DRM Free songs on a test drive at Universal

August 10, 2007 -- Universal Music Group, one of the fiercest guardians of its artists' copyrights, is set to test market thousands of tracks from such performers as Amy Winehouse, Gwen Stefani, 50 Cent and others without copy protection software, The Post has learned.
The move, expected to be announced today, differs from EMI's deal with Apple to sell tracks free of digital rights management software, known as DRM, in that Universal is only in test mode and hasn't committed to making its copy protection free songs available permanently.
It also differs from EMI in that Apple's iTunes is a noticeably absent retail partner in the test. Universal famously sparred with Apple during contract renegotiations earlier this year, refusing to sign a long-term rights deal with iTunes and opting instead to re-up for only a few months at a time.
Instead, Universal has enlisted Amazon.com, Best Buy, Wal-Mart, Google, Real Networks' Rhapsody, Transworld, Passalong Networks and PureTracks for the test, which is slated to begin this month and run through January.
Sources said Universal's ability to line up such big-name retailers for the test could provide some significant leverage for record labels against Apple.
Part of the reason for the iTunes Music Store's popularity is because songs purchased at most other digital outlets can't be played on an iPod, which is by far the best-selling MP3 player. But according to one source at a rival label, DRM-free tracks "open up the business to distribution platforms that weren't available before" since they are compatible with any MP3 device.
Universal, the industry's largest record label, is hoping to glean insights into price sensitivity, consumer demand and the impact on piracy from the test.
Unlike EMI, whose DRM-free tracks are recorded at a higher sound quality and sell for $1.29, the songs chosen for the Universal test are expected to retail for the standard 99 cents.
Universal is operating under the assumption that consumers prefer tracks without copy protection and that the industry will ultimately have to capitulate to their demands. However, one music industry executive said that an analysis of prior testing showed that, "there is indeed a segment of people that like to have their music DRM-free, but it certainly is not an overwhelming majority."
EMI began selling its DRM-free tracks through iTunes on May 30 but has yet to provide any performance metrics for them.
In June, Lauren Berkowitz, a senior vice president at EMI, said that the initial results were "good." She said early results indicated that songs without copy protection may boost revenue from digital albums and individual songs and pointed to sales of Pink Floyd's "Dark Side of Moon" as increasing since it became available in DRM-free format.

http://www.nypost.com/seven/08102007/business/umgs_sound_check_business_peter_lauria.htm