Apple, labels focus on copy protection

Last year, the main issue that dominated iTunes licensing talks was pricing, as some of the big music companies urged Jobs to entertain charging more for some songs than others.

The dispute percolated for months, but Jobs didn't budge, not wanting to complicate iTunes' simple pricing scheme for singles.

Eventually, the music companies each agreed to one-year deals, which expire this spring.

Now, Apple is facing pressure in Europe to license its brand of DRM technology to rivals so consumers can play the music they buy on iTunes on any digital music player, not just iPods.

Critics of the recording industry have argued for years that the labels are alienating customers by placing copy restrictions on legal music downloads, especially as many CDs have been sold without them.

FairPlay
The technology behind such measures differs, depending on the retailer and the music device. Apple, for example, has its own version, called FairPlay, that only works with iPods, making it cumbersome for consumers to transfer songs from iTunes across other portable digital devices. Likewise, DRM systems used at other online stores won't work with iPods.

Many music fans who don't want to deal with the hassle simply turn to online file-sharing networks to download no-strings tracks for free.

The recording industry has argued that copy protection software itself is not what makes some songs incompatible with some digital players, but the fact that there are different versions of the technology in use. The music companies have called on Jobs to license FairPlay to makers of rival devices.

Jobs has countered that the best way to get rid of technological barriers is for record labels to strip the copy safeguards from their music. He defends keeping FairPlay closed, saying that if it was widely available, it would become easier for hackers to figure out how to bypass it.

No matter what, Apple plans to continue selling standard, copy-restricted versions of songs for 99 cents each. With the EMI deal, Apple will this month start selling $1.29 premium tracks that are not only DRM-free but also of higher quality, compressed at twice the usual bit rate.

John Heard, an iTunes user in Santa Monica, said he would jump at the chance to buy no-strings downloads, even if it costs more.

"If I have the choice between something that doesn't have copy protection or it does, I'm always going to choose the thing that doesn't have copy protection," said Heard, 28, a television producer who spends about $300 a year on music, almost all on iTunes.

Buying a better-sounding track is appealing to David Sholle, 54, of Long Beach, a college professor who has purchased several hundred songs from iTunes.

"I'd be willing to pay for that," he said.

Buying online
Anticipating a more competitive market, other companies are looking to break into online music sales. Online retailer Amazon.com Inc. first approached the major recording companies 18 months ago about launching an online music store.

A recent meeting prompted speculation that Amazon might begin selling unrestricted MP3s and other music downloads as early as this month. The company has declined to comment.

David Pakman, president and CEO of eMusic.com Inc., said the elimination of copy protection could help his company mine the rare, catalog recordings owned by major labels but not typically available on iTunes.

EMusic already sells music from independent labels in the MP3 format and boasts some 300,000 subscribers.

Pakman believes the major record labels will also eventually relent on requiring copy restrictions.

"We really think the market is breaking our way," Pakman said. "A noteworthy major will probably take some steps in this direction later this year."

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