They were the last major DRM holdout. This is a huge victory for everyone… except Apple.
When Warner dropped DRM last month, they only did so on Amazon’s service — possibly only because they had to (Amazon’s service doesn’t offer or support DRM at all). Sony BMG’s move looks similar - many of the same albums available DRM-free on Amazon will be sold at the same price with DRM on iTunes.
Apple’s not being evil to consumers here — the record labels are using Amazon as leverage against Apple. Amazon offers variable pricing, which the labels have been pressuring Apple to offer for years. They want to charge more money for popular songs and new releases, but Apple has maintained a firm flat rate of $0.99 per song, regardless of popularity.
As great as the Amazon MP3 store is, the other factors aren’t all pretty.
- iTunes finally has real competition, encouraging both services to improve for our benefit.
- Amazon has finally provided the push that the labels needed to mostly abandon DRM.
- We’re getting higher quality encoding. Apple or the labels (not sure who was responsible) wouldn’t drop DRM on iTunes without an initial price hike, so Apple doubled the bitrate and attached the notion of “DRM-free” with the unrelated notion of “higher quality” to help justify the higher price. Amazon was forced to match that quality, so their entire catalog launched at 256 kbit/s. Now, the price increase is gone, so we’re getting high-bitrate DRM-free music at the same price.
- Apple isn’t the only significant distributor anymore, so when the record labels push for a change and Amazon gives it to them, Apple loses leverage and will probably be forced to adopt it too.
- We’re likely to see variable pricing on all music. This allows Amazon to offer some albums at $8-9, but the more common case will be popular music selling for $12-16.
- We’re likely to see stupid “bundles”, in which the record company refuses to sell a popular single alone, instead offering a bundle with a few other bad songs for more money ($3-7). It’s like CD singles! (Maybe this will encourage artists to actually make albums again.)
Overall, this is a good thing, but I’d hate to be Apple in these negotiations.