Business Channel 2007-04-07&09

Music group EMI has announced a U-turn that would make it easier for many to download and listen to digital music. Now for the first time it's going to sell tracks without digital rights management or DRM. It's a technology that allows media companies to set terms for which consumers access their intellectual property whether it's movies or music would not. Now Apple's iTunes will be the first online store to sell the new downloads from EMI which boasts artists from Norah Jones to Radiohead. And uh, here is the rub: when you buy the new tracks that EMI trusts iTunes now, you won't have to own an iPod to listen to them. Now the deal does not include the music of the Beatles who continue to hold out against the digital download cultures (Excuse me). Those tracks in the new format 1 will sell on iTunes for around a dollar thirty, compared to 99 cents for songs with DRM. Now for more on what this all means for consumers, I'm joined live by Carl Gressum in London, he is a senior analyst 2 with the technology consultants 3 Ovum. Welcome to the program. When we talk about DRM and digital rights management, it's a hard nut to crack in, in all senses of the word. But for consumers, what impact does this EMI announcement have on us?

Ok, so, one of the key impacts here is that consumers will have an easier choice to play music on any device they want to. Now Apple can rest fairly comfortably in that sense because they have such a good grip on the portable audio player market. So we,what we have to bear in mind here is that Apple is in the business of providing you with the best user experience for fan of digital media. So they want you to use more digital media, be it photos, be it music, be it videos. And they want to provide the environment and devices for you actually interact with this kind of technologies. So, this has been seen as...

Yeah, Apple has been, Apple and Steve Jobs, the head of Apple, they have been calling for this for a long time. Now, Steve Jobs famously sent up that missive telling record companies to just give up using digital rights management to lock up their files just to make it easier for the consumers as you said. Finally we have a major record company that's doing this: EMI. But is there any risk to EMI to do this? You know, because DRM was made really to protect intellectual property, was made to prevent mass copying. Does there, is there any risk there for EMI for doing this?

Well, of course this can be seen as a brave bet for EMI. However, what is important to bear in mind here is that if you want to combat file shares on peer-to-peer networks who may or may not have bought the CD or rights to the music, they will always be able to circumvent 4 most DRM protection systems. So, by offering DRM-free contents there are more incentives 5 for buying music from EMI without DRM and in fact that this is actually the first time you can legally buy music online from EMI with no DRM.

oh, do you think other record labels will copy what EMI is doing now? or theyh are just gonna stand by the way?

Well, I'm fairly certain they are monitoring this very closely, and I would not be surprised if they will be tracking to see if any of the songs are appearing on peer-to-peer networks, and I'm confident they will be monitoring what kind of impact this will have on EMI sales both in terms of what they can sell in the retail 6 stores but also on what they are able to sell online.

And there are a lot of companies will be watching this, the record labels, our movies companies, Micorsoft as well. Unfortunately, We have to wrap up our conversation here. But, Carl Gressum of Ovum, thank you very much indeed.

thank you.

NOTES:

1. Ovum Ltd.

Ovum Ltd. is an industry analyst firm headquartered in London, England. It is the largest technology analyst firm that is headquartered outside of the United States[citation needed].

2. EMI Group plc

EMI's business is keeping music fans entertained. EMI Group is the #3 major record company (behind Universal Music Group and Sony BMG) in terms of worldwide sales. Its recorded music segment, EMI Music, distributes CDs, videos, and other music formats 7 primarily through imprints 8 Capitol, EMI Records, and Virgin 9, which together sport a roster 10 of pop artists such as The Beastie Boys, Norah Jones, and Lenny Kravitz. Its EMI Music Publishing division, the world's largest music publishing business, handles the rights to more than a million songs. In 2006 EMI offered $4.2 billion to buy Warner Music Group (WMG), but the bid was rejected.

3. Steve Jobs, business personality.

Steve Jobs was a college dropout 11 when he teamed up with Steve Wozniak in 1976 to sell personal computers assembled in Jobs' garage. That was the beginning of Apple Computers, which revolutionized the computing 12 industry and made Jobs a multimillionaire before he was 30 years old. He was forced out of the company in 1985 and started the NeXT Corporation, but returned to his old company in 1996 when Apple bought NeXT. Jobs soon became Apple's chief executive officer and sparked a resurgence 13 in the company with products like the colorful iMac computer and the iPod music player. Jobs is also the CEO of Pixar, the animation 14 company responsible for movies like Toy Story and Monsters, Inc. Pixar was purchased by the Walt Disney Company in 2006 for $7.4 billion in stock; the deal made Jobs the largest individual shareholder 15 of Disney stock.