Analysis: Amazon Goes DRM-Free, Will iTunes Be Next?

Authored by Jay Baage on May 16, 2007 - 12:34pm.

Amazon.com today announced that they will be launching a digital music store that will only sell DRM-free MP3 music files. Buyers will know that once they buy the music, they own the music and are free to use it on anything, anywhere for personal use. Amazon’s decision to sell only DRM-free music is a powerful statement against the use of DRM restrictions by the major labels and it shows that one of the most powerful online stores believe that a digital music business can be built using only DRM-free products.

EMI and a lot of indie labels that work with Passalong Networks have separately announced that they will be offering their whole catalogs of millions of songs and features from iconic artists like James Brown, Frank Sinatra and current chart-toppers like Green Day, Barenaked Ladies, Coldplay, Norah Jones and Joss Stone and Avril Lavigne without DRM-restrictions.
"We already offer around two million tracks in MP3 format to the stores that we power. I predict that it will be up to three million tracks by the end of the year. It is all moving in the direction of an open MP3 format", says Dave Jaworski, Founder and CEO, Passalong Networks.

Now the question is if the dominant player in the online music space, Apple’s iTunes, will drop DRM restrictions too?

Apple CEO Steve Jobs has already showed that he is willing to drop some DRM restrictions on iTunes when he announced that iTunes have struck a deal with EMI, one of the major giants in the music business, to offering digital music from the label without the built in restrictions for a premium price. Steve Jobs, in his recent music manifesto, said that he would be open to dropping all DRM restrictions, but that it is ultimately the major labels’ call.

Now the pressure is on the major labels to act. The question is really not if, but when the rest of them will come around and realize that DRM is not what consumers want?

It is time to start thinking out of the box. Passalong has announced that the 44 online music stores it powers, including Ebay and Procter & Gamble, will be testing a variable pricing model for music downloads - the first online stores to do so. It is a step in the right direction and lets consumers to some extent decide what they think music is worth. I have no doubt that there is a viable business in selling music online, but I think it is clear by now that they way forward is not to involve DRM restrictions.

Joakim Baage