Apple's iTunes Adds Three Major Labels For DRM-Free Songs, Sets New Prices

January 6, 2009 9:05 AM ET

Apple has signed a deal with three more major labels to bring more DRM-free MP3s to their iTunes digital music store. The announcement of the deal with Sony, Universal and Warner Music was the centerpiece of today's Macworld Expo in San Francisco. Apple already had a DRM-free deal in place with EMI, so all four major labels now have terms with Apple for unprotected music files. With the announcement, iTunes significantly strengthens its grasp on the digital music industry. Competitors like the Amazon MP3 Store, Wal-Mart's digital music store and eMusic all went DRM-free over a year ago but failed to gain traction on Apple's service.

So why would the three majors, who often complained about iTunes' 99-cent price lock, agree to a deal with Apple to distribute DRM-free files? As part of the deal, Apple reportedly to be more lax on their strict price fix, breaking MP3s into three tiered pricing: Older catalog tracks will cost in the 69-cent vicinity, and newer songs will retain their 99-cent pricing. But hit songs, where the downloads can often creep into the millions, will now cost $1.29, allowing the labels to fully capitalize on their big songs. The pricing shift takes effect April 1st, with Apple determining cost based on how each label offers the music. As of today, the service now has 8 million DRM-free songs available, with the remaining 2 million tracks set to be DRM-free by month's end. Users who previously purchased protected files can now switch them with the better encoded, DRM-free files. Apple also announced that iPhones will now be able to download music via the iTunes music store through a 3G network, as opposed to just a Wi-Fi signal. Following the announcements, Tony Bennett took the stage to serenade the tech-hungry crowd.

Related Stories:
Apple Wins Royalty Fight: No Rate Hike Means iTunes Is Saved
Apple Talks Tough, Threatens To Close iTunes If Royalty Rate Rises
Apple Reveals New iPod Nano, iTunes Update

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