EMI's announcement that it would be offering higher audio quality, DRM-free downloads on Apple's iTunes service is definitely the talk of the music industry this week. I'm happy that music fans will be able to have more options to use the files they buy and place on iTunes on different devices and computers.
Interesting take from Newsweek's Steven Levy on this new announcement. I wholly disagree that the business models coming out of this new model will be advantageous in any way to record companies - at least those companies who don't have some financial stake in touring and merchandising revenues for a particular act. I reiterate music fans have not backed off illegal file trading of unprotected files; we tell the story of iTunes and Zune and Rhapsody, and eMusic, etc...., but file sharing continues unabated. Two points: 1) just because these tracks are of higher quality doesn't mean music fans will care. Music fans have come to accept lower quality, MP3 audio files as the standard for audio files. 2) Even if Apple convinces other major copyright holders to go along with a DRM-free existence who is to say that consumers won't just buy these files once and trade them to death, thereby undercutting both the labels and Apple.
File sharing can only help an act in one way: exposure. There may be the odd consumer who gets a band's track or album illegally and then goes out and buys that act's CD, but that's not the norm. So a band de facto deprives itself of any potential artist or mechanical royalties they would be scheduled to receive under their recording and publishing contracts. Many acts these days have decided it has become so hard to make money off their recording contracts that the label's priorities don't dovetail with the act's career plan. How does a going concern maintain or grow their business if this is the attitude of their primary business partners, namely labels and artist managers?
EMI's new support for tracks not containing DRM is a major risk/reward scenario. I'm actually pretty pissed they caved to Apple when it ought to be the other way around. Content owners are nothing without steady, predictable revenue streams. EMI's bet is "all in - NOW." Why not force Apple's hand? I don't see EMI getting any major boost from this announcement in the mid-to-long term, but, then again, no one is managing for the long-term in the record biz these days. Shameful.