Tuesday, April 03, 2007

EMI & Apple -- Unlocking Music at a Cost

As anticipated early yesterday, EMI and Apple have in fact announced that EMI will make its music available online at iTunes "unlocked" -- i.e., without copying restrictions (or DRM) (Phoneboy pointed out yesterday that the actual unrestricted format is AAC and not MP3). However, EMI and Apple's move comes at a cost to consumers -- such tracks will be available only at a $.30 premium over current $.99 tracks (i.e., at $1.29 per track). EMI and Apple contend that consumers will gladly pay more for more freedom, although music in CD format already comes without DRM (the new "unlocked" tracks also apparently will be of higher sound quality).

THIS (i.e., higher cost music) presents an interesting marketing challenge for Apple and Steve Jobs. First, Apple has consistently argued for uniformity in pricing across the board for music, so that the end user experience at iTunes would be as painless and elegant as possible -- certainly, differentiated pricing ($1.29 v. $.99) will be more difficult to "message" and market effectively to end users. Second, Steve Jobs personally has previously railed against the record labels previously for contemplating increased pricing for the purchase of their music online in a time when overall sales continue to decline.

It will be interesting to see which other major labels will follow suit, and how soon ... and it also will be interesting to see how iTunes markets/promotes EMI tracks.