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In early July, just when Apple was riding the wave of the iPhone, the tides got a little tough with news that Vivendi’s Universal Music Group (the biggest of the Big 4 music labels) had decided not to renew a long term contract allowing the sale of their catalog.  Instead, they announced they would go month to month, giving them the power to withdraw from iTunes on short notice.

Rumored to be at issue was both Apple’s unwillingness to open its Fairplay Rights Management technology to other vendors (which would allow other music stores to sell music playable on iPods)  and, also,  Apple’s desire to offer the music at fixed prices.  (Universal, and other labels, have long wanted to be able to price music at their discretion to influence sales and maximize profits)   

A month has passed and the plot’s  thickened.  Today, Universal announced it would join EMI on the DRM-Free express.   Breaking with the music industries hard line anti-piracy position, Universal announced they would offer the majority of the catalog without Digital Rights Management restrictions.   The catch is, they will not offer (at least for now) DRM free music on iTunes. It will be available through rivals like RealNetworks Rhapsody service , Wal-Mart, Amazon,  Passalong Networks and , in some case, artists’ Official Web sites. Many of these services are also working with EMI.

Excluding iTunes is a shot across Apple’s bow, a clear and provocative statement that Universal isn’t happy with the strength of Apple’s bargaining position. 

The move by Universal is characterized as limited market test and will run from August 21st to January 31.   The official word is, like a focus group, that time will allow the company to assemble and study data about both consumer demand and the effect going DRM-Free may have on piracy.

It’s difficult to imagine, absent shocking data returns in January, that the program won’t continue in perpetuity. Releasing DRM-Free music is like opening a can of worms. Once the songs are released, they’re on the ether; out there for good.

The retailers will likely sell the tracks for 99 cents and make the songs available at a variety of bit rates. The songs will be available in the MP3 format  but retailers will have the option of selling the tracks in any DRM-free format..

In a statement, Universal Music Chairman and CEO Doug Morris said the "will provide valuable insights into the implications of selling our music in an open format."

The decision to bypass Apple for this test is a story filled with irony.  For one thing, Steve Jobs has openly chastised the industry for requiring DRM Technology.   For another, it can be convincingly argued that the labels past insistence on DRM is what  helped build iTunes into the dominant player it’s become (iTunes is responsible for about 75% of music download sales).  So now, threatened by that dominance, they’ll offer the service Apple told them they should have offered all along to Apple’s competitors.

In the past on Metue, we have taken a very close look at DRM issues including the appearance of faulty logic in the labels insistence to force its adoption, and more recently an editorial on why DRM-Free sales may be the key to the labels long term survival.   For those looking for more information on the DRM debate these articles can be found at the following links:

i.   The Paradox of DRM: or why forcing DRM has been bad for the music labels.
ii.  Can EMI save the record industry: or how DRM-Free licensing may be the labels only hope to retain control of their industry.
iii. EMIs strategy of Ubiquity: putting DRM-Free music everywhere