guy who had made hundreds of millions peddling copy-protected songs and the gadgets that play them. Was this just another case of the master showman blowing smoke to keep critics and regulators at bay?

Not this time. Jobs backed up his rhetoric with action this week, announcing a ground-breaking deal with London-based EMI Group, one of the four large conglomerates that dominate the recording industry.

Starting in May, Apple's iTunes store will sell almost all of EMI's music online without copy protection - if customers are willing to pay a 30 percent premium.

That means most music fans who have digital players other than Apple's iPod will be able to play EMI tracks they download from iTunes - without going through an awkward, two-step conversion process.

It's hard to overestimate the importance of this deal. Since the advent of powerful computers, CD-burners and portable music players made it possible for users to create and trade digital copies of songs, the industry has been at war with its best customers.

For years, the studios refused to sell music online altogether - while users traded billion of files illegally.

Only when they realized that filing lawsuits against 12-year-olds who share their libraries might not be the only way to deal with piracy did the music producers agree to put their catalogs online. But they insisted on Digital Rights Management (DRM). That's a euphemism for copy protection schemes that make it difficult, though not impossible, to duplicate their music.

The result has been a mishmash of incompatible copy protection schemes, online music services and players - and a customer base that's increasingly disenchanted.

The Apple-EMI deal is interesting because it adds a sweetener. For the extra money they pay for unprotected music ($1.29 a tune versus 99 cents for protected tracks), customers will get files with twice the audio density - 256 kilobits of data per second of sound, versus 128 kbps in the protected format.

This is good news for audiophiles who have long complained that digital music sold online lacks depth and detail.

If you use your iPod, or any other player, while you're jogging, riding the subway, or driving your car, the ambient noise will wash out most of the improvements, but it's nice to have higher fidelity for indoor listening.

As an added break, unprotected albums will cost the same as their protected counterparts, usually $9.99. And if you've already purchased protected EMI songs from iTunes over the years, you can upgrade them to the new unprotected format for 30 cents a pop.

All things considered, this is a reasonable deal. Consumers get what they want - unprotected music - if they're willing to pay more. But no one will end up short on the rent because he's downloading tunes. If customers don't like the deal, they can continue to buy protected tracks for 99 cents.

The industry also gets what it wants - a chance to increase moribund sales and book a lot more revenue. When you're selling hundreds of millions of tracks, an extra 30 cents a pop is real money - with no added production or distribution cost.

For the time being, the EMI deal won't include one of the company's biggest assets - the rights to The Beatles. Their business arm, Apple Corps, has refused to sell online to anyone, although millions of Beatles tracks have been traded illegally over the years.

Now that Apple Inc. (the computer company) and Apple Corps (the Beatles) have worked out a long-standing dispute over the Apple trademark, most observers expect a deal.

Even without the Beatles, EMI has plenty of variety in its catalog, with artists as diverse as Norah Jones, David Bowie, Garth Brooks, Deep Purple, The Rolling Stones, Blur, Radiohead, Boys Like Girls, Kenny Rogers and Paula Abdul.

Announcing the agreement on Monday, Jobs said he expects other record labels to follow suit and predicted that half of iTunes' 5,000,000-track inventory will be available in unprotected format within a year.

That would be an amazing turnaround for an industry that has fanatically resisted selling music that can be easily copied.

It would be an even more amazing turnaround for Jobs. After all, it was copy protection that turned Jobs from the chief of a niche computer company that was going nowhere into the titan of online music sales.

His iTunes store has delivered 2.5 billion tracks since it opened in 2004, and the iPod has captured 75 percent of the digital music player business - more than 90 million sold. Sales of players and music now account for half of Apple's revenue.

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