Apple iTunes Music Store (Finally) Goes DRM-free: First Take

So finally Apple gets DRM-free across all of its music catalogue on the iTunes Music Store (80% now, 100% end of Q1). It’s late, not too late but non-the-less late. As Apple accounts for the vast majority of the paid download market we can talk effectively talk about the impact this will have on the broader digital music market rather than just on iTunes sales.

Don’t expect it to kick start the digital music market (which is worryingly sluggish). This is just a basic enabler the market needs for long term viability. It is, however, crucial for future differentiation of the next wave of digital music services. Subsidized and ad supported services such as Qtrax and Nokia’s Comes With Music give consumers music for free but with DRM restrictions. DRM will become the key tool for differentiating premium from subsidized. The more you pay, the less DRM you have.

So it’s a case of DRM is dead, long live DRM.

But why did we have to wait so long for this announcement? European digital music execs told Forrester in late 2006 that they were ready for dropping DRM and, in April EMI went DRM free on iTunes and elsewhere. Most readers will have noticed that much of Apple’s competition has been acquiring increasingly comprehensive MP3 catalogue from the majors whilst Apple has not. Some of the majors trying to ‘level the playing field’ is undoubtedly a factor here, but it’s evident that Apple remains the biggest game in town with or without DRM-free. So all this strategy achieved was penalizing the majority of digital music buyers and the key force in one of the few dynamic parts of the industry the labels have left.

DRM-free should be a non-story by now. It’s not even much of an issue for the majority of digital music consumers. Principally because they don’t come up against it. Apple has dominant market share in devices and downloads. So the majority of digital music buyers don’t have DRM interoperability issues. And anyone who wants to burn more than 5 CDs knows how to. But at some time Apple may lose market share, perhaps to music enabled phones. When it does, consumers will start encountering interoperability issues. So it’s actually in the interests of the labels to weaken Apple’s lock in sooner rather than later in order to aid any such transition.

Finally, from an Apple perspective, dropping DRM starts a process of bringing iTMS up to date. Whilst the iPod and iPhone have undergone key transformation, the iTMS has essentially remained unchanged save for Genius. Whilst MP3, social music and mobile music happened around it iTMS clung stubbornly to it’s 2003 blueprint. Nokia’s Comes With Music is arguably the first major challenger to the iPod / iTunes dominance, because it a) is an integrated device / service proposition buy b) because it tries to do something radically different i.e. unlimited permanent downloads. Apple know they need to respond. DRM-free across all catalogue is a first step towards putting clear blue water between them, but they need to do a lot more yet. Ideally the next steps will be in the social-music direction, building upon the start made with Genius.