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iTunes Moves Closer to DRM-Free Music

6 Jan, 2009 By: Chris Tribbey

Apple CEO Steve Jobs wasn’t there, but Tony Bennett was. There was no big iPhone-like hardware announcement, but there was DRM-free iTunes music.

Apple’s final appearance at the Macworld trade show Jan. 6 was highlighted by Jobs’ absence, causing speculation about his health, and the announcement that by the end of March, all iTunes music would be free of digital rights management.

“Starting today, we will offer 8 million songs, DRM free … and by the end of this quarter we will offer 2 million more, and all songs will be DRM-free in iTunes,” said Phil Schiller, Apple senior product marketing executive, who delivered the hour-plus long keynote in Jobs’ stead. The music will also be offered in a higher quality 256 kbps AAC encoding.

A new pricing model for iTunes music also was unveiled: Starting in April, music will be sold for 69 cents, 99 cents or $1.29 per song, at the music companies’ discretion. Amazon.com began offering DRM-free music in mid-2007, but remains No. 4 in music sales behind iTunes, Wal-Mart and Best Buy.

“We’ve worked with all the major music companies, as well as thousands of independents, and over the last six years we’ve had one pricing model for all songs: 99 cents,” Schiller said. “And the music companies have told us they want more flexibility.

“We know already that more songs are going to be offered at 69 cents than $1.29.”

Schiller started the keynote speaking about how successful the Apple stores are — with 3.4 million visitors per week — which might be one of the reasons this will be Apple’s final Macworld.

“That’s 100 Macworlds going on around the world every week,” he said.

Independent analyst Rob Enderle said Apple did itself a favor by negotiating with the music companies to offer DRM-free music.

“An awful lot of iPod users were getting music from CDs or free sources, and they wanted to move their music around freely,” he said. “By removing DRM, Apple will boost its own sales.”

Shares of Apple were down $1.56 to $93.02 at the end of afternoon trading Jan. 6.

Jobs’ health

On the eve of the Apple’s final keynote at Macworld, Jobs released a letter to the Apple community, allaying fears about his health that had hurt the company’s stock since it was announced Dec. 16 he would not deliver the keynote.

“Unfortunately, my decision to have Phil deliver the Macworld keynote set off another flurry of rumors about my health, with some even publishing stories of me on my deathbed,” Jobs wrote. “I've decided to share something very personal with the Apple community so that we can all relax and enjoy the show tomorrow.”

Blaming his weight loss on a hormone imbalance, Jobs, who is a survivor of pancreatic cancer, wrote that he has begun treatment, and that it may take until the spring before he regains the weight he lost.

“I have given more than my all to Apple for the past 11 years now. I will be the first one to step up and tell our board of directors if I can no longer continue to fulfill my duties as Apple’s CEO,” he wrote.

The company’s board of directors released a statement supporting Jobs.

“As we have said before, if there ever comes a day when Steve wants to retire or for other reasons cannot continue to fulfill his duties as Apple’s CEO, you will know it,” the statement read. “Apple is very lucky to have Steve as its leader and CEO, and he deserves our complete and unwavering support during his recuperation.”

Enderle said Apple was doing “an amazing job making it look like he’s still in charge of the company. He’s not.” And that could spell trouble for Apple.

“When Steve Jobs wasn’t there, Apple started to decline, and Apple could find itself out of step with the rest of the market,” Enderle said. “He is unlike any other CEO.”

Other Apple news

In addition to being DRM-free, iTunes music also will be able to be purchased directly over AT&T’s 3G network on the iPhone, Schiller announced. Before Jan. 6, iPhone users could only purchase iTunes songs over Wi-Fi.

Also unveiled was a new 17-inch MacBook Pro, with a battery that lasts for eight hours and can be recharged 1,000 times. Less than an inch in thickness, the widescreen laptop has a 1920 by 1200, LED-backlit display, an Intel Core 2 Duo processor up to 2.93 GHz, and comes standard with a 320 GB hard drive. The SRP is $2,799.

Schiller also introduced two new software suites from the company: iLife ’09, with the latest version of iPhoto, iMovie, GarageBand, iDVD and iWeb; and iWork ’09, the office suite with Keynote, Pages and Numbers.

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